3 months ago 1 min read

Tokenomics Will be Redesigned to Reinvigorate Protocol, Says Head Chef SushiSwap

sushiswap-jared gray-xsushi-ROI-crypto-cryptonews-defi

The modifications that are being discussed are intended to increase stakeholders' value, increase liquidity, and provide its native token sushi additional uses without detracting from the value of current token holders or endangering the financial stability of the system. Sushiswap currently has a runway of just 1.5 years, according to Grey.

The proposal includes four important changes to the protocol's tokenomics.

One of the most major suggested changes is that staked sushi (xSushi) will instead get emission-based benefits paid out in sushi instead of trading fee earning incentives. The majority of swap fees will go to the liquidity providers of trading pools with the biggest volume, and they will also benefit more from a new time-lock implementation that they can choose to use.

Additionally, a portion of the trading fees would be used to lock in liquidity for future price support as well as to buy and burn sushi from the open market.

A final upgrade would change the emissions for the sushi token to 1-3% APY in order to control inflation and balance the total emissions with the buy-backs, burns, and locked liquidity used for price support from trading fees.

As long as users are not LPs, their current model supports non-sticky liquidity, allowing them to invest money, earn rewards, and get the best ROI possible. Sushi learned from historical data that its current xSushi architecture enables xSushi stakeholders to receive an excessive amount of incentives in comparison to liquidity providers.

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