SushiSwap replaces DAO with ‘Labs’, introduces multi-token ecosystem

Update (June 11, 15:58): This article has been updated to say that the decentralized exchange, managed by Sushi Labs, will continue to operate under the Sushi Swap brand.

After months of heated debate, decentralized exchange SushiSwap has introduced a new business model to the ecosystem. Under the name of Sushi Labs, the new era will replace the decentralized autonomous organization (DAO) with a “council structure.”

On June 11, The Protocol introduced Sushi Labs – an independent administrative, technical and operational company that manages the sushi ecosystem. First proposed in March, the amendment sought to respond to “market needs and user needs,” including slow responses to market changes due to “difficult governance.”

The new Labs model operates through a council structure similar to Protocol Syntex, which consists of four councils: the Sushi High Kitchen, the Treasury Council, the Grants Council and the Ambassador Council. The top kitchen—consisting of six to eight members—is the protocol's central governing body, which oversees the multi-sig setup for transactions.

“Many of Sushin's frozen growth and AMM liquidation cases are attributed to LPs migrating to other DEXs for better yields. However, with our newly established organizational structure, we have the tools to increase liquidity on Sushi DEX with sufficient budget and effective products like Root Processor,” Jared Gray, Managing Director of Sushi Labs, wrote in a note to Sushi. community.

Sushi Labs will take over the DAO's multi-million dollar budget, which consists of 25 million Sushi Swap (SUSHI) tokens. Tokenholders will still have the power to decide on the allocation of the treasury but will not be involved in the details of the operation.

According to data from Defilama, Sushi generated $1.62 million in fees in May, with earnings of 270,500 for the month – a significant drop from its performance in the previous bull cycle. In May 2021, Sushi's revenue stood at $14.37 million after earning $86.24 million in fees.

Another change comes with a multi-token product suite. According to Sushi, it helps distribute production costs while giving Takabashi more reward opportunities. “The multi-token ecosystem will reduce the risk of sushi token inflation and reduce the financial burden of funding the DAO initiative when products are not profitable,” the statement reads.

In recent months, the new model has sparked debate and criticism for its centralized nature. Members of the community have previously accused the protocol of hostile takedown proposals. “Sushi Dao seems to be at the end of its journey,” said a member of Sushi on the management forum.

Sushi Swap has faced financial challenges since 2022, when Gray warned of a $30 million loss on liquidity provider incentives, prompting a review on Tokenomics. In the year In December 2022, the decentralized exchange revealed that it had only 1.5 years of operational runway, prompting a renewed focus on diversifying its treasury and improving liquidity management.

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