Legendary DeFi token introduces optimized LP reward model, more decentralized and fair, its head chef says
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SushiSwap (SUSHI), a crucial decentralized protocol of the 2020 DeFi Summer, might have its token model for the native asset SUSHI totally reconsidered. Jared Grey, SushiSwap CEO, shares details and the rationale of his proposition.
Longer locks, larger rewards: New rules for SushiSwap LPs and xSushi holders
According to the Sushi Tokenomics Redesign proposal shared by Tate on the Sushi.com forum, the protocol might change the principles of reward distribution for liquidity providers (LPs) and xSushi payouts.
I am excited to share the vision for @SushiSwap‘s new token model. I’ve posted a brief tl;dr write-up on the Sushi forum & linked the entire proposal. We look forward to your questions & feedback.https://t.co/D9TO2Oi8ra pic.twitter.com/GBrQKPzfiH
— Jared Grey (@jaredgrey) December 30, 2022
LPs will receive bonuses from the 0.05% swap fee, while the bulk of rewards will be distributed to the most active pools. In order to boost the rewards, LPs can lock them. Meanwhile, if removed before maturity, LPs lose the rewards.
XSushi community members will receive emissions-based rewards and will also be able to freeze them in “soft locks”: collateral can be removed before maturity but the rewards will disappear:
xSushi receives emissions-based rewards in time-locked tiers. Longer locks receive more rewards
Also, a variable percentage of the 0.05% swap fee will fuel a buyback program designed to remove SUSHI tokens from the circulating supply.
The actual percentage will change based on the total time-locked tiers selected.
New emissions schedule for predictable margin
The SushiSwap team is also going to launch a price support program: a portion of the 0.05% swap fee will be allocated for this initiative.
Grey has stated that the team will target a nominal 1-3% APY for emissions in order to keep a balanced supply with all buybacks and token burn events.
As covered by U.Today previously, SushiSwap (SUSHI) became a top-tier DeFi protocol in 2020 as it siphoned liquidity from Uniswap (UNI) by offering better yield farming rates.
In 2022, the platform’s new leadership introduced SushiSwap 2.0, an updated protocol’s roadmap. As of December 2022, it is the #11 DeFi protocol by network activity with $454 million locked over multiple blockchains.
Source: https://u.today/sushi-token-design-to-be-amended-proposal