[Withdrawn] Sushi Phantom Troupe - Strategic Raise

1 - Based on our pricing model, we believe a fair discount is ~50-60% for SUSHI with a 6-month lockup followed by 18-month vesting period.

the balls it takes to say this is just a slap in the face to defi and the sushi community. If you guys actually cared about growing the protocol you would know this lockup / vesting is an absolute joke.

how about less talk about price and your “fair-value” pricing models and what you guys would actually do for the sushi. everyone has money…but who has the proper tools / ideas / drive to actually make this beneficial for both parties involved.

What would happen if the Sushiswap Treasury tried doing the same thing via the open market, i.e., market sell $60m in SUSHI?

i also like to market sell everything on sushiswap when i want the best price…

less talk about money more talk about what you guys will do to benefit sushi

/stomponcig

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Great Thoughts and love the work you are doing at Pantera.

However, let me try to see if these can be quantifiable milestones. While I know all of them are hard to measure/quantify but then we should not be thinking in Crypto from the traditional lens.

  1. Hiring support- → What does that translate to? Assuming that you agree to Sushi’s hiring process how many people can you help recruit? The sushi team can share a broad roadmap to estimate hiring needs. Let’s put a number to this and smart contract this. If the goal is missed vesting period increases or a fine is put.

  2. Portfolio / Industry connectivity → This is as generic as it gets. What does this mean? If you are investing there has to be a thesis on what partnerships can happen. Let’s put a definite outcome. That hey will get x number of partnerships stitched in Y time. In fact, even before the raise, the Sushi team & community should know what your partnership CRM looks like.

  3. Technical / Market research - Who scans these? Are these tech leads? If not then you can potentially bring the noise to the ecosystem. Also, the community should decide on say which L2 to focus on and not on individual expertise. While I clearly see the merit, to me again this is too generic

  4. Resources / Vendors / Best practices → Definitely a value for the community, but this should dovetail into point 2

  5. Visibility / Marketing - Agree. That is one thing that a lot of Defi projects are missing on how to make them more mainstream.

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Good to see pitch from the two potential investors. Community will also like to hear the answers to the following questions

  1. Do you intend to provide a boost on the liquidity front in an ever growing competitive market?
  2. Majority of the VC’s are invested in many DeFi projects some of which are rivals or potential rivals to Sushi on the Market. What are your thoughts on conflicts of interest and how would you approach it if such a situation arrives in the future?
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1 - Based on our pricing model, we believe a fair discount is ~50-60% for SUSHI with a 6-month lockup followed by 18-month vesting period.

What would happen if the Sushiswap Treasury tried doing the same thing via the open market, i.e., market sell $60m in SUSHI?

I think you are missing the fundamental point of this raise. The sushi team does not need to raise money. Hence trying to compare the market impact of one stop dumping $60M sushi, which is being disingenuous in its own right, is completely useless. The point of the raise as I understand it is to bring together a couple of long term aligned VC’s to support the project and use their connections to expand the general reach of the sushi ecosystem. Diversifying the treasury, while being a nice benefit in of itself, is not the core goal of this raise.
Now I do agree that having a “fair” discount is necessary to attract the right VC’s that will actually be active and beneficial for sushi, however IMO depending on the size of the raise, even a 30% discount should be attached to a significantly longer vesting period. We’re already currently seeing the negative effects of having such a large vesting period hanging over the project from the ongoing sushi rewards vesting, and adding another unlock period right after this current one ends is honestly quite a horrible idea in my opinion.
I also think that having 21 investors is quite ludicrous, as is only dilutes the general allocation each VC gets and like tokenactivist said will result in sushi being just another tiny allocation in their fund. That being said, I would advocate for having at least a one year cliff, followed by a minimum of 24 months linear vesting targeting at a maximum the 10 most aligned and beneficial VC’s. Even if that would require a more significant discount I believe it would be well worth it.

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Hey everyone - I help run a thesis-driven venture fund called Compound focused on both highly technical early-stage companies as well as crypto broadly as a category. As a Sushi holder, I figured I would share my $0.02 (disclosure: Sushi makes up a material portion of my personal crypto portfolio + we are investors in Multicoin).

Round Dynamics

IMO the dominant strategy here would be to anchor the round with 2-3 major investors which equal at least 40% of the capital and then build a collage of smaller firms with a specific value add attached to them. I agree that having them articulate what they want to bring to the table is a fair ask from the community, just as @amywu has so eloquently done.

