SushiSwap’s ‘chef’ can pocket a third of all tokens paid to staff
SushiSwap’s proposed new “head chef” could pocket more than a third of the crypto exchange’s total SUSHI coins allocated to staff over the next four years, according to an analysis of the compensation package by The Defiant.
The token should achieve lofty goals and trigger performance bonuses to reach the hat level. If you add up salary, guaranteed SUSHI and incentives, using current prices, the tally comes to a potential salary of $10.6 million.
The news could inflame tensions in the SushiSwap community as it clashes with the proposed hiring of Jonathan Howard to run the fifth-largest decentralized exchange and ease a leadership crisis that has been brewing since last year.
The donnybrook also sheds light on the thorny governance challenges facing DAOs as the bear market increases the tax burden on projects. SushiSwap is governed by a decentralized autonomous organization.
On July 27, The Defiant reported that many in the SushiSwap community were appalled by the size of a new chef’s salary package. As Howard, a seasoned crypto veteran, has pledged to bolster SushiSwap’s development team and invest in its nascent NFT market, DeFi analysts have warned that the kerfuffle could undermine trust in the platform. form.
“Sushi governance needs unity and focus above all else,” Cam Crossley, an analyst at venture capital studio Web3 NotCentralized, told The Defiant. “If a vote passes as proposed, the new chef will not be off to exactly the right foot.”
Jonathan Howard’s eventual election as Sushi’s new chef, which participants in the protocol governance forum are voting on through August 4, also calls for a base salary of $800,000 in stablecoins, which would represent 14% of the total payroll budget of $5.75 million. USDC.
Survey in progress
If passed, the measures will be transformed into an instant community-wide vote, which will determine whether Howard is elected.
So far, the poll has received 125 votes, with 57% in favor of Howard becoming the new head chef.
But Howard’s proposed salary has drawn backlash, with many members taking to social media to denounce the proposal as a sign that SushiSwap is no longer a community project. Critics argue that the terms of his election could entrust too much of the project’s war chest to a single individual.
The proposed severance package is a real sore point. This could lead to Howard pocketing millions if fired.
Currently enjoying a total locked value of over $1 billion, SushiSwap was a darling in the DEX space during the 2021 bull run. Yet SUSHI has fallen 84% this year, compared to a 49% drop by rival Uniswap.
The road to follow
The appointment of a new chef de cuisine was one of the main priorities set out in the recent Sushi 2.0: restructuring for the road ahead governance proposal, which the Sushi community adopted in May. The proposal was intended to create the roadmap for a fresh start after months of infighting and instability.
The main objectives of the roadmap included the creation of a formal compensation committee initially comprising core team members Neil and Matthew Lilley and the establishment of a formal legal structure for the SushiDAO.
If elected, Howard would receive a base salary of $800,000 in stablecoins per year plus 600,000 SUSHI tokens (currently trading at $1.56 each) over a four-year vesting period, with 350,000 SUSHI allocated for bonuses to be awarded as new products are shipped.
An additional 1.2 million SUSHI has been set aside as incentives for Howard should the price of SUSHI exceed certain thresholds during his tenure, with payouts steadily increasing as the price of SUSHI rises above $3, $5, $7, $9 and $11. If SUSHI’s price exceeds $11 under his watch, Howard would receive $8.35 million in bonuses through the incentive program.
Sushi is also offering severance pay in the event of Howard’s dismissal equal to 24 months of base salary, with the payment reduced each month served up to a floor of six months’ compensation. The chef would not be eligible for severance pay if he resigns or is removed from his post due to “professional malfeasance such as a felony”.
Speaking to The Defiant, Neil of Sushi’s core team and compensation committee confirmed that the SUSHI component of Howard’s proposed compensation would be paid from the 6 million SUSHI allocated to fund current and future staff in the Sushi 2.0 roadmap.
Neil said the base salary would be paid from his operational multisig wallet. He said that Sushi was able to “exchange some of the altcoins from its treasury before the recent market crash” and that “not a single $SUSHI should be sold by treasury to fund [Howard’s] salary.”
Still, some members of the community unite around the argument that it’s a mistake to give such a large chunk of Sushi’s operating budget to the chef.
SushiSwap votes to let merchants offset carbon emissions
“Assuming the funds for this proposal come from the operational multisig, which has 2.67m USDC and 250k SUSHI, if this guy leaves on day one he will take with him 60% of the USDC and ALL sushi with another 50k still to be paid,” Dranon911 posted on the Sushi governance forum.
As for the proposed severance package, C3 Group, a Web3-focused compensation consultancy, said it “doesn’t make sense.”
“Equity-based incentives are never included in severance packages, and unearned rewards are generally entirely forfeited in the event of termination without cause,” a company representative said on the forum. “Otherwise, equity has no retention or motivational value.”
Neil said the chef’s pay could be changed if this proves an untenable sticking point for the community. Still, Neil added that “the candidate has to be open to it” and warned that changing the package could “risk a great candidate walking”.
It’s not just the salary that’s troubling the community. Howard’s nomination process has also been criticized.
BoringCrypto, a prominent Sushi contributor, wondered why the community didn’t get a chance to vote on the proposed executive chef compensation package before voting on Howard’s election.
EthCC Journal: Exploring the State of the Network and a Decentralized Future
Boring also objected to a clause in the terms of Howard’s appointment noting that current bonuses based on Sushi’s core team prizes will be lowered to the same prize levels and ratios offered to Howard.
“There’s a hidden renegotiation of team incentives hidden in there,” they said.
The proposal claims that the current thresholds were set during the bull market and “are so high that they don’t carry much weight in the motivation.”
But Mountain_Goat, a “tomodachi community” of Sushi, warned that if passed, the proposal would allow members of the compensation committee – which Howard would join upon his appointment – to decide their own allocation of future tokens.
“It’s like a blank check,” they said.
On Discord, Mountain_Goat also claimed that the voting process was “manipulated” by Sushi’s core team. “When this deal or their compensation offer 2.0 goes live, it’s pre-loaded with team votes yes before the community sees it live,” they said.
An unfair head start
“F**king with the urn is weak. It’s a temperature control on the recommendation of the team, but they feel the need to fiddle with the optics and give that temperature control [an] an unfair head start.
Neil dismissed the allegation and told The Defiant there was “no truth” to the claim. “Obviously the team was in favor of the candidate and the team has bots that ping when things go up, so it’s only reasonable for the team to vote before people with other priorities” , did he declare.
The latest chapter in Sushi’s leadership drama has rekindled concerns that the once community-driven project has been captured by the interests of a small minority of stakeholders.
Pegbit, a lead developer at Sushi, said the Sushi 2.0 roadmap was only approved by the project’s investors with the inclusion of a side clause that the team quickly select a new leader. “They pressured the existing team to select one as soon as possible, otherwise they wouldn’t vote… the group of investors want to move towards a venture capital management route, rather than Sushi being managed by the community.”
“It’s time to let go of the ‘community’ centered charade. Temporary controls are overtaken by new users, governance is overtaken by VC bags,” said Graine.
Asked about accusations that Sushi’s governance has become centralized within a small group of investors and core team members, Neil told The Defiant that Sushi’s token-based voting means that ” naturally, those who have spent the most and put the most skin into the game have more votes.
“There are no puppets, these guys run their business, vote on stuff, and Sushi builds DeFi and web3 products,” Neil said. “I see how it sucks if you’re a little guy and you don’t have that much money, but no governance is perfect. What can you do? These are the rules of Sushi voting and governance and we follow the rules of the road. Most of them were established long before many current contributors joined, so it’s just something to deal with.