SushiSwap Gets a Makeover: Moves Forward with Sushi Labs Despite Backlash

Sushi DAO is shaking things up with a new business model dubbed “Sushi Labs.” The overhaul throws a twist into the governance of the decentralized exchange (DEX) by introducing a council structure alongside its existing DAO framework.

Back in April, Sushi DAO passed the controversial Burū no Shinka proposal, which sought to diminish the role of its decentralized autonomous organization (DAO) and vest control of the protocol’s multimillion-dollar treasury to a new entity called Sushi Labs.

Although the proposal faced much backlash from the community, with many tagging it a “hostile takeover,” the protocol’s team introduced Sushi Labs on June 11, marking the beginning of a new era.

According to Head Chef Jared Grey, Sushi Labs is envisioned as an autonomous administrative, technical, and operational entity tasked with managing the Sushi ecosystem. Central to the new model is a council structure comprising four distinct bodies: the Sushi High Kitchen, Treasury Council, Grants Council, and Ambassador Council. The High Kitchen, consisting of six to eight members, will function as the paramount governing authority, overseeing a multisig setup for key transactions and strategic decisions.

Grey, now appointed as Sushi Labs’ managing director, expressed optimism about the restructuring’s potential to reinvigorate growth and liquidity on the SushiSwap decentralized exchange (DEX). “With our newly established organizational structure, sufficient budget, and leveraging successful products like Route Processor, we have the tools to enhance liquidity on the Sushi DEX,” Grey stated in a memo to the community.

Under the new arrangement, Sushi Labs will assume control over the DAO’s multimillion-dollar budget, comprising 25 million SushiSwap (SUSHI) tokens. While token holders will retain the power to decide on treasury allocations, they will no longer be directly involved in operational details.

The revamp also introduces a multi-token product suite, aimed at diversifying revenue streams and mitigating the financial strain on the SUSHI token during periods of lower profitability.

While the transition has sparked debates and criticisms over centralization concerns, SushiSwap maintains that the council-based structure will enable swifter decision-making and a more agile response to market dynamics, addressing the platform’s previously stagnated growth and liquidity challenges.

Although SushiSwap quickly clarified that the new structure was not meant to replace the DAO, a quick look at the Sushi forum suggests that the DAO may have died a natural death. An RFC calling for candidates to fill the council roles has seen just 5 applicants in the past six weeks.