Sushi DAO implements proposal to direct xSUSHI revenue to treasury

Sushi DAO is set to implement a governance action that will see all fees generated by xSushi holders diverted to the DAO’s treasury, following the results of its latest vote on Monday.

Those that stake the SushiSwap's governance token sushi receive a token called xSushi, which gives them a reward fee from all trades on the platform. Previously, xSushi holders received 0.05% of each swap, 10% of which was directed to the SushiSwap treasury wallet. After the proposal is implemented, the fee ratio has increased from 10% to 100%, leaving no more token rewards for xSushi holders.

This is called Kanpai, SushiSwap’s fee-diversion protocol. It enables the DAO to determine how much of the exchange’s trading fees can be sent to the treasury. 

The new Kanpai ratio will last for one year or until the DAO adopts a new tokenomics model. The date of the previous signal vote — Dec. 19, 2022 — was chosen as the effective starting date for the new ratio. As such, the Kanpai ratio should revert to its original form on Dec. 19, 2023, unless a new tokenomics model is adopted before then. Sushi token holders will not receive rewards from trading fees during this period.

Sushi Head Chef Jared Grey has previously called the new Kanpai ratio a “temporary solution to a long-term problem.” The problem being the DAO’s need to ensure that the project’s resources attain a competitive level. Grey stated that diverting fees to the treasury is a better solution than selling sushi tokens to raise funds for the team.

Sushi DAO’s treasury holds $17 million worth of crypto tokens in its reserves. The bulk of this sum — $16.6 million worth — is in its native sushi token. The DAO also holds significant amounts of ether and USDC.

GoldenChain’s influence

Monday’s vote ended with almost unanimous approval from participants, according to Snapshot data. The voting page shows 747 wallets participated in the polls, with 99% in support of the move.

GoldenChain, the digital investment arm of venture capital outfit Golden Tree, was largely responsible for the success of the plan. GoldenChain’s wallet supplied 5.9 million out of the 6.7 million votes cast in support of the proposal.

GoldenChain’s voting power on the DAO was cause for some controversy during the previous vote. The signal vote that preceded Monday’s implementation vote turned out to be a whale tussle within the DAO. In the end, GoldenChain and another major voter believed to be owned by crypto trading firm Cumberland were responsible for swaying the polls.

The wallets belonging to the major opposition during the previous signal vote did not participate this time around.