Sushiswap intends to offer $60 million in discounted tokens to venture capitalists. About 62% of the community thinks the plan is a bad idea.
0xMaki, the defacto leader of Sushiswap, proposed making it cheaper for venture capitalists to control the protocol’s growth on July 8th. Many members of the Sushiswap community fear that this will put too much power in the hands of venture capitalists.
VCs make early-stage investments in companies and then provide guidance. This may be accomplished by VCs purchasing governance tokens like SUSHI and using them to vote on network proposals. 0xMaki’s proposal allows venture capitalists to purchase a small percentage of that influence at a cheaper price than the rest of the market.
A Polarizing Sushiswap Proposal
The first backers for the $60 million private token sale are Polychain, Dragonfly Capital, and Hashed. They may be able to purchase the token at a discount if they agree to lock up their tokens for a year, provided the original proposal succeeds.
The community has spent the last week discussing the idea, and controversy seems to be ensuing.
In favor of the idea, FTX CEO Sam Bankman Fried tweeted:
4) Why might it be good?
Because some VCs are really connected and influential and knowledgeable and smart.
Some VCs will fucking fight for you.
The second are the ones you want; if they're also in the first group, even better.
— SBF (@SBF_Alameda) July 16, 2021
SUSHI token holders now have a substantial amount of anger against the protocol for considering offering reduced tokens to whales.
Hayden Adams, who co-founded Uniswap, said that he’d vote ‘no’ if he could vote.
Strongly against / would vote no if I had votes
While I think it's fine to raise money from VCs, this feels like it goes against strong expectations set by SUSHI community.https://t.co/27dgG0F6RG
— Hayden Adams 🦄 (@haydenzadams) July 16, 2021
He said that SUSHI members have reached out to him in the hundreds or thousands to tell him about how terrible it is to solicit venture capital, adding,
“I’ve received hundreds / thousands of DMs and notifications from SUSHI community members about how bad it is to raise money from VCs. After all that, a VC raise from SUSHI feels hella lame tbh.”
What is Sushiswap?
Before getting into Sushiswap, it is essential to understand what Uniswap is.
Uniswap is a decentralized trading system. Instead of an order book, where liquidity providers apply money to liquidity pools, it uses a mechanism called automated market-making (AMM). Uniswap was forked into Sushiswap, and a large number of features from Uniswap were included into Sushiswap.
As is the case with Uniswap, the biggest distinction between SushiSwap and SushiSwap is the SUSHI token. Initially, the token grants a person the rights of government and pays a portion of the costs that the protocol charges.
In a simple manner, SUSHI holders “own” the protocol. In the case of SUSHI, purchasers are usually entitled to a portion of the fees that the dealers charge as part of the dealer-to-sushi-shop commission agreement.