March 4, 2024

SushiSwap Discusses Possibility of Suspension of Rewards for xSushi Holders

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SushiSwap Discusses Possibility of Suspension of Rewards for xSushi Holders

The new chef of the decentralized exchange (DEX) SushiSwap reported that the project is running out of reserve capital to maintain operations and development.

SushiSwap CEO Jared Gray said that the community is currently discussing a proposal to transfer 100% of xSushi holders' rewards to the company's balance sheet: 

“After reviewing expenses, it is clear that the significant treasury deficit threatens Sushi’s operating viability and requires immediate correction.”

Gray claims that to develop the project ata falling market needs $5 million. According to him, assets received from trading commissions on the exchange will help raise the required amount. The fees represent a reward for users who freeze the Sushi governance token and receive a token called xSushi. This token gives them a bonus for all trades on the SushiSwap platform.

Currently xSushi holders receive 0.05% of each swap, 10% of which goes to the SushiSwap wallet. Gray recommended that SushiSwap increase its treasury fee ratio from 10% to 100% while suspending rewards to xSushi holders.

The main developer of SushiSwap, Matthew Lilley, agreed with the proposal, clarifying that this is a temporary solution and in a year the company will return to paying remuneration to xSushi owners:

“I hope payments will be restored much faster if the tokenomics update is completed sooner.”

Many members of the SushiSwap community believethat the decision to suspend rewards is a violation of obligations to xSushi holders who can sell the Sushi token, and this could lead to catastrophic consequences for the project.

A Twitter user in October accused the current head of the decentralized cryptocurrency exchange SushiSwap of copyright infringement.