The SushiSwap decentralized exchange has plans to entice venture capitalists and institutional investors by using its treasury funds, but the community isn’t pleased.
The proposal was made by developer 0xMaki last week and has turned into a heated controversial debate. DeFi protocols by nature are supposed to be decentralized, so luring VCs to the protocol using its treasury as a carrot is, in essence, the complete opposite of this notion.
The proposal intends to use up to $60 million, or 25% of the treasury, to onboard institutional investors. It wants to offer a discount of 20-30% for the tokens to be locked up in an 18-month vesting period. Purchased SUSHI will be converted into xSushi and will receive xSushi yields while vesting, it added.
The funds will be offered to 21 venture capital and DeFi companies if the proposal is passed.
Centralizing the DEX
The concept has yet to be put forward for a governance vote and is still being discussed. A large portion of SUSHI token holders is now pretty disgruntled that the protocol wants to offer discounted tokens to whales.
Uniswap founder Hayden Adams also expressed his disagreement with the proposal saying that he would vote ‘no’ if he could vote.
“While I think it’s fine to raise money from VCs, this feels like it goes against strong expectations set by SUSHI community.”
He added that he has received “hundreds/thousands” of messages and notifications from SUSHI community members about how bad it is to raise money from VCs, adding “After all that, a VC raise from SUSHI feels hella lame tbh.”
This is the same Hayden Adams that recently blocked someone for questioning transparency on his own platform, Uniswap.
SushiSwap was one of the first projects with no VC money before launch and therefore have no VCs in its token distribution. Those that approve of the proposal also wanted a longer vesting period and a lower discount.
On July 15, 0xMaki polled the community to get their initial reactions and 62% voted negatively while 38% were positive in their response to the proposal.
SUSHI price retreating
SUSHI tokens are still in decline with a further 5.8% shed on the day according to CoinGecko. At the time of press, SUSHI was trading at $6.68 after losing 16% over the past week.
The DEX governance token is trading down 71% from its all-time high of $23.38 in mid-March. The protocol has also lost 54% of its collateral since its peak and total value locked (TVL) is down to $2.6 billion according to DappRadar.