New Tokenomics for Sushi by Jared Grey amid Liquidity Crisis

The liquidity crisis on centralized crypto exchanges is a major 

Concern for investors, but decentralized exchanges are also experiencing difficulties due to a significant drop in overall interest in DEXs. 

As a result, Jared Grey, CEO of SushiSwap, a decentralized crypto exchange, has proposed a new tokenomics to increase the liquidity of his platform. As per the proposal, time-lock levels for emission-based rewards would be introduced, along with a token-burning mechanism and a liquidity lock for price support. In the official announcement, Grey added,

“It's time for Sushi to discuss modern tokenomics. An ideal token model should encourage liquidity while also encouraging decentralization. Furthermore, it should provide more equal governance and economic sustainability.”

The new tokenomics aims to increase platform liquidity and decentralization while also increasing treasury reserves to enable continued operation and development. The proposal also aims to modify the reward distribution criteria for liquidity providers (LPs) and Staked SUSHI (xSushi) payouts.

Reward Distribution for LPs & xSushi 

As per the proposal, LPs will receive rewards from the 0.05% swap fee, with the majority of rewards going to the most active pools. LPs can also lock rewards to increase their value. Meanwhile, LPs lose the rewards if they are removed before maturity.

In addition, members of the XSushi community will receive emission-based rewards and will be able to freeze them in "soft locks": collateral can be withdrawn before maturity, but the rewards will be lost.

Also, a variable amount of the 0.05% swap fee will be used to fund a repurchase scheme aiming to remove SUSHI tokens from circulation. The actual proportion will vary depending on the total number of time-locked levels selected.

Grey added that the team will aim for a modest 1-3% APY for emissions in order to maintain a balanced supply with all token burn events and buybacks.

The community believes that the tokenomics redesign follows SushiSwap's disclosure that it has less than 1.5 years of runway left in its treasury, implying that a major deficit was threatening the exchange's operating sustainability.

How will this be helpful?

Experts believe that the new proposed tokenomics will assist the decentralized exchange SushiSwap in preventing the ongoing liquidity crisis. Furthermore, the proposal's reward distribution criteria will also encourage the utilization of platform services by liquidity providers (LPs) and Staked SUSHI (xSushi) community members.

However, the broader crypto community seemed to be divided over the proposal. In addition, the announcement has triggered the price of SushiSwap's native token. At the time of writing, the SUHSI token was trading at &0.9566, which increased by 4.5% in the last 24 hrs.

What are your thoughts on Jared Grey's new proposed tokenomics for the SushiSwap platform? Please share your thoughts in the comment section below.

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