SushiSwap Token Sale Proposal Was Upset, Quick View of the Community’s 5 Questions and Responses


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The SushiSwap token sale proposal may become one of the most classic proposals in the crypto community. Community members put pressure on the project team to modify the details of the proposal, and related venture capitalists publicly presented evidence to state their ideas and strategic values ​​to cater to the community.

Original Title: “SushiSwap Token Sale Proposal Leads to Community Questions, May Become a Classic Case of DeFi Governance | Chain Catcher”
Written by: Gong Quanyu

On July 8, 0xMaki, the co-founder of SushiSwap, issued a proposal on the official governance forum. As part of the treasury diversification plan, it is recommended that part of the approximately 51 million SUSHI currently held by SushiSwap Treasury be used for institutional investors, with a maximum sale size of 6000 Ten thousand dollars, the sale price is 20-30% of the time-weighted average price 30 days before the end of the proposal, and the attribution clause is a 6-month lock-up period and an 18-month linear release period.

Token sale price setting

At present, most of the assets held by SushiSwap Treasury are SUSHI, valued at more than US$300 million. This proposal aims to diversify the treasury assets and strengthen the strategic partnership with crypto venture capital institutions.

The proposal also revealed that currently confirmed strategic investment institutions include Lightspeed Venture Partners (hereinafter referred to as Lightspeed Venture Capital), Spartan, Dragonfly Capital, Polychain,, Pantera Capital, 3AC, DeFiance, Parafi, Hashed, Multicoin Capital, Coinfund, 21 institutions including CMS Holding.

However, due to the recent poor performance of SUSHI tokens and the improper details of the sale plan, the proposal has caused huge doubts in the SushiSwap community and continued to ferment. Almost 80% of the replies are opposed to the proposal. In response, many crypto venture capital institutions, such as Lightspeed Venture Capital, Pantera Capital, and DeFiance Capital, explained the doubts under the proposal, and many indirect participants such as FTX founder SBF, Arca Capital partners, UMA protocol developers, etc. Participate in discussions on this topic.

At present, the number of responses to this proposal in the SushiSwap governance forum has reached 201, making it the most discussed proposal in the history of the project. Specific to the disputes caused by this proposal, it can be summarized into 5 points.

One of the doubts is that the SushiSwap vault has sufficient funds and annual operating expenses are less than $1 million, so there is no need for such a large-scale token sale. A user named “GreenEyes” pointed out that “Sushi should not raise funds now and start a fund diversification plan. At present, its income is temporarily sufficient to cover all operating expenses. As DeFi regains the strong traction of public market valuations, SUSHI fundamentals continue Increase, and the new agreement is upgraded and runs smoothly. We can sell tokens on a small scale many times during the rise, or even just start to diversify our investment and use the treasury internally.”

Regarding this topic, 0xMaki stated that the main purpose of this token sale is to establish more strategic partnerships, indicating that these partners can act as advocates for their investment portfolios to promote projects that have not yet issued tokens to be launched on Miso and basically Integration with the Sushi ecosystem.

The second question is that the discounted price of 20-30% is too high, which has further harmed the interests of SUSHI holders in the context of the recent sharp drop in SUSHI prices. Jeff Dorman, a partner at Arca Capital, said that SUSHI’s current transaction price is lower than its fair value and it is definitely not the time to sell.

“Given the vibrant community, project fundamentals, and a large number of “strategic” investors who are interested in financing, the market for SUSHI tokens is clearly strong. If the future of Sushiswap is so optimistic, then investors should buy SUSHI, give up the discount, and add the claimed “strategic value.” “Jeff Dorman said.

In this regard, Franklin Bi, Pantera Capital’s portfolio development director, said that if the Sushi team sells all SUSHI that it plans to sell on DEX at market prices, there will be a 30% slippage impact. This transaction will make the team 20-30 The% discount immediately obtains 60 million US dollars of liquidity, and there is a 2-year restriction period, so the discounted price is still fair.

However, many members of the SushiSwap community did not approve of this response, because the SUSHI/ETH transaction pair actually exemplified by Franklin Bi only accounts for a small part of SUSHI’s overall liquidity, so it is not representative and convincing.

The third question is that the linear unlocking period of the past two years is still too short. If these institutions are optimistic about Sushi’s long-term potential, they should set a longer unlocking time. According to a poll initiated by 0xMaki, 60% of community users believe that a four-year unlock time should be set.

SushiSwap Token Sale Proposal Leads to Community Questions, May Become a Classic Case of DeFi Governance | Chain Catcher Source: SushiSwap Governance Forum

In addition, many community members have proposed that tokens should be sold in the form of options, that is, only when the price of SUSHI reaches a certain price, venture capital institutions can unlock their tokens. SBF also tweeted that he believes that it is the right move to sell at the market price + increase the strike price of a 1:1 option of $12 and a maturity of 5 years.

The synthetic asset agreement UMA also proposed a new token financing solution, Success Token, which integrates the project’s own token with the call option of the project’s token, which means that the project party is asking investors Offer call options instead of offering discounts to sell tokens. The part of the call option is only valuable after the price of the project’s tokens rises, so that a more reasonable incentive mechanism is set up: investors can only get their “bonus” when the project performs well.

