While the DeFi industry has continued to reflect the rise in the cryptocurrency market, the ecosystem has seen an increase in the number of innovations presented. According to recent reports, SushiSwap, which is currently ranked as the sixth-largest decentralized exchange (DEX) by 24 hours trading volume, has approved a proposal to move one hundred percent of its trading fees to the SushiSwap treasury, where they will be used for the platform’s upkeep and other costs.
SushiSwap to redirect trading fees to keep up with 2023’s market
This latest update comes after CEO Jared Grey warned that the exchange treasury stability is numbered as it has “just 1.5 years of treasury runway remaining.” This is despite the fact that the yearly operational expenditures were reduced from $9 million to $5 million during the current crypto winter.
According to a management proposal that was conveyed by the developers of the decentralized SushiSwap exchange, which was managed to pass on Jan. 23, the SushiSwap exchange will now broaden the utilization of trading fees by diverting them to the exchange’s treasury to improve the operation and upkeep of the exchange over the course of the following year.
Per the plan, contributions to the treasury will be made up of fifty percent ETH and fifty percent USDC. It is anticipated that around $6 million will be earned over the following year if this proposal is accepted.
In a further successful proposal on the same day, almost 99.85% of voters supported “clawing back” 10,936,284 unclaimed SUSHI tokens, valued at around $14.8 million, so that they may be distributed to early liquidity providers upon the launch of the DEX in 2020.
Without a doubt, the crypto winter affected the majority of initiatives inside the sector, including decentralized exchange platforms like SushiSwap, which abandoned its lending protocols due to these hindrances. The CEO of SushiSwap, Jared Grey, said in December of last year that the DEX had incurred a loss of $30 million over the course of the preceding year on incentives for liquidity providers (LPs).
To compensate for this loss and kickstart the recovery process, Grey shared his ideas to modify the tokenomics of SushiSwap so that LPs would no longer be bankrolled with emissions and to rethink the whole concept of bootstrapping liquidity on the exchange.
SushiSwap is looking to utilize the protocol to replenish its cash reserves, which enables it to continue paying competitive salaries, pay for vital infrastructure, and diversify its Treasury with revenues gathered in the base pairs of assets, such as ETH, stablecoins, and so on.