According to a governance proposal from the project developers, Sushi, a decentralized finance (DeFi) protocol, is dealing with a sizable deficit in its treasury that jeopardizes its long-term operational viability.
The annual runway requirement for the project was lowered from $9 million to $5 million after reviewing expenditures, but the treasury still only covers about 18 months of runway, according to the developers.
Sushi’s token supply has already been distributed almost entirely, and the company has yet to take advantage of chances to diversify its Treasury and supply the necessary liquidity for ongoing operations. There is currently 1.5 years of runway provided by the Treasury. As a result, action must be taken right away to ensure that there are enough resources for continuous operation.
Sushi developers propose a fee-diversion protocol
Lead developer Jared Gray suggested that Kanpai, a protocol for fee-diversion, be set to 100% of fees diverted to the Treasury multisig for a year, or until new token distribution and reward schemes are implemented, to address the deficit.
The proposal only addresses a short-term issue; new tokenomics will take some time to implement, according to developers.
Community members’ responses to the proposal were conflicted. Others criticized the “sensationalized” tone used by developers to emphasize the urgency of the situation, while some claimed that depriving users of the “fees they are entitled to” felt like a breach of the project’s main objections.
However, the proposal, according to the developers, is intended to guarantee the long-term operations of sushi.
“Bear market environments present multiple challenges for projects and teams, and recently, we’ve seen many notable projects lay off substantial personnel or go bankrupt.”“It makes little sense for Sushi to follow a similar path when it has an opportunity to capture its singular significant source of revenue and direct it back to the treasury for the benefit of all.”
Grey stated in the proposal
Kanpai, according to Grey is a short-term fix for a long-term issue, and a new tokenomics proposal is in the works that will help stakeholders better understand the long-term value proposition of sushi.
Grey warned that depending on such business development deals is only “part of a successful business model to secure Sushi’s future” and that the Sushi team had continued to increase its financing by obtaining several multi-million dollar partner deals.