SushiSwap CEO Jared Grey has proposed changes to the token economics of the SUSHI token in an effort to address the liquidity crunch facing the protocol.
On December 6, Grey announced that the project’s treasury had a runway of just 1.5 years, leading to a proposal that 100% of fees earned by SushiSwap be redirected to Kanpai, the project’s treasury, for one year or until new token economics are introduced.
Grey has now proposed a new model that seeks to increase liquidity and create more utilities for SUSHI, as well as “promote maximum value for all stakeholders.”
The new model will introduce time-lock tiers for emissions-based rewards, a token burn mechanism, and locked liquidity for price support.
It will also see staked SUSHI (xSUSHI) receive only emissions-based rewards paid in SUSHI, while liquidity providers (LPs) will receive a share of the 0.05% swap fee revenue, based on volume.
The proposal also includes a burn mechanism that will use a variable percentage of the 0.05% swap fee to buy back and burn SUSHI, as well as a plan to lock liquidity for price support.
Lastly, the proposal aims to reduce inflation by bringing emissions to 1-3% annual percentage yield for the SUSHI token.