The fourth question is that there are too many venture capital institutions participating in this transaction, which in fact cannot bring enough strategic value, or the strategic value and value-added services they provide are similar. A user named “klemperer-the-goat” pointed out, “If the purpose of the sale is for a strategic partner rather than to raise funds, it would be absurd to add 21 funds. Many of these funds also know each other and are all Well-known funds that focus on cryptocurrencies, are the value added by each of them really different from each other?”

Most of the community members have this question, and said that 3-5 major venture capital institutions can participate. Institutions willing to participate in the transaction should publicly express the strategic value and specific contribution that the institution can bring to Sushi, and finally make a choice. “I will ask every investor to promise to write at least one public post/tweet, etc., in each quarter for the next 4 years: a) update Sushi for the general audience; b) what they are doing/help A list of things to do.” SBF tweeted.

Below the proposal post, many venture capital institutions also elaborated in accordance with public opinion. For example, Amy Wu, partner of the well-known venture capital institution Lightspeed Venture Capital, replied that from the perspective of product, vision and execution, Sushi is the top team in the DeFi industry One of them, so I hope to establish a long-term relationship with the Sushi team and the community, and the institution can introduce various financial technology products and new banks to the Sushi team and the community, expand Sushi’s network outside the crypto industry, and at the same time in recruitment, public relations, and marketing. , BD and other aspects to help Sushi.

Franklin Bi, director of portfolio development at Pantera Capital, introduced the institution’s history and philosophy in a reply, and said that the institution can be used in recruitment, portfolio/industry connectivity, technology/market research, marketing, resources/suppliers, etc. Help Sushi.

The Future Fund replied that the institution was one of SushiSwap’s early investors and had purchased the domain name and gifted it to the project.

The fifth question is that some of the venture capital institutions listed in the proposal are even hurting the Sush community. According to Etherscan data, some community members pointed out that while planning to participate in the transaction, 3AC and DeFiance have sold nearly a million SUSHI on DEX and Binance in recent days, and they are not eligible to become strategic supporters of Sushi. “This looks more like arbitrage trading, rather than a strategic long-term investment.” Jeff Dorman said.

SushiSwap Token Sale Proposal Leads to Community Questions, May Become a Classic Case of DeFi Governance | Chain Catcher

SushiSwap Token Sale Proposal Leads to Community Questions, May Become a Classic Case of DeFi Governance | Chain Catcher

SushiSwap Token Sale Proposal Leads to Community Questions, May Become a Classic Case of DeFi Governance | Chain Catcher Source: Etherscan

Wangarian, a partner at DeFiance Capital, responded that DeFiance is an early supporter of Sushi and one of the largest SUSHI holders at present, but as a crypto investment fund holding a liquid position, “Our job requires us not only to buy tokens.” , And sell them occasionally. We don’t think it is necessary to explain to the public every action we take.”

Wangarian also stated that DeFiance will not participate in the financing to eliminate any concerns about conflicts of interest. “We hope that the Sushi community will recognize the benefits of large stablecoin-denominated vaults, which will provide the SushiSwap team with meaningful financial firepower in the coming years.”

In addition to the aforementioned doubts, due to the fact that the DeFi Education Fund obtained 1 million UNI through Uniswap community voting a few days ago, but it quickly sold off, some SushiSwap users have also reconsidered and worried that venture capital institutions are abusing governance for their own benefit.

“After the UNI Education Fund, we got this proposal in such a short period of time. I want to say that it is no coincidence that venture capital funds realize that they can abuse governance for their own purposes. Just open a governance proposal and make it look at It’s legal, and VC can use their huge SUSHI position to vote for them every vote.” A user named “Wunderbernd” replied, “There is no mechanism to ensure that VC truly fulfills its promise. They can offer discounted prices. Get SUSHI without actually being forced to do anything. This is again similar to the DeFi Education Fund. They get the money and they can do whatever they want.”

On July 16, 0xMaki replied in a proposal post that according to the overall response of the community, the transaction size will be reduced from 60 million US dollars to 15-20 million US dollars, and a number of votes have been launched on the details of the token sale.

“It is rare to see this degree of interaction between institutions and community governance, and how these institutions interact with the DAO through open discussions at critical moments .” 0xMaki also commented on the significance of this event.

Perhaps due to the influence of community activity, the price of SUSHI token today rose by about 16% as the overall market fell. It was quoted at $7.04 as of press time, but it was still down by about 68% from the high point during the year.

At present, the discussion on the proposal is still further fermenting, and many industry celebrities such as Uniswap founder Hayden Adams, Compound founder Robert Leshner, YFI founder Andre Cronje, Messari founder Ryan Selkis, BlockTower Capital founder Ari Paul, etc. Talk about this in particular.

Regardless of the final outcome of the proposal, SushiSwap’s token sale proposal has become one of the most fully discussed proposals in the crypto community. Community members have exerted large-scale pressure to force the project party to modify the details of the proposal, and the relevant venture capital institutions of the plan have publicly provided evidence statements. Its philosophy and strategic value to cater to the community may become one of the most classic cases in the history of DeFi governance.

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