Daily Briefing: The Cursed Protocol

Sushi began sturdy however shortly went off the rails.

Unhealthy Mangement

After I started my crypto journey in late 2020, one of many first tokens to catch my eye was SUSHI. I had no thought what DeFi was or how sensible contracts labored, however the modern purple and pink ombre emblem stood out among the many relaxation. From that preliminary curiosity, I realized in regards to the challenge’s colourful historical past, “the DeFi summer time” of 2020, and why decentralized finance is so necessary.

Sushi is one in every of many so-called “decentralized exchanges”—permissionless protocols that permit DeFi customers swap tokens with out going via a centralized trade or intermediary. Right here, liquidity suppliers deposit tokens into buying and selling swimming pools and earn a share of the swap charges for locking up their belongings. The fantastic thing about decentralized exchanges like Sushi is that they will perform independently from the individuals who created their sensible contracts.

Sushi was hit by its first main scandal early in its lifetime. After roaring into the DeFi house and attracting liquidity via its beneficiant SUSHI token emissions, the protocol’s pseudonymous creator, often called Chef Nomi, dumped $14 million value of SUSHI from the protocol’s growth fund earlier than leaving the challenge. Though Nomi later returned the funds to the Sushi treasury, many customers grew to become cautious of the challenge’s administration, which set a nasty precedent.

As DeFi grew all through 2021, so did the drama surrounding Sushi. In September, 0xMaki, typically cited as one of many individuals chargeable for saving the protocol after Chef Nomi’s departure, abruptly left the Sushi crew. It will later be revealed that 0xMaki was forcibly faraway from Sushi as a part of an alleged hostile takeover. Different notable names to go away the challenge included core builders Mudit Gupta, 0xKeno, and LevX.

Sushi’s then CTO Joseph Delong additionally confronted stress from a number of inside disputes because of the fracturing of the protocol’s crew. Sushi’s enterprise growth lead, AG, accused Delong of abuses of energy—earlier than being fired “for a continued sample of conduct that made for a poisonous office.” A rekt.information investigation then accused Sushi crew members of spending treasury funds on steak and lobster dinners, gaming an allocation of tokens from MISO’s BitDAO sale, and day buying and selling utilizing protocol funds. Delong resigned in December 2021.

For a lot of 2022, Sushi has been caught in limbo. A plan to unite the protocol with Daniele Sestagalli’s abracadabra.cash gave the SUSHI token a quick value bump, however this fell via after it was revealed that serial scammer Michael Patryn (in any other case often called 0xSifu) was the treasury supervisor for one in every of Sestagalli’s different initiatives. Nonetheless, a latest vote for a brand new Sushi CEO promised to breathe life again into the challenge and put it on a brand new trajectory.

Sadly, Sushi simply can’t catch a break. Whether or not the protocol is affected by rampant corruption or incompetence is unclear, however SUSHI token holders opted to elect Jared Gray because the protocol’s new CEO. Past a sure foolish meme that’s carried out the rounds on CT over the previous 24 hours, it’s not laborious to uncover Gray’s controversial previous with only a little bit of digging. He’s been on the head of a number of failed initiatives, one in every of which concerned Gray’s enterprise accomplice Kevin Collmer
stealing funds from buyer accounts. What’s extra, two enterprise capital corporations—GoldenTree and Cumberland—carried the vote to place Gray in cost, making up over 61% of the overall voting energy. I’ll go away you all to attract your individual conclusions from this.

Sushi was as soon as a promising protocol and an actual rival to the main decentralized trade Uniswap. Regardless of all of the drama, Sushi nonetheless receives an honest quantity of buying and selling quantity and is the nineteenth largest DeFi protocol by whole worth locked. In comparison with different exchanges, Sushi seems undervalued when contemplating the ratio between the quantity of buying and selling quantity it handles and its token value. Though Sushi will seemingly stay a core protocol within the broader DeFi ecosystem, its historical past of poor administration and controversy can be extremely laborious to shed.

Disclosure: On the time of writing, the writer of this piece owned SUSHI, ETH, and several other different cryptocurrencies. The knowledge contained on this article is for instructional functions solely and shouldn’t be thought of funding recommendation.