In terms of structure - if we truly want long-term aligned investors I would stretch out the vesting period or backload it more on vesting, and/or create a cliff that is 12 months (@0xMaki i don’t think increasing discount materially should be pre-requisite and I believe the traction of this proposal will mean Sushi has plenty of demand). As venture investors we raise 10 year funds with the idea that we want to be long-term aligned with our companies that create massive outcomes over a 4-6 year time horizon (perhaps 2-4 years for growth stage). While 6 months in DeFi is like 3 years in normal tech, I do think venture investors should have fairly low pushback against longer time horizons, especially if they are able to sell rewards after a cliff vesting period.

Why Institutional Investors

Advocating for venture investors (I’m obviously biased), at the growth stage, venture investors are often great as sounding boards for their given founders/portcos, as well as unlocking mechanisms surrounding areas of commercialization or scaling. With this in mind, I too believe it’s important to figure out how as a community we want institutional investors involved in governance and/or what their ultimate vision for Sushi is over time (this should be a discussion, not a single pitch from a VC → community).

For me, one of the biggest things that Sushi has going for it is an increasingly horizontal approach to building a suite DeFi products, thus I would prioritize a syndicate that can help think through the constellation of use-cases within DeFi that should be consolidated within Sushi and/or that Sushi should actively partner with to bring onto the core platform. I’ve been impressed by the launch of products like Miso and Kashi Lending and there are likely many other possible expansions that will be enticing over the coming years, but might not be dominant for Sushi to focus on in short-term vs. medium/long-term.

VCs have lots of experience thinking through the long-term sequencing of product roadmaps in order to gain market share, while also having the luxury of being removed from the trenches and seeing innovation at the earliest stages, which will be helpful specifically for a project like Sushi that could be a core leader in the maturation phase of DeFi which again, I believe could be about consolidation of some kind relative to the fragmented/disparate behaviors we see today enabled by composability.

The next order thinking of building a lasting community should be survival in the early days, and aggressive expansion in the later days. What I mean by this is that if/when a true bear market comes, having a group of investors that can participate in the community discussions and governance votes surrounding when to be aggressive while other projects aren’t able to move as quickly in bear markets (due to our large treasury and community relative to others except a few core projects), as well as that can possibly further fund offensive moves during these times is incredibly helpful (to this point of why having more concentrated leads with large funds, is an asset).

Related to this, I would add that similar to the view on product sequencing, the holistic, long-term oriented view of smart VCs within the space also will allow us as a community to perhaps better think through strategic treasury management. (not to pump a post but i’ve written about this here: ).

As a final note, I do think the addition of great firms like many of those listed will help bring some form of brand halo to Sushi that we have been missing. As a community we all have looked at the Sushi token price at one time or another compared to competitors and not fully understood the discount relative to metrics, while in the back of our head wondering if this was a brand perception issue (@0xmaki said as much on a podcast recently). Over time, it’s likely that this halo should deteriorate as capital continues to commoditize, but for now there is some brand signal that comes from large institutions backing you, for better or for worse.

TLDR - I support this at a high level, think we should be intentional but understand how these firms want to engage with Sushi, should have longer vesting, and am excited by many of the partners listed.

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A lot of great ideas and debate happening in this thread! A few thoughts from a relative “shrimp” in all of this.

As far as Defi goes, Sushi is a known quantity “blue chip” with a strong track record of success, implementation, and innovation. That should count for something. Providing a 20-30% discount for such a large amount of the treasury with those vesting terms seems unreasonable.

I think the majority of the community can agree treasury diversification, decentralized supply, and strategic partners are a good idea, but we should explore other alternatives that are more inclusive of all community members that can help achieve the same goals as this proposal.

I think its SUPER important for the funds listed to weigh in here and to give an overview of how they have previously added value to portfolio companies, examples of how they have been active in governance (whether in sushi or other protocols), and how they plan add value to Sushi.

We have seen a ton of misaligned VCs over the past year use “institutional” status as a way to get discounted deals and secure profits by dumping on retail investors. (Note: this is not accusatory towards the funds listed, I actually think many of them are awesome community members and have been a massive value add to many of the communities I personally have seen them active in.) I think more clarity from the funds on how their incentives align long term would help many of us feel more comfortable and build more informed opinions on this.

