In an effort to resolve a leadership crisis, SushiSwap, the fifth-largest decentralized exchange by capital locked, is currently polling its community on a candidate to take over as its new “head chef”.
But its community is unhappy with the proposed compensation for the incoming culinarian.
On July 26, the Sushi team nominated Jonathan Howard, a software engineer who previously founded four startups including NFT studio, Bighead Club.
Potential $8.3M Com Package
If elected, Howard will receive $800,000 in stablecoins annually plus 600,000 SUSHI tokens (currently worth $1.29 each) over a four-year vesting period, with an additional 350,000 SUSHI set aside for bonuses to be awarded as new products are shipped.
A further 1.2M SUSHI will be issued to Howard should SUSHI’s price rise above various milestones under his leadership, with the payouts increasing if SUSHI’s price rises above $3, $5, $7, $9, and $11.
Cam Crossley, an analyst at web3 venture studio NotCentralised, told The Defiant that should Sushi rally above $11, its incoming head chef would be set to receive $8.35M in bonuses under its proposed compensation.
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Dranon911, a Sushi community member questioned where the compensation funds would come from.
“Assuming the funds for this proposal comes out of the operational multisig, which has $2.67M USDC and 250k SUSHI, if this guy leaves day one he will take with him 60% of the USDC and ALL of the sushi with still 50k yet to be paid,” they said.
SushiSwap is currently generating daily protocol revenues of between $20,000 and $25,000, according to TokenTerminal.
SushiSwap protocol revenue has held steady since a big spike last year. Source: TokenTerminal
Votes have been submitted by 38 participants on Sushi’s governance forum so far, with 68% of voters supporting Howard’s appointment.
Howard posted that he has been a Sushi user since its first week, praising the protocol as a community-owned platform allowing users to “collect a salary, source a loan, swap to virtually any token, and put it to work.”
“Sushi is on the verge of launching tons of new products and features so the #1 priority is getting the dev team back to consistently shipping, as the team has demonstrated recently,” he said in the governance form post. “The first order of business is to ensure we become world-class at the fundamentals and ship the existing roadmap as directed by the DAO in the Sushi 2.0 proposal.”
He added that he would focus on improving Shoyu, Sushi’s NFT marketplace.
‘A Crazy Ask’
Should Howard be terminated, he would receive a severance package equal to 24 months of the planned salary and bonus compensation plan. The severance package would not be paid should Howard resign or be terminated as a result of “professional malfeasance such as crime.”
Many comments on Sushi’s governance forum strongly criticize the severance package. Dranon911 described it as “a crazy ask.”
The total package roiled the Sushi community. “An 800k USDC ask plus what could be millions in token incentives is insane imo,” ControlCplusControlV said in the governance forum that “Sushi can hardly afford $800k USDC given current revenues, and imo it should be closer to 1/4 of that given his previous experience (he has not led a DEX or another major DeFi project).”
While Crossley suggested that a $800,000 base salary is not unreasonable to lead a project with a total value locked (TVL) of $934M and a $250M market cap, he said compensation should be aligned with the interests of the Sushi community. He worried the new head chef may not start his tenure “on the right foot.”
“One of the most promising aspects of crypto is the ability to transparently align incentives across multiple stakeholders,” Crossley told The Defiant. “This severance clause seems to accomplish the opposite.”
Daniel Bar, founder of venture network, Bitfwd Capital, told The Defiant Howard’s proposed compensation is “grotesquely exuberant and reflects poorly on those involved in promoting the offer.”
Bar added that while it is important to compensate well to attract good talent to the DeFi sector, the offer for Sushi’s head chef position “seems unnecessarily exaggerated.”
Howard’s proposed appointment comes after the May approval of the “Sushi 2.0: A Restructure For The Road Ahead” proposal. It seeks to formalize the project’s organizational hierarchy and establish a roadmap for the future after months of infighting and leadership turmoil for the project.
The plan included earmarking 6M SUSHI to fund its team and operations over the next four years, the establishment of a compensation committee tasked with budgetary oversight, and the appointment of “formal leadership and executive talent.” The proposal passed with 92% support.
Sushi launched in August 2020, briefly overtaking Uniswap by TVL the following month amid the success of a liquidity mining vampire attack that sought to attract liquidity away from the pioneering AMM. However, one month later, its pseudonymous founder attempted a rug-pull that set the protocol back.
Sushi solidified itself as a top decentralized exchange in early 2021 under the guidance of a new core team led by co-founder 0xMaki, positioning itself as a decentralized alternative to the VC-backed Uniswap.
But 0xMaki stepped down to an advisory position in September, and escalating infighting resulted in the project’s CTO, Joseph Delong, resigning in December as tensions rose between himself, SushiSwap investor and asset manager, Arca, and the broader Sushi community.
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A report published the same month by Rekt cited purported former Sushi insiders claiming that 0xMaki had been pushed out by Delong and a small cabal of core team members that had centralized control over the protocol into their own hands.
“Sushi is no longer a community-driven project but JORKN’s *company*,” AGdyor, a former Sushi contributor, tweeted at the time in reference to core team members Joseph, Omakase, Rachel, Keno, and Nori.
Deal Falls Apart
Amid the turmoil, Arca and Daniele Sesta of Wonderland and Frog Nation put forward a proposal intending to restructure Sushi’s DAO to resemble a corporation of comparable size, including the creation of a formal legal entity. However, the deal fell apart after Frog Nation’s CFO, Sifu, was revealed to be a co-founder of the collapsed Canadian centralized cryptocurrency exchange, QuadrigaCX.
On July 27, Pegbit, a SushiSwap core developer, again accused Sushi of no longer comprising a community-run project in response to Howard’s proposed appointment and compensation. Pegbit claimed that the project is instead governed by “Arca, Cumberland, and a few other investors calling the shots with the compensation committee.”
Sushi governance forum-goer, mountain_goat, agreed, stating “Arca have unfair influence akin to minority shareholder oppression.”
A member of the core team rejected allegations the process was flawed. “Everything related to chef talent pool was done with 100% with absolute integrity,” Neil said on the forum.
But not everyone is opposed to Sushi moving away from DAO-based governance and borrowing from organizational structures popular among centralized corporations.
“While Sushi is pretty revered as a poster child of a truly decentralized model, the DAO governance structure has come in for criticism,” Nick Bishop, director of capital advisory firm, Bishop & Fang, told The Defiant “Those that have departed to move onto other projects have been vocally critical of the voting process and challenge of the governance model.”