Sushi Labs, formerly SushiSwap, is now an independent business that has supplanted the decentralized autonomous organization inside the ecosystem.
Decentralized exchange completes months of contentious discussion To its ecosystem, SushiSwap has brought a new brand and business strategy. The modern era’s Sushi Labs is characterized by a “council structure” rather than a decentralized autonomous organization (DAO).
In order to oversee the Sushi ecosystem, the protocol established Sushi Labs on June 11. This independent firm will handle administrative, technical, and operational tasks. Implemented for the first time in March, the redesign aimed to address “market needs and user requirements,” such as the protocol’s inflexibility un adapting to changing market conditions caused by “cumbersome governance.”
There will be four councils in the new Labs model, just like there are four councils in the derivatives protocol Synthetix. These are the Sushi High Kitchen, the Treasury Council, the Grants Council, and the Ambassador Council. The protocol’s core governing body, High Kitchen, which consists of six to eight members, will supervise a multisig configuration for transactions.
People think that LPs are leaving Sushi for other DEXs in search of greater returns, which is why the company’s growth has stalled and AMM is having liquidity problems. Nevertheless, Jared Grey, who is now the managing director of Sushi Labs, informed the Sushi community in a note that the company has the resources to increase liquidity on the Sushi DEX, thanks to its reorganized structure, enough funding, and successful products such as Route Processor.
The twenty-five million SushiSwap tokens that make up the DAO’s multimillion-dollar budget will be inherited by Sushi Labs. While they will not be engaged in day-to-day operations, tokenholders will retain voting rights over treasury allocations.
Data from DefiLlama shows that in May, Sushi made $1.62 million in fees and $270,500 in income, which is a significant drop from how it did during the last bull cycle. With fees totaling $86.24 million, Sushi’s May 2021 income was $14.37 million.
A multitoken product suite also brings up another shift. Sushi claims it will help spread product prices and provide tokenholders with additional possibilities to earn rewards. There would be less financial pressure on the DAO to finance efforts even when items aren’t lucrative, and the danger of Sushi token inflation will be lower in a multi-token environment, according to the statement.
The new model’s centralization has been the subject of controversy and criticism in recent months. Earlier, members of the community had claimed that the protocol was attempting a hostile takeover with the plan. The Sushi DAO seems to have reached its final destination, according to a member of the Sushi community who posted on the governance forum.
Ever since Grey forewarned of a $30 million loss in liquidity provider incentives in 2022, causing SushiSwap to revise its tokenomics, the company has been experiencing financial difficulties. After disclosing that its operating runway was only 1.5 years in December 2022, the decentralized exchange redoubled its efforts to diversify its treasury and enhance its liquidity management.
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