Sushi

This proposal’s expectation is to produce an implementation. Full details and discussions thus far can be found at:

https://forum.sushi.com/discussion/25954-Treasury%2520Diversification%2520[Implementation]

Synopsis:

This implementation proposal outlines a flexible approach for diversifying Sushi DAO’s treasury into stablecoins and blue-chip assets, such as WBTC and ETH/WETH. The diversification strategy aims to support Protocol Owned Liquidity (“POL”) initiatives, bolstering SushiSwap’s competitive positioning and ensuring sustainable value generation for SushiSwap, Sushi Labs, and token holders. Sushi Labs will receive and manage these diversified funds, aligning with the best interests of the SushiSwap protocol to achieve its POL, fee generation, and growth and operational continuity objectives by funding Sushi Labs’ infrastructure and personnel, product expansion, research, and development.

Treasury Diversification Strategy:

The following treasury diversification strategy proposal aims to enhance SushiSwap’s operational resilience and liquidity depth.

1. Asset Diversification:

• Diversification of Sushi DAO’s native token treasury holdings into stablecoins and blue-chip cryptocurrencies (e.g., WBTC and ETH/WETH);
• The exact composition and allocation will remain flexible and at the sole discretion of the Sushi Labs team to adapt to prevailing market conditions and opportunities.

2. Implementation Mechanism:

• Diversification will occur gradually, subject to market dynamics and liquidity, with no pre-scheduled timeframe for completion or expiry to mitigate market impact.
• Execution will utilize the expertise of the Sushi Labs team and authorized third parties.
  • Authorized parties may include, but are not limited to, professional, high-frequency trading firms, market makers, OTC desks, and other financial institutions or liquidity providers that desire exposure to the Sushi ecosystem.
• Treasury funds may be diversified via multiple platforms, including centralized exchanges (CEXs), over-the-counter (OTC) desks, decentralized exchanges (DEXs), and exotic instruments like options or single-sided liquidity deployments.

3. Protocol-Owned Liquidity (POL) Strategy:

• Utilization of a portion of the diversified funds for POL strategies on SushiSwap.
  • Sushi Labs will provide quarterly profit-and-loss reports to the DAO regarding its POL strategies via its community forum or publicly accessible platform.
• These strategies aim to deepen liquidity across emerging and established networks, supporting SushiSwap’s growth and attracting volume.
  • Sushi Labs will assist by identifying and deploying capital into network pools that reinforce the protocol’s liquidity goals and generate fees. These goals include:
    • Deepening liquidity on key pairs such as ETH/USDC on competitive networks, including Base, Arbitrum, etc., to further improve the user’s swapping experience and ultimately scale the protocol’s routing and aggregation opportunities.
    • Reduce the risk of exposure to impermanent loss and price volatility to assets through a core focus on POL deployments into various stablecoin and blue-chip assets.

4. Operational Support and Value Capture:

• Allocation of a portion of the diversified funds to Sushi Labs’ multi-sig wallet for operational costs, essential for executing and maintaining POL strategies and general DEX operations.
  • Sushi Labs will disclose the proceeds from its treasury fund usage on the Sushi forum or a publicly accessible platform and focus the funds on operations, growth, research and development, or acquisition purposes.
• Sushi Labs endeavors to utilize a portion of the proceeds generated from its management of treasury funds to implement POL strategies to achieve the following goals:
  • Deepen liquidity by reinvesting trading fees to compound POL.
  • Expand the Sushi product ecosystem by reinvesting in its product ecosystem.
  • Develop new and existing revenue streams for Sushi Labs’ operations.
  • Share a portion of fees with xSUSHI or its equivalent.

Fund Management and Accountability:

Management by Sushi Labs:

• Sushi Labs will manage the diversified treasury funds on behalf of the DAO and employ risk management to deploy funds on the SushiSwap DEX.
  • Sushi Labs will hold and manage funds in multi-sig wallets requiring 4 of 6 signers.
  • Sushi Labs assumes no risk or responsibility for fund loss. Please note: Dealing in crypto assets is a high-risk activity, and the DAO should only participate if it’s comfortable with and understands the risks involved. In particular, it may incur substantial losses, including a total loss of capital used to participate.
• Sushi Labs will ensure transparency by providing periodic updates to Sushi DAO on diversification activities and outcomes by posting quarterly reports to the DAO’s forum (found at https://forum.sushi.com) or another publicly accessible venue to which we will signpost.

Alignment of Interests:

• Sushi Labs commits to acting in the best interests of the SushiSwap protocol and Sushi DAO.
• The design of these strategic diversification and subsequent POL initiatives seek to strengthen SushiSwap’s long-term value proposition.

TLDR:

This flexible treasury diversification strategy aims to deepen and promote vital liquidity, optimize protocol performance, and create long-term value for Sushi DAO, SushiSwap, and Sushi Labs. By authorizing Sushi Labs to manage these funds, Sushi DAO helps to ensure strategic execution and alignment across the entire Sushi ecosystem.