Proposal To Create A DAO To Support SushiSwap

Earlier this week, Nathan Allman, the founder of DeFi protocol Ondo Finance, made a post on decentralized exchange’s SushiSwap forums, proposing to create a DAO to support SushiSwap. Ondo offers structured products with several tranches and levels of risk as well as liquidity-as-a-service in partnership with several stablecoin issuers.

The Formation Of An On-Chain DAO

The proposal called for forming an on-chain DAO and a legal entity for certain Sushi assets, both governed by SUSHI holders. More importantly, it suggested a sushi development fund of approximately $15 million to pay for Sushi development and compensate core contributors. The $15 million would be sourced from stablecoin issuer Frax and other yet to be announced contributors. Moreover, the proposal called for stronger partnerships between Sushi and protocols such as Ondo, Synapse, Frax, and UMA.

Stemming The Losses

My initial take is that if this proposal were to pass, this could potentially be a significant positive for SushiSwap, which has seemed to languish over the past year (SUSHI price is down ~70% YoY as of writing), especially since losing ground to Uniswap v3 and drama between Sushi’s core contributors. The protocols behind the proposal such as Ondo and Frax have products that are dependent on Sushi in some way, so it makes sense they want to provide a boost to Sushi. If the DAO formed is indeed effective, it is possible they will be able to help Sushi streamline many of its product efforts. Moreover, the fund should be able to ensure competitive compensation for new and current Sushi developers, alleviating the loss of talent Sushi saw last year.

Conclusion

The Sushi community seems to be pushing back initially, noting it is still digesting the aftermath of a December 2021 proposal from Arca and Frog Nation which fell apart. Moreover, the Sushi community is just getting back control of its Discord, after tumultuous team infighting, so it may be a while before the Ondo proposal receives full consideration. But it seems like it could be a major step in the right direction for Sushi and could lead to a new wave of innovative products built on it.

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