BlocksInform
Jared Grey, CEO of the decentralized exchange Sushiswap, has plans to redesign the tokenomics of the SUSHI token, according to a proposal introduced on Dec. Thirty at the sushi hall.
Under the proposed new Tokenomic model, temporal lock levels will be put in place for emissions-based rewards, as well as a token-burning mechanism and a liquidity lock for price support. The new Tokenomics aims to increase liquidity and decentralisation in the platform, as well as strengthening "cash reserves to ensure continued functioning and development," noted grey.
Under the proposed model, liquidity providers (lps) would receive 0.05% of swap commission revenues, with higher-volume pools receiving the largest portion. Lps will also be able to lock in cash to get stimulated rewards, based on the issues. Rewards are lost and burned, however, if deleted prior to expiry.
I am excited to share the vision for @SushiSwap's new token model. I wrote a short article about the sushi forum. We would be pleased to respond to any questions you may have.https://t.co/D9TO2Oi8ra pic.twitter.com/GBrQKPzfiH
— Jared Grey (@jaredgrey) December 30, 2022
Also, staked SUSHI (xSUSHI) won't receive any share of the fee revenue, but emissions-based rewards paid in SUSHI tokens. Rewards based on programs paid in sushi chips. Time lock levels will be used to determine emissions-based rewards, with longer time locks that will translate into greater rewards.
Withdrawals before the maturity of the locks are permitted. The rewards will be lost and burned. The proposal notes that:
"Because time locks get paid after maturity, but burns happen in “real-time” when a large amount of collateral gets unstaked before maturity, it has a sizable deflationary effect on supply."
The tokenomics redesign comes after SushiSwap's disclosed to have less than 1.5 years of runway left in its treasury, meaning that a significant deficit was threatening the exchange's operational viability. As reported by Cointelegraph, Sushiswap experienced a $30 million loss over the past 12 months on incentives for LPs due to the token-based emission strategy, leading the company to introduce the new tokenomics model.
