SushiSwap May Overhaul its Entire Structure – The Defiant

A few weeks ago SushiSwap plunged into controversy when it moved to pay a prospective new “head chef” what many of its members deemed an exorbitant compensation package.

Turns out the drama was only just beginning at the $1.2B decentralized crypto exchange. 

Now SushiSwap’s community is backing a sweeping proposal to overhaul the project’s DAO, voting process, and revenue model. 

Losing Ground

The proposal is called Meiji Restoration and it aims to do nothing less than revitalize a DeFi project that has been struggling to find its footing after suffering a leadership crisis and losing ground to rivals such as Uniswap and Curve. SushiSwap’s token has dropped 85% this year compared to a 50% decline at Uniswap. 

The plan calls for a new DAO funded by protocol fees and directed by voting shares. It also seeks to introduce Curve-style Vote Escrow (VE) tokenomics in a bid to motivate tokenholders to lock their assets over the longer term. The idea is this would kickstart SUSHI out of the doldrums.

So far, SushiSwap’s members like what they see — on Aug. 11, the Meiji Restoration drew 88% of the vote in a preliminary governance poll. Further details relating to the proposal are expected to be finalized over roughly the next two weeks, after which the community will decide whether to proceed with the restructuring in a binding on-chain vote.

The episode is designed to end the crucible the exchange has been enduring for the last year. Months of infighting, leadership spills, and even a failed merger with the DeFi network Frog nation left Sushi’s core team in disarray. 

In response, SushiSwap’s community backed the Sushi 2.0 roadmap in May. It sought to establish its informal DAO as a legal entity and find a new head chef to lead the protocol. 

Moving Forward

But the Meiji proposal comes as the project is divided on how to install a new head chef and resolve Sushi’s long-running leadership crisis. 

Outcry that the candidate’s compensation is excessive has persisted despite the Sushi community narrowly voting to move forward with the hiring. Sources familiar with the matter told The Defiant the community may be polled concerning the candidate and their proposed compensation separately.

The trials and tribulations of SushiSwap have pulled back the curtain on one of the most critical challenges confronting DeFi protocols and the web3 ethos of decentralization — governance. Other projects are watching Sushi closely to inform how to navigate their own governance issues in the future. 

Neil Bhasin, one of two SushiSwap compensation committee members, told The Defiant that there is a lot he likes about the Meiji proposal. Yet he has reservations. 

“There are still a number of details needing to be worked out,” he said. He encouraged its authors to model the impact the proposal will have on SUSHI supply and demand dynamics.

SushiSwap is currently the fifth-largest DEX with a total…