The Sushiswap team has announced a redesign of the SUSHI token economy in an effort to address the liquidity crisis facing the decentralized exchange (DEX). The current bear market has made the project’s current token economics and reward system unsustainable, according to Sushiswap’s head chef Jared Grey, who warned that the protocol may become inoperable if the issue is not permanently resolved. In response, the team has outlined a new tokenomics model that aims to promote decentralized ownership and reward liquidity growth through a comprehensive and sustainable system.
Sushiswap is currently the world’s 20th-largest decentralized finance (DeFi) protocol, with a total value locked (TVL) of $454.12 million, according to DefiLlama. The price of SUSHI is currently around $0.938, with a market capitalization of $208.4 million, according to CoinMarketCap.
A Winter-Proof New Model
The new model includes four key measures that will enable Sushiswap to remain solvent in all market conditions, as it removes pressure from the Sushi treasury:
-Incentivizing liquidity providers (LPs) with scalable volume and non-dilutive token rewards
-Improving the exchange’s product stack to create more LP opportunities
-Optimizing the reward mechanism to increase Sushi’s market share
-Revamping governance with a more equitable model
“The newly proposed Sushi token model properly incentivizes behavior that benefits the entire ecosystem and all stakeholders by encouraging long-term liquidity provision, directing fees to activities that earn a profit, and supporting perpetual token principals.” is mentioned by the Sushiswap team.
A Much-Needed Change
The proposed changes to the SUSHI token economy are designed to address the liquidity issues facing Sushiswap, which has struggled in the current bear market. The new model aims to incentivize behavior that benefits the entire ecosystem and all stakeholders, including encouraging long-term liquidity provision, directing fees to activities that generate profit, and supporting perpetual token principles. The team believes that if successfully implemented, the new model will help Sushiswap remain solvent in all market conditions.