24 Jan 2023
To Strengthen Treasury, DeFi Protocol Sushi Passes Two Governance Votes
There is a larger strategy to ensure the project's longevity, and the separate proposals passed in the past two days by voters in the Sushi community are all part of that strategy
Two proposals seeking to improve the treasury and the long-term viability of the decentralized finance (DeFi) service were put to the vote by token owners from the Sushi community. In separate votes, token owners who staked sushipowah and xSushi—two Sushi ecosystem tokens—on Sushi's governance forums approved both proposals. Sushi uses smart contracts, like other DeFi applications (dApps), to offer users financial services like trading, borrowing, and lending.
It was one of the first dApps, and as of Tuesday, it had over $459 million in tokens locked up, down from a peak of $7.5 billion for all time in 2021.
The “Kanpai” proposal sought to return unclaimed sushi tokens from a distribution held in 2021 to the treasury. The other attempted to redirect all trading fees from xSushi holders to the treasury. Users who staked tokens on the trading platform SushiSwap received xSushi tokens, enabling them to earn 0.05% from each trade. 10% of this money went to the SushiSwap fund. But as a result of Monday's proposal decision, all fees will be paid to the Treasury in full, leaving no rewards for owners of xSushi.
Until Dec. 19, 2023, when this model expires, the community is expected to propose and approve a new rewards distribution model. Kanpai was described as a “temporary solution to a long-term problem” by its creators in a previous statement.
The 8.2 million SUSHI, or just over $11 million at the time of writing, that was initially given to early liquidity providers (LPs) during the launch of SushiSwap in 2020 was approved by the Sushi DAO community. LPs are individuals or organizations that provide resources to any dApps in exchange for a share of the fees made from transactions made through that dApp or connected goods. Over two-thirds of the rewards accrued during the first six months after SushiSwap's launch were locked up and vested for an additional six months as SUSHI tokens for LPs.
Over 8.2 million SUSHI were still unclaimed, even though these tokens were fully unvested the previous year. The Sushi community then proposed claiming these unclaimed tokens to strengthen its treasury, and successfully voted favorably.
LPs have until April 23 to claim the tokens if they so choose. After that time, all unclaimed tokens will be delivered to the Treasury.
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