SushiSwap recently passed a controversial governance proposal called “Evolving Sushi – Burū no Shinka” (Sushi Evolution – Blue Evolution) on April 10th, 2023, local time in the United States.
The proposal suggests that SushiSwap, like other decentralized protocols, establish an autonomous entity called “Sushi Labs” to oversee operations, protocol development, and the management of Sushi’s ecosystem. The existing decentralized autonomous organization (DAO) called Sushi DAO would transition to on-chain governance, only responsible for overseeing the treasury and token supply.
Additionally, the proposal requests that Sushi DAO grant 25 million of its native token, $SUSHI (worth approximately $35 million), to Sushi Labs and transfer approximately $53 million in assets from the Sushi ecosystem to Sushi Labs’ control. Furthermore, Sushi Labs would become the sole recipient of $SUSHI provided by future protocols, partners, or airdrop rewards.
In summary, the proposal aims to transfer most of the funds currently controlled by the DAO to the newly established treasury of Sushi Labs, leaving Sushi DAO with only supervisory control over the funds.
According to the proposal’s proponent, Jiro, the proposal aims to restructure the current SushiSwap organization to improve flexibility, operational efficiency, and accelerate protocol development.
In a signal vote that ended on April 10th, more than 62% of voters supported the new proposal. As of the deadline, approximately 83% of voters are in favor of the plan, and the final vote will conclude on April 17th.
However, similar to previous controversial incidents involving SushiSwap, this vote has sparked intense debate within the community, with accusations that the core team manipulated the voting results.
The community points out three clues and accuses the operations team of manipulating the vote:
Clue 1: Before the vote, a large number of new wallets received $SUSHI tokens. Naïm Boubziz, a former contributor to SushiSwap, discovered through on-chain data that many newly created wallets received $SUSHI tokens just before the snapshot for the vote, and these tokens were subsequently withdrawn from these wallets shortly after the snapshot. This behavior raised suspicions within the community about the manipulation of voting power and results by the core team.
Clue 2: The “signal vote” to test community sentiment and the formal “implementation vote” were presented simultaneously. Typically, there are two stages for a proposal, with the first stage being the deployment of a signal vote to gauge community response. If the signal vote is approved, the second stage involves the design of the implementation vote to formally execute the proposal’s content. It is uncommon for the signal vote and implementation vote to occur simultaneously. This raised concerns within the Sushi community that the core team was confident their proposal would pass, thereby preventing community members from utilizing the time difference to fundraise and acquire more voting power.
Clue 3: The core team took $SUSHI tokens from the treasury and voted for themselves. A community member named “savesushiswap.eth” discovered that the SushiSwap core team’s operational wallet recently withdrew 4,000,000 $SUSHI tokens from the SushiSwap multisig treasury and voted for themselves. This is the first time in SushiSwap’s history that the operational wallet has participated in voting. The substantial number of $SUSHI tokens held by the operational wallet gives the core team overwhelming influence and raises questions about the legitimacy of the vote.
In response to community criticism, Jared Grey, the “chef” of SushiSwap, explained that the operational team instructed the use of funds from the operational wallet to vote in order to prevent hostile takeovers by other protocols. Grey blamed the DAO’s excessive ambitions for the limitations and delays in the product development roadmap, suggesting that the proposal’s approval would help Sushi Labs attract more talent to compete with strong rivals like Uniswap and 1inch.
The SushiSwap community is concerned about the excessive concentration of power within Sushi Labs, which would undermine the decentralized principles that SushiSwap has always championed. The core team’s manipulation of the vote has raised concerns about the transparency of future governance, fair allocation of resources, and long-term impact on the SushiSwap community.
The implementation vote for the proposal is currently ongoing, with approximately 83% of voters in favor as of the deadline. The vote will conclude on April 17th.