One of the most inspiring things about DeFi has always been the opportunity it provides for anyone to get involved as a community member/stakeholder at an early stage and to make an impact. I think its important we keep this ethos in mind during discussions.

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I can offer a perspective here to back this proposal. In many ways my comments will echo those of others who’ve recently posted to help present the role they intend to play as participants in this diversification. For context, I lead DeFi and Venture investing at GSR

When you consider the list of those strategic partners proposed for this diversification, they each have a variety of unique value adds that would contribute to the Sushi roadmap and growth and ultimately drive value back to this community.

Some of these qualities include:

  • Liquidity - in the AMM game, the driving factor that will bring more TVL into Sushi is ultimately where can traders find and access the most trading pairs at the lowest slippage. Invested partners in the ecosystem who can bring new liquidity to Sushi through either their own LP activities in pools or through the relationships they have with new token issuers who are looking at IDOs or simply DeFi-first launches will be beneficial to Sushi in building out both deeper liquidity in existing pools and sourcing new liquidity pools to Sushi.
  • New capital - VC’s and trading firms have deep relationships with institutional capital both across the crypto/DeFi world and the broader TradFi world where there are trillions of dollars sitting on the sidelines waiting to enter this marketplace. Partnering with these groups that have access to this institutional capital is ultimately to the benefit of the Sushi ecosystem as it contributed further to the liquidity growth and, ultimately, the revenue growth for Sushi - benefitting both the treasury and community.
  • Product strategy - most, if not all proposed parties here have a depth of experience in working with a number of leading teams in and outside of crypto to help inform and advise upon product strategy and roadmaps based on years of experience in investing in startups or liquid markets. If the expectation is that these partners are being selected/approved by the community based on a stated commitment to building up Sushi long term and ensuring its success in an increasingly competitive DeFi landscape, then one would hope this experience and expertise would be value add to the community as future capabilities and product releases are contemplated and planned.
  • Marketing - Sushi is not an unknown in the space by any stretch. But as evidenced by the Future Fund contribution of Sushi.com to the project, there’s a range of marketing benefits that come from having a set of active, well respected investors across the crypto ecosystem that are helping to drive awareness for Sushi and amplifying the successes and future launches through their various channels of influence.

In terms of our role at GSR, as both a market maker, trader and investor we’ve partnered closely with many of the proposed strategic investors and can say with confidence this is a group that is well-crafted and are all individuals/teams we greatly respect. For those looking for context on us:

  • GSR is one of the oldest crypto-native firms in the industry, founded in 2013 with more than 125 people globally. Our firm’s founding predates the launch of Ethereum. By being exclusively focused on crypto markets throughout our history, we have a depth of trading expertise that comes from years of experience and relationships that go back nearly a decade spanning the global crypto market.
  • We’ve partnered with close to 100 token issuers as a liquidity provider and over time work with them on a number of related needs, including treasury management and OTC trading capabilities, including having one of the largest derivatives portfolios across the alt-coin and crypto landscape. Some names on this list include
  • We work with a growing list of more than 200 institutional clients as a trading partner, including many of the largest institutions in both crypto and traditional finance.
  • We trade billions of dollars a day across 60+ markets globally and increasingly are expanding these efforts with liquidity on decentralized exchanges, including Sushi. This market making function is critical in driving price discovery and ensuring efficient markets across DEXs and CEX trading pairs.
  • We’ve made nearly 50 investments as a strategic investment partner from our own firm capital. We aren’t a traditional VC and we are putting our own money to work in supporting projects we believe in. Some notable venture investments we’ve made include Ethereum, The Graph, Flow, dydx, Coinlist, Secured Finance, Eco, Reserve, Shyft, Tracer and others.

We plan on acting as a strategic partner to Sushi through the expansion of our DeFi trading efforts as both a liquidity provider, partner to new token issuers and a supporter of teams looking to build upon the capabilities of the Sushi ecosystem. It is great to see the level of engagement from the community on this proposal and we would be excited to increase our engagement through participation in this diversification offering.

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Thanks @CryptoPriest and @fozzydiablo for the candid feedback here. To be clear, the extra color around the discount proposed here is meant to be exactly that - just extra color. I felt it’d be helpful to provide extra context on how we (Pantera) look at the impact of illiquidity on deal pricing, since it seemed like that was missing from the conversation around “Why are we giving anybody a discount?! Hell no!” to carry it towards something more nuanced.

