--- title: Sushi Gauges and Meiji DAO description: updated with notes and spelling fixes --- # Sushi Gauges and Meiji DAO Authored by @ControlCplusControlV > updated with feedback at the bottom and spelling fixes in the primary doc Like Japan before the Meiji restoration, Sushi has fallen behind the rest of DeFi. This proposal aims to restructure Sushi's community. Unlike many previous proposals targeting the Sushi Org, this one focuses on Sushi's on-chain DAO. It hopes to separate those with financial interests in Sushi from those with Social interests in Sushi and align them towards working together. ## šŸ£ Sushi token revamp Sushiswap currently takes a 0.05% fee protocol wide on trades. The initial goal of this fee was to return protocol revenue to the hands of the token holder. Still, it has become apparent that this is wasteful and similar to a traditional corporation spending all of its income on share buybacks. This focus on immediate returns has also interfered with governance efforts to improve long-term health, being stopped by short-term holders hoping for a short-term pump. This, of course, inhibits long-term growth and sustainability. The goal of Meiji is to separate the short-term interests of token holders from the long-term goals of governance participants so that they can work together for the good of Sushi. ## šŸ£ Sushi Gauges The 0.05% fee protocol fee for swaps will remain, but instead of going to xSushi Holders, 10% of the cost will be a tribute to the DAO, which will grow Sushi long term. The other 90% is to be distributed among LP as incentives. The incentives for each pool will be voted on by $SUSHI token holders, giving them power over the short-term finance of $SUSHI. The incentives of $SUSHI tokens for liquidity providers will remain, and 70% of all $SUSHI emissions will be distributed alongside the formerly xSushi fee to Liquidity Providers. As for implementation details, Gauges voting occurs weekly to distribute the coming weeks' rewards. So SUSHI gauge weights at the start of the week will determine how rewards are allocated for the rest of the week. Gauges can also be built to enable emissions to other chains, so if a chain wants to incentivize their liquidity pools, they could buy SUSHI to boost emissions on their pools. Usually, Gauge voting requires a SUSHI to be locked up, but was removed as Sushi is attempting to accomplish something different with Gauges than Curve. As LP fees are being distributed Gauges are intentionally built plutocratically. While Crypto usually avoids plutocracy in this case, it is useful to cater to the wants of whales since who is providing liquidity doesn't matter as much as how much liquidity is being provided. However, if a $SUSHI holder votes on gauges, they can use that voting power on the DAO. This means short-term traders can help determine short-term direction, while long-term holders can determine long-term direction without interfering with the other. ## šŸ£ The Sushi DAO (v2) The new Sushi Dao hopes to include learnings on DAOs ignored in recent times to push a token narrative, taking inspiration from successful and the significantly less plutocratic MetaCartel and MolochDAO. This new DAO will use a share-based system with a lockup mechanism that awards a decreasing amount of shares the more $SUSHI locked up. The role of this DAO will be to focus on running the Sushi Organization, fund ecosystem development, and ensure Sushi remains well positioned in the market. Sushi has long seen high participation across a wide variety of DAO members but, in recent times, has struggled to involve these contributors directly in operations. This new DAO structure emphasizes individuals contributing, laying the groundwork for future proposals to decentralize development and operations. ## šŸ£ DAO Membership DAO Shares are votes which cannot be traded and are gained by locking up $SUSHI in an entrance contract. After locking up $SUSHI a member must wait for double the voting period before they can begin voting with their shares, although a new member can cancel entrance at any time. This waiting period prevents short-term thinkers from flooding governance and protects the integrity of votes (ie, if a whale is farming gauges, they can't use votes to push $SUSHI towards partnering with other projects they own). The formula for the number of shares granted is Shares granted = ((n DAO Members) * (log (Sushi locked Up)) / Average Number of Shares. This equation is chosen so that the number of shares awarded per $SUSHI diminishes the more you use to enter. For those trying to Sybil, it reduces the number of shares they get based on their size relative to already participating members. Each member will always have the right to Ragequit and claim all their $SUSHI in exchange for burning all their shares. --- TODO - Ask Sam on math, ideally large amounts have their voting power reduced exponentially, and Sybiler's destroy their voting power the more they Sybil As the DAO is also prevented from controlling token-holder returns, it cannot affect gauges or affect $SUSHI emissions without an emissions decision between $SUSHI holders and the DAO. Sushi emissions with otherwise continue at their present rate but instead fixed 30% to the DAO and 70% to the gauges. The 30% of $SUSHI emissions and 10% of the Protocol Swap fee will provide a modest amount of funding for the DAO to pay its engineers, the market at conferences, and make other operational decisions needed for the health of the protocol. Having a new DAO contract will also allow for some decentralization upgrades to approve the DAO's ability to act autonomously. The new DAO will be able to execute smart-contract calls on chain, change its internal parameters with a vote, and transfer tokens, making it truly autonomous. This will be a huge improvement from voting currently done from Snapshot and no longer require a centralized platform to reach consensus. ## šŸ£ DAO Operations Since Sushi will be upgrading to a new DAO structure, this enables new possibilities. The most obvious is onchain-voting for ratification, which also allows future experiments like DAO owned liquidity and on-chain lending