SushiSwap DAO Budgets $5.2M, With 82% Going to Salaries

SushiSwap DAO CEO Jared Grey has disclosed the operation’s Budget Snapshot for 2023, with more than $5.2 million slotted to maintain the decentralized exchange (DEX) next year.

The platform, stewarded by a DAO, will spend more than 80% of those funds across 15 salaries, including $500,000 in USDC to “head chef” Grey (salary recipient names were redacted on Twitter). That works out to be around $286,500 per team member on average.

The remaining DAO budget, about $919,000, will go towards SushiSwap operational overheads such as legal fees, subscriptions, freelance contributor compensation and social media management costs.

One undisclosed freelancer is budgeted for $12,000 per month, just $500 less than the averaged monthly retainer for Sushi’s legal team.

Grey addressed the compensation-heavy budget and stated that transparency is a “critical component of a successful DAO.

“[For what it’s worth], any project is only as strong as its talent and community; talent requires proper compensation through grants or as a full-time contributor with a salary. The current team is dedicated and proven; 2023 will see Sushi deliver an innovative DEX model.”

Grey’s tweet comes soon after SushiSwap disclosed a $30 million loss over the past 12 months. He said the protocol’s emissions-based reward strategy — which pays participants in native token SUSHI — failed to incentivize liquidity providers. 

SushiSwap, which runs on Ethereum, competes with DEXs Uniswap and Balancer. Once one of DeFi’s largest protocols, much of SushiSwap’s dominance has slipped over the past two years due to leadership controversies alongside allegations of improper spending, including $9,000 dinners and $5,000 tickets to industry mixers. 

Its SUSHI token, which DAO participants must hold to vote on governance, has been hit hard by the bear market. SUSHI trades at $1.12, down more than 85% this year. For scale, bitcoin is down around 63% year to date alongside ether (ETH).

SushiSwap DAO proposal for a sustainable business model

In an effort to get SushiSwap into shape, Grey recently re-proposed shaking up how the protocol structures its revenue flows. SushiSwap DAO hired Grey, a crypto entrepreneur and tech consultant, in October.

Dubbed the “Kanpai and Treasury Payout Ratio,” the move would allocate all protocol revenue (trading fees) to SushiSwap DAO’s treasury to pay budget costs. SushiSwap previously paid only 10% of fees to the treasury, and Grey said the DAO has around 18 months of runway as things stand.

If passed by token holders, the payout ratio will stay in place for one year or until new tokenomics are suggested and implemented. Projected revenue sits around $6 million (15% higher than its budget) and will be received by the treasury in the form of 50% ETH and 50% USDC.

“The Kanpai proposal will reinforce Treasury diversification, secure its future runway and promote a successful pivot of the DEX business and token goals,” Grey tweeted. “Diversification allows Sushi’s Treasury to earn USDC and ETH without selling tokens.”

Despite a push for transparency, some community members believe SushiSwap DAO is overpaying its talent (the DAO voted in August to cut CEO $800,000 compensation by more than a third). Others have voiced belief that SUSHI holders should receive a slice of the trading fees.

“Paying [$300,000] a year by employee without bonus just to add some effect on the UI, sponsoring a lot of crypto events around the world is not a good way to spend money,” pseudonymous DAO member GoldenNaim wrote in the proposal discussion. 

Alex Shefrin, business development lead at SushiSwap, replied further down to suggest its core problems stemmed from past leadership decisions, which left the protocol without an underlying business model to “sustainably capture the value that we are creating.”

“[And] frankly we spend a lot of time here fighting this point,” said Shefrin. The Kanpai proposal currently has 97 voters, with 64% voting “Yes – Secure Sushi’s Future with Kanpai.”

A complete financial audit of Sushi can be expected in the first quarter of 2023, Grey said.

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