Not at all meant to be an argument for why this strategic raise should happen - which I completely agree is the bigger question here, as well as communicating the value that any participating fund would bring to the table (which is much more directly answered through my other post). I’ll try to add this into the original post to clarify that for others too.

Just saw this on twitter

What’s going on?

DeFiance Capital is dumping SUSHI as per user @Luciano_vPEPO on Twitter

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1 - Based on our pricing model, we believe a fair discount is ~50-60% for SUSHI with a 6-month lockup followed by 18-month vesting period.

What would happen if the Sushiswap Treasury tried doing the same thing via the open market, i.e., market sell $60m in SUSHI?

I was actually starting to like you Franklin, and we are grateful for you coming out here to get involved. I understand you guys do a great job in managing portfolio risk management, congrats… Although, spitting on the face of the sushi community is quite disrespectful and goes against what Sushi has built in the first place. Please don’t call a 50% discount and 6-month lockup “fair”, just to make 30% sound reasonable. Then comparing it to us market selling our own treasury like apes.

"wHaT wOuLd HaPpEn If FuNdS mArKeT BoUgHt 60M iN sUsHi???"

…You see what I mean? That was not cool of me to do, so don’t do the same.

I respect your math and your persuasion tactics, but when pitching to DAOs, we would appreciate respect in return.

Sushi would be honored to onboard big-brained people like yourselves. The funds that want to back us seem excited and motivated, as we are- but this is about every VC on the round working as a team alongside Sushi. As the rest of the blue chips begin to see maturity, and as I realize this is more than a “treasury diversification” I now understand the value of having these veterans alongside us.

Therefore I will piggyback and restate some of the points mentioned above

  • Cut the number of VCs to improve incentives, I like the idea of focusing the round on 2-4 major investors, a variety of smaller VCs, and 50-100 angel investors, even a “shrimp” crowd sale would be something new and unique
  • Every investor should be specific and detailed on what they will bring and how, without generalizing a pitch.
  • Make the lockup and vesting way longer. what happened to 10-year time horizons? (Obviously not implying a 10-year vest!) We want people/teams that are in for the long haul, not a short flip.
    -We should use this sale to bring high emergence from all types of investors and builders to expand sushi to the next level.

@zafalijadev brings up a massively underestimated point.
I understand the discount is industry standard, but It’s not hard to imagine how VCs can use this, along with their holdings and trading department, to buy Sushi for dirt cheap. That’s why even 20-30% off a TWAP can be predatory for sushi price.
Options are to limit the VC list to only 2-4 top funds (and hope they play nice)… Or bring in the innovative range tokens to prevent such an attack.

Exciting times ahead,
Thank you everyone and I look forward to the community call!

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@GreenEyes - fwiw, I do see what you mean here and I accept the correction & appreciate the callout. My example wasn’t really relevant / helpful. Just to reiterate from my previous post, sharing our model’s output here wasn’t meant to be a persuasion tactic on any specific terms. I think it mostly accomplished what I was hoping but which you stated much better than I did: it’s industry standard and it’s a part of us managing portfolio risk responsibly.

Where I wholeheartedly disagree is with the characterization that we intended any disrespect to the community by sharing this info. Hope you can come to understand that as this discussion continues.

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Roger @Franklin-Pantera, I accept the apology and completely understand where you are coming from. And once again really grateful to have everyone here for an open discussion :slight_smile:

At the same time, I apologize for that reaction from my end, was just trying to prove a point, while at the same spilled uncalled-for saltiness from having to market buy SUSHI on dips with my humble stack. Way overstated. Sorry.

Onwards!!!

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Hi everybody! Long term lurker looking to give a bit of feedback on this important proposal. Btw, thanks @Franklin-Pantera and @amywu for responding to this proposal.

(1) I think the amount suggested is probably too high, as mentioned by many others, as Sushi will profit much more from the human capital provided by VCs rather than their funds. This is why a crawl-walk-run strategy suggested by @amywu makes a ton of sense for me.

(2) Also as mentioned by others, it is best in my opinion to focus on a few VCs that have these meaningful connections and have a solid track-record. This will avoid the kind of dump that other projects have experienced in the past.