and borrowing for the Sushi DAO. With the DAO having the ability to execute actions on the chain, the question comes up of security. To protect against this, incoming members can be slashed with INSERT PERCENT HERE% preventing them from entering the DAO, while allowing them to have their tokens still. They must be able to self-prune to stop hostile takeovers, so while this limits how permissionless governance is, it is necessary to protect the DAO. Internal Kitchen Initially, the DOA will also have a "kitchen" composed of influential community members who serve as a pseudo executive branch. These people will be needed to enact a proposal and are expected to enact proposals in line with Members. They do however act as a last line of defense against attacks. ## šŸ£ Parameter Finalization So while this proposal outlines many things, a second proposal will still be required to ratify the Meiji DAO, enabling a specific set of smart contracts, and provide exact answers to starting Voting Period, Quorum, and other parameters. ## šŸ£ Why? Sushi as a protocol needs repositioning and change to return to competition with Uniswap V3. This DAO upgrade will set the stage for future proposals šŸ‘€ making it easier to decide without needing to involve many disinterested short-term holders or rely on whales to push things through. With this upgrade, Sushi's DAO will move from a Glacier pace to a position of unmatched agility within DeFi. Sushi deserves to exist as a decentralized alternative to its competitors like Uniswap who've traded decentralization for token-based VC raises selling governance rights to the highest bidder, with this upgrade Sushi will return to the forefront of decentralization and have a framework for which to begin re-establishing an empire. ## šŸ£ Key Details šŸ£ New DAO created, which requires lockup of $SUSHI to enter. New DAO is Share Based, which grants shares based on a lockup mechanism favoring multiple medium participants rather than a few large ones (similar to quadratic voting) Gauges were Created to control rewards on Liquidity Pools Gauges are plutocratic, favoring whales similar to Curve Those voting in Gauges cannot participate in DAO and vice versa DAO gains 10% of the Protocol Swap fee (also known as xSushi fee) and 30% of token emissions to fund the project's long-term success. Sushi Gauges are created to distribute 90% of the Protocol Swap fee (also known as xSushi fee) rewards and 70% of newly minted $SUSHI. --- ## Notes ### Creating and demonstrating value to your readers: why should I care? > These notes can be used for any sort of academic-releated writing. We almost always overestimate our readers' sense of the importance of what we think is important. Any time you decide to skip stating a motivating problem, you ought to look hard at whether or not your readers are so motivated that they will read your prose even if they perceive it to be useless to them To talk about problems, we're starting with **the idea of instability**. We claim that in order to perceive a problem, readers have to perceive that something is unstable: something doesn't fit; something is amiss; something is wrong; something is incomplete; something is unknown; something is unresolved; something is contradicting something else; something causing tension; something is causing conflict; etc, etc. ## Instabilities Not all instabilities are perceived as problems. It's very easy to imagine readers who do not value any given instability: what if they just don't care? Something is unstable: so what? Something is unknown: why does it matter? Some things are in tension: who cares? Your 'task' of establishing value gets harder when it is not obvious to readers why they should care about the instability. For those readers, you have to be able to persuade them that not resolving the instability has costs, that resolving the instability has benefits. **And it is crucial that these costs and benefits be perceived as costs and benefits to the reader**. One of the most common weaknesses of writing is that the writer describes costs and benefits. > The reader, not the community or protocol: they must be relatable to the reader themselves. Background is something you give the reader (if at all) because you think they need it as a reliable base for understanding what you will present. Background is something you give readers so that they can build on it. To be effective, it has to stay stable: you provide background so that your reader can accept it and agree with it. You don't want background to be controversial--it's just background. The last thing you want is for your reader to come to doubt background. ## Gaps and Errors A ***Gap*** is in their understanding, these problem claim that there is a flaw in there readersā€™ knowledge. A *gap* problem claims that there is something outside the readersā€™ current knowledge that they ought to understand; an ***Error*** problem claims that there is something amiss in the knowledge that the readers think they have. **It is the function of proposals to advance the overall communityā€™s understanding.** Very often, we find that filling a *gap* does not advance understanding because the gap has no consequences: leaving the gap unfilled has no costs for the readers; filling it has no benefits. Ultimately it is that the value and function of your work lies in responding to the **readersā€™ problem of understanding**. > Ensure that readers will see the importance, the significance of your analysis. Otherwise their is no clear way to demonstrate value of your conclusions (hence why they should support your proposal). While it may be very appropriate, in the cost/benefits language of your problem, to show that your work affects the understanding of BIG issues, it is not the case that your problemā€”whether gap or errorā€”needs to resolve the issue in itself. You must bear many pressures from the fact that you write within a community, but this is one of the advantages: you arenā€™t in it alone. **Donā€™t deny yourself this advantage by forcing yourself to resolve it all yourself.** > Add a call to action and invite people to help: share the glory amongst your supporters.