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SushiSwap Rebrands and Launches New Business Model with Sushi Labs

Sushiswap

After the heated exchanges that lasted for quite some time, distributed exchange SushiSwap has introduced a new brand and business model to the platform. Sushi Labs is the name of the distributed autonomous organization (DAO) that opens up to a “council structure.”

Introduction of Sushi Labs

The protocol introduced Sushi Labs on June 11, which is an independent governing, technological, and operational unit responsible for the management of the Sushi ecosystem. Proposed in March, the revamp was intended to respond to “user needs and market expectations,” especially the slow reaction of the protocol to market changes due to “clunky governance.”

The new Labs model is developed by four councils: the Sushi High Kitchen, the Treasury Council, the Grants Council, and the Ambassador Council. It will operate under a council structure similar to that of the Synthetic protocol. Consisting of six to eight members, High Kitchen is the primary governing body for the protocol and will supervise a multisignature solution for any operation.

Addressing Liquidity and Growth Issues

Some people attributed the slow growth of Sushi and problems with AMM liquidity to LPs’ migration to other DEXs in search of higher returns. But with the new organizational structure, sufficient funding, and the adoption of popular products such as Route Processor, we can work on enhancing liquidity on the Sushi DEX, said Jared Grey, the managing director of Sushi Labs, in a note to the Sushi community.

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Sushi Labs, which consists of 25 million SushiSwap tokens, will control the multimillion-dollar budget of the DAO. Tokenholders will not be involved in the daily running of the organization; they will still be able to vote for the distribution of the Treasury.

Financial Performance and Future Prospects

Sushi earned $270,500 in revenue in May and charged $1.62 million in fees, as reported by DefiLlama, which is far less than what the project made during the previous bull cycle. Having paid fees of $86.24 million, Sushi made $14.37 million in May 2021.

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A multitoken product suite is another sign of evolution. Sushi promises that it will allow tokenholders to have more options for rewards and assist in the distribution of goods’ expenses. This also means that a multi-token ecosystem reduces the chances of Sushi token inflation and reduces the burden of funding DAO projects, especially when products are not profitable.

Criticism and Financial Challenges

The new paradigm has recently been criticized and despised due to the centralized structure it has. Earlier, similar accusations of a hostile takeover of the project had been made by community members. One Sushi DAO member in the governance forum commented: “It looks like Sushi DAO is at the end of the road.”

As early as in 2022, Grey drew attention to the fact that SushiSwap faced a $30 million loss in liquidity provider incentives. Since then, the project has been in a rather tough financial situation and has had to alter its tokenomics. The distributed exchange also revealed in December 2022 that it had a remaining operational runway of 1.5 years, leading to a new focus on its treasury and liquidity management.

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