The Sushiswap team plans to introduce new tokenomics to address the liquidity problems that the decentralised exchange (DEX) has as a result of unfavourable market conditions.
Sushiswap updates the SUSHI token market
The team is implementing a new tokenomics model to encourage decentralised ownership and incentivize liquidity growth via a comprehensive and sustainable mechanism in order to address the severe liquidity problem that the Sushiswap DEX is now experiencing.
You may remember that the chief chef of Sushiswap Jared Grey, stated earlier this month that the project’s present token economics and incentive scheme were no longer viable due to the current bear market. If the issue is not permanently fixed, he continued, the protocol might soon stop working.
According to the team’s new tokenomics proposal, there are four key steps they will take to address the liquidity crunch: rewarding liquidity providers (LPs) with non-dilutive token rewards for scalable volume, supporting exchange product stack enhancements to encourage LP opportunities, implementing an optimised reward mechanism to increase Sushi’s market share, and reorganising its governance with a more equitable model.
The team stated:
“The newly proposed Sushi token model properly incentivizes behavior that benefits the entire ecosystem and all stakeholders by encouraging long-term liquidity provision, directing fees to activities that earn a profit, and supporting perpetual token principals.”
The new model completely relieves strain on the Sushi treasury, and the developers are confident that if it is successfully implemented, it will allow Sushiswap to continue operating regardless of market conditions.
According to DefiLlama, Sushiswap is the 20th-largest decentralised finance (DeFi) protocol in the world as of the time of publication, with $454.12 million in total value locked (TVL). On the other side, according to CoinMarketCap, the price of SUSHI is currently fluctuating about $0.938 and has a market capitalization of $208.4 million.