(3) As far as valuation go, I think a discount is fair given the role these VCs will have in the governance and business development. In a certain sense, they are providing not only monetary value, but their expertise and connections and we have to account for that. They are probably also occurring additional costs versus retail investors. However, It feels to me like a fixed 30% discount does not reflect the free market values that should be favored in an open-space like crypto. As mentioned previously, Sushi does not need money, so why not do an auction and get a price that reflects the rationale of the most interested buyer?

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Hi guys, can @Wangarian provide an explanation why DeFiance Capital (defiactivist.eth) is dumping Sushi while responsible for putting together the VC list of “backers”?

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I highly suggest to remove Defiance Capital from the list. They are doing a clever arbitrage trade here by dumping SUSHI on spot markets, pushing the TWAP down and securing even better discount…

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Both @amywu (around ~20) and @Franklin-Pantera (around 100+) have valiantly mentioned their huge portfolio of crypto investments under their umbrella firm. Could you break us down on how you “strategically” assisted these invested companies (the ones similar to Sushi’s traction) apart from just investing? Can you throw more light on this topic? This would instil more confidence on knowing and planning what we get in return “strategically”?

I personally like to think that past behaviour can always be taken as one of the predictors for the future.

Totally agree with this!

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Long story short: allocate to funds who will have skin in the game.
It makes no sense to sell 3-4 millions worth of tokens to funds managing a few billions.
We’d better allocate said tokens to smaller institutional investors.
This or we cut the list drastically and choose 3-4 funds in order to give them a meaningful exposure to SUSHI (you can’t expect them to ‘add value’ if SUSHI amounts for <0.01% of their portfolio).


I also propose that whatever the total allocation is, at least 10% of it is offered to the community, in particular to the xSUSHI stakers.
The excellent Kanpai proposal by @yuan-han-li could be very useful in this situation.

Kanpai explained for 5 years old: a small % of trading fees isn’t used to buyback SUSHI from the SUSHI-ETH pair but is kept as “hard money” by the development treasury.

I proposed that instead of not buying SUSHI from the open market, SUSHI is bought back from the development treasury: this way we’re not only adding harder money to the treasury (thus diversifying the portfolio) but we’re also preserving xSUSHI APY (which would be hurt in @yuan-han-li 's original proposal).

If we do it my way, the Sushibar becomes a community-run fund.
We can allocate (as an example) 5M$ to the modified Kanpai proposal so that everyone will be able to buy SUSHI at the same discount VCs get simply by staking their SUSHI.
Notice how this creates a race for staked SUSHI which is only beneficial to the protocol, especially if paired with a reviewed tokenomics as per @andrecronje 's oSUSHI proposal.
I think both vesting and the discount can be added at the smart contract level.
Not a solidity engineer but it should be trivial.


On a sidenote: in my short trading experience I’ve noticed most VCs buy dogshit tokens.
This can only mean one thing: most of the times they don’t care about what they’re buying - I can’t believe they’re actually aligned with blatant scams.
We could and should do our own due diligence before allocating % of the development treasury to funds who flip discounts for a profit, with 0 added value.
I suggest we check not only the investments showed in their portfolio pages but also the untracked, ugliest ones.
If someone bought absolute dogshit there’s no way they will align with SUSHI.

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If VCs are getting 20-30% discount based on their promised “value add”, we need a quantitative way to assess their contribution over a timeline and change their % discount and vesting horizon.

Otherwise, just market buy and DCA. This gives VCs skin in the game, and why not contribute then to add value? Why give discount on unverifiable promises?

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Following up on Defiance Capital selling $SUSHI on DÈXes, I propose for each of the potential strategic institutional investors to disclose the history of their $SUSHI holdings. The last thing we need is them arbitraging this deal

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@GreenEyes , @Franklin-Pantera - Thanks for expressing your views, I think something should be clear:

The fact that selling liquid tokens from treasuries at discount has become “an industry standard”, is something the crypto industry should be ashamed of. Indipendently of the lockup, you’re just diluting current token holders. Also, most of the funds on the list have already disclosed positions in SUSHI, so the sudden necessity for a discount seems quite incoherent.

If Pantera or other funds have a liquidity issue then they have all the rights to arrange via the governance several OTC trades with the treasury, but at market price. The premise that great VCs should be granted discounts for an asset that is already tradable does not seem valid enough excuse.

At the end of the day, your LPs are paying you fees because among other things you’re supposed to do that “value add” work anyways.

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