SushiSwap, the well-known decentralized exchange, has rebranded and restructured itself as Sushi Labs, moving away from its previous decentralized autonomous organization (DAO) model. This change aims to streamline operations and better respond to market demands.
On June 11, Sushi Labs was introduced as an autonomous company responsible for the administrative, technical, and operational aspects of the Sushi ecosystem. This new structure replaces the DAO with a council model, intended to address the inefficiencies and slow responses that plagued the previous governance system.
The council structure will consist of four main councils: the Sushi High Kitchen, the Treasury Council, the Grants Council, and the Ambassador Council. The Sushi High Kitchen, the central governing body, will include six to eight members and oversee transaction management through a multisignature (multisig) setup.
Jared Grey, the new managing director of Sushi Labs, emphasized the potential benefits of this new structure in a memo to the Sushi community. He pointed out that liquidity providers (LPs) had been migrating to other decentralized exchanges (DEXs) in search of better yields, which contributed to Sushi’s stagnation. Grey believes that with a clear organizational structure, adequate budget, and successful products like the Route Processor, Sushi Labs can improve liquidity on the Sushi DEX.
Sushi Labs will inherit the DAO’s substantial budget, which includes 25 million SushiSwap (SUSHI) tokens. Although tokenholders will retain the ability to influence treasury allocations, they will not be involved in the day-to-day operational decisions.
Recent financial data highlights the challenges Sushi has faced. According to DefiLlama, Sushi generated $1.62 million in fees and $270,500 in revenue in May, a significant drop from its peak performance during the 2021 bull cycle when monthly revenue reached $14.37 million from $86.24 million in fees.
A significant change accompanying the new structure is the introduction of a multitoken product suite. This move is designed to distribute product costs and offer more reward opportunities for tokenholders. The multitoken ecosystem is expected to reduce the risk of Sushi token inflation and alleviate financial pressures when products are not profitable.
Despite the potential benefits, the new model has sparked debate within the community. Some members have criticized the centralized nature of the new structure, accusing it of a hostile takeover. One member on Sushi’s governance forum remarked, “It appears that Sushi DAO is at the end of its journey.”
SushiSwap has been dealing with financial difficulties since 2022, when Grey highlighted a $30 million loss in liquidity provider incentives, necessitating a revision of its tokenomics. By December 2022, the DEX revealed it had only 1.5 years of operational runway left, prompting efforts to diversify its treasury and enhance liquidity management.
Summary Review: SushiSwap’s transformation into Sushi Labs and the introduction of a multitoken ecosystem mark significant steps toward revitalizing the platform. These changes aim to address past inefficiencies and financial challenges, paving the way for a more robust and responsive future.
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