SushiSwap (SUSHI) CEO Introduces New SUSHI Tokenomics: What Does It Mean for Investors?

The newly redesigned SUSHI tokenomics aims to provide a “long-term value for token holders and liquidity providers.”

Jared Grey behind a human hand holding sushi with chopstics
  • SushiSwaip (SUSHI) CEO Jared Grey has introduced a redesigned tokenomics model for SUSHI.
  • It will allow xSushi stakers to earn emissions-based rewards in time-locked tiers. 
  • Liquidity providers will be able to receive a portion of the 0.05% swap fee and earn extra emissions-based rewards.
  • The redesigned tokenomics will also burn a fluctuating percentage of the 0.05% swap fee plus the staking and LP rewards that are pulled out from the programs prematurely.
  • Another portion of the 0.05% fee will be used to support the price of SUSHI.

Redesigned Tokenomics Explained

SushiSwap (SUSHI) CEO Jared Grey has introduced a new tokenomics model for the decentralized exchange’s native token SUSHI.

“We propose a new token model that will help Sushi achieve [our] goals and, in addition, help bolster Treasury reserves to ensure continual operation and development. The proposed token model is robust and offers several tried and true methods for promoting value and utility. In addition, we institute novel concepts to help promote maximum value for all stakeholders,” Grey said in his proposal.

Grey’s new tokenomics redesign, posted on SushiSwaip’s governance forum, proposes several new things. First, xSushi stakers will no longer receive fee shares but will earn emissions-based rewards in time-locked tiers. The longer the time lock, the bigger the rewards. Stakers can remove their collateral before maturity but lose their accumulated rewards.

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Second, liquidity providers (LP) will receive a portion of the 0.05% swap fee and can earn extra emissions-based rewards if they lock their liquidity. LPs lose their rewards if they exit before maturity.

Third, the newly proposed tokenomics will feature token burn mechanisms. A fluctuating percentage of the 0.05% swap fee will be used to buy SUSHI and then burn it. The rewards removed prematurely from staking and LP programs will also be burned. Another portion of the 0.05% fee will be used to lock liquidity and support the price of SUSHI. 

Finally, the new tokenomics aims to reduce SUSHI inflation by lowering the annual percentage yield (APY) for SUHSI to 1-3%.

The redesign comes after the SushiSwap team reported last month that it had only 1.5 years’ worth of runway left in its treasury. Grey said at the time that a tokenomics redesign, together with other new changes like adopting a new DAO structure and redirecting stakers’ rewards to the treasury, would be needed to “save the project.”

How Will SUSHI Token Holders Benefit?

The new tokenomics, according to Grey, will help accrue value to SUSHI holders through a “holistic and sustainable reward mechanism that scales with volume and fees.”

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“Ultimately, our goal is to help provide long-term value for token holders and liquidity providers without extractive qualities and detriment to either party. This new model promotes a holistic and sustainable value that scales with the DEX while boosting deeper liquidity to help revitalize the Sushi ecosystem,” he said.

Such features as token burns and emissions-based rewards in time-locked tiers incentivize users to accumulate SUSHI tokens and hold them for bigger rewards. The new tokenomics may revive the SUSHI token, which fell off a cliff last year.

SUSHI is currently trading at around $0.95, according to data from CoinGecko. That’s a 96% drawdown from its all-time high of $23.38, which the token reached in March 2021.

The new tokenomics might also help revive SushiSwap in terms of usage. The decentralized exchange is currently only eleventh in terms of 24-hour volume, with around $8.5 million going through it, according to DefiLlama. In terms of total value locked (TVL), SushiSwap ranks seventh with $387 million, below such exchanges as Tron-based SUNSwap, GMX, and Balancer.

On the Flipside

  • The community still needs to conduct a vote to adopt the new tokenomics.
  • The proposed tokenomics are still subject to discussion and changes.
  • Not everyone in the community agrees with the redesigned tokenomics.

Why You Should Care

SushiSwaip has tried to revive its decentralized exchange for a few months. The newly redesigned tokenomics might be the thing that propels SUSHI and, subsequently, the adoption of the exchange. Users should study the new tokenomics proposal and see if it makes sense to invest in the token.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Arturas Skur

Arturas Skur is a cryptocurrency news reporter at DailyCoin who covers Web 3.0 domains, DeFi, and Ethereum Layer-2s. With over five years of experience in journalism and public relations, Arturas brings his critical thinking and analytical abilities to deliver insightful news stories. In his free time, he enjoys hiking, playing with his dog, and reading.