Head Chef Sushiswap Announcing Redesign The Tokenomics To Revive The Protocol
- Staked sushi (xSushi) would no longer get trading fee income incentives, but rather emission-based benefits paid out in sushi.
- The sushiswap final update would alter the emissions to 1-3% APY for the sushi token.
- Non-sticky liquidity allows users to stake money, receive incentives, and obtain an optimal ROI even if they are not LPs.
The “Head Chef” of the decentralized exchange Sushiswap, Jared Grey, suggested altering the tokenomics of the exchange in an effort to revive the protocol after a tough year.
The improvements that are being considered aim to boost stakeholders’ value, expand liquidity, and provide its native token sushi additional uses while neither eroding the value of existing token holders nor jeopardizing the protocol’s financial stability. According to Grey, Sushiswap presently has a runway of just 1.5 years.
Like the original xSushi model hoped to achieve, the new model’s primary goals are to foster decentralized ownership and reward liquidity growth via a holistic and sustainable reward mechanism that scales with volume and fees. Sushi’s new token model brings LPs to the forefront of the reward mechanism, generating greater liquidity so we can leverage our unique Trident framework and upcoming aggregation router to scale swap volumes.According to the proposal
The proposal lists four significant modifications to the tokenomics of the protocol.
One of the most significant suggested modifications is that staked sushi (xSushi) would no longer get trading fee income incentives, but rather emission-based benefits paid out in sushi. The liquidity providers of trading pools with the highest volume will earn the bulk of swap fees, as well as increased benefits based on a new time-lock implementation that they can opt into.
A certain amount of trading fees would also be utilized to purchase and burn sushi from the open market, as well as to lock in liquidity for further price support.
In order to limit inflation and balance the total emissions with the buy-backs, burns, and locked liquidity utilized for price support from trading fees, a final update would alter the emissions to 1-3% APY for the sushi token.
Its present model encourages non-sticky liquidity, allowing users to stake money, receive incentives, and obtain an optimal ROI even if they are not LPs. Sushi discovered from historical data that its present xSushi architecture permits xSushi stakeholders to get a disproportionate rate of incentives compared to liquidity suppliers.
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