Casey Wagner

The SEC on Tuesday served a subpoena on Tuesday to decentralized crypto exchange SushiSwap — presumably regarding concerns over its native token, Sushi.&nbsp;



In a governance proposal released Tuesday afternoon, the DEX said it hopes to sell 15% of its treasury to fund legal defense efforts.&nbsp;



“The international regulatory environment for DAOs remains in flux, and the options for contributor insurance policies remain limited,” Jared Grey, Sushi head chef, wrote in the governance forum Tuesday. “Therefore, we propose Sushi DAO make available a legal defense fund of 3M USDT.



Sushi and Grey were both served, the forum noted.&nbsp;



“We’re cooperating with the SEC,” Grey said in the proposal. “We do not intend to comment publicly on ongoing investigations or other legal matters.”



The proposal received six votes in the first 30 minutes after being published, all of which were in favor of establishing the legal defense fund.&nbsp;



The subpoena is only the latest in a series of recent SEC actions to look into various crypto tokens and projects over concerns of unregistered securities offerings. Ripple has been fighting its case in court over accusations that its XRP token is an unregistered security for more than two years.&nbsp;



When a crypto company is served a subpoena, or a Wells notice, or an enforcement action — and <a href="https://blockworks.co/news/sec-crypto-enforcement-actions-accelerate">there have been no shortage lately</a> — they need to operate under the assumption that the SEC’s case is already decided, Stuart Alderoty, chief legal officer at Ripple, said.



“The fix is in, and do what you what you need to do to cooperate under the law but don&#8217;t fool yourself into believing that you&#8217;re going to curry favor with [the SEC] or that you&#8217;re going to be able to sway them, because you never will and their goal ultimately will be to crush you or destroy your business,” Alderoty said.&nbsp;



Grey declined Blockworks’ request for comment.



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SushiSwap Defense Fund Against SEC Subpoena Already in Works

Sebastian Sinclair

Decentralized exchange trading activity has begun to pick up steam, with some of the DEX sector’s biggest players booking a notable bump in trading volumes this week.



Ethereum-based Uniswap was leading the pack toward the end of the work week in New York, hovering around the 50% mark of total DEX volume, equating to a week-over-week double-digit jump to around $12 billion, data from <a href="https://defillama.com/dexs" target="_blank" rel="noreferrer noopener">DeFiLlama</a> shows.



Its closest rival, PancakeSwap was holding steady around 8% via the same market cap metric — up about 20% since the week prior, clocking in around $2.1 billion. The DEX still leads on <a href="https://twitter.com/Blockpour/status/1623668554137751552?s=20&amp;t=ihhtwohhnDZvzdZcS-9Kjw" target="_blank" rel="noreferrer noopener">trader count</a> on Binance’s BNB Chain.



Notable DEXes Curve and SushiSwap have also seen significant increases in trading volumes,  jumping 12% and 63