DeFi Protocol SushiSwap Proposes 'Immediate' Action to Support Its Treasury

SushiSwap, a decentralized finance (DeFi) protocol, is facing a significant deficit in its treasury that threatens its long-term operational viability, according to a governance proposal from project developers.

After reviewing expenditures, the project's annual runway requirement was reduced from $9 million to $5 million, but the treasury still provides for only about 18 months of runway, developers said.

To address the deficit, lead developer Jared Gray proposed setting Kanpai, a fee-diversion protocol, to 100% of fees diverted to the Treasury multisig for one year, or until new token distribution and reward schemes are implemented.

The proposal is a temporary solution to a long-term problem, and new tokenomics will take time to implement, developers said.

Community members showed mixed reactions to the proposal. Some said that depriving users of the “fees they are entitled to” felt like a breach of the project’s primary objections, while others criticized the “sensationalized” tone used by developers to highlight the urgency of the situation.

Developers, however, maintain that the proposal is to ensure the long-term operations of SushiSwap.

“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,” Gray noted in the proposal.

“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,” he added.

The Sushi team had increased its funding by securing several multi-million-dollar partnership deals, Gray said, cautioning that relying on such business development deals is only “part of a successful business model to secure Sushi’s future.”