According to a new Twitter post by SushiSwap CEO Jared Grey, the decentralized exchange, or DEX, experienced a $30 million loss in the past 12 months on incentives for liquidity providers, or LPs. As explained by Grey, SushiSwap currently employs a token-based emission strategy to incentivize LPs, but the current rate is "unsustainable."
Moving forward, Grey plans to rework SushiSwap's tokenomics so that LPs are no longer subsidized with emissions and redesign the entire model of bootstrapping liquidity on the exchange. " In Q1 2023, we will bring innovation to scale swap volume & prioritize TVL. As LPs experience a more profitable swap experience, others should migrate to Sushi," wrote the DEX executive.
A Sunday @SushiSwap thread. I want to readdress the chatter regarding the Kanpai proposal & highlight upcoming tokenomics improvements. I want to emphasize key factors in Sushi's business model & how we plan to improve it in Q1 '23. 1/
Grey also turned his attention to promoting the "Kanpai" governance proposal, which will divert trading protocol fees earned as rewards from SUSHI stakers into the SushiSwap treasury. Previously, Grey disclosed that the SushiSwap treasury had only 1.5 years of runway left.
Curiously, Grey has remained opaque concerning the design of the new SushiSwap for now, stating that he will provide "full financial transparency by releasing public dashboards for DAO & Treasury activity" in Q1 2023. When pressed by a community member on the matter, Grey responded:
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