SushiSwap Creates Sushi Labs Council and Multi-Token Model

Decentralized exchange SushiSwap is introducing a “multi-token” model and creating a new “council structure” dubbed Sushi Labs, to operate alongside the protocol’s decentralized autonomous organization (DAO).

The new organization will be an autonomous administrative firm tasked with managing and overseeing the entire Sushi ecosystem. Sushi has pivoted from its previous model due to “cumbersome governance,” according to the pseudonymous Sushi developer Jiro, which will hopefully now see an unhindered growth scheme.

The proposal, which was put forward on May 26, sparked heated debate. It was approved on June 11 with 19 million (98%) votes in favor and 230,000 against.

The shift aims to revive a struggling protocol. SushiSwap’s Total Value Locked (TVL) has slid to $295 million from its peak of $8 billion in Nov. 2021. It now ranks 69th in TVL out of all DeFi protocols, and 10th in the DEX category, according to DeFiLlama. Uniswap leads the DEXs pack, with $6 billion in TVL.

“Sushi Labs is designed to complement Sushi DAO, drive faster, more efficient development, and help us stay ahead in the competitive DeFi landscape,” wrote the team on a blog post yesterday.

Tokenomics Overhaul

Sushi Labs will overhaul Sushi DAO’s tokenomics. The newly created organization will mint 25 million tokens to support its grant request from SushiDAO, along with introducing a 1.5% APR to bolster liquidity, incentivize participation, and fortify the Treasury, the initial proposal read. The new organization will also be the sole recipient of any future airdrops earmarked for Sushi.

The market continues to react favorably to the news. SUSHI, the protocol’s native token, has rallied 4% to $0.99 since the change was announced. SUSHI is down 5% in the past 30 days and up 77% this year.

Sushi Labs will be organized in a council-like structure with four main bodies: the Sushi High Kitchen, the Treasury Council, the Grants Council, and the Ambassador Council. Integrated with six to eight members, the “High Kitchen” will be the central governing body for the protocol, along with handling a multi-sig wallet set up for transactions.

The structure is similar to that of derivatives protocol, Synthetix, which is divided into seven groups.

SushiSwap was born as the more decentralized version of Uniswap. But four years after its launch, the leadership team is signaling it needs greater centralization to continue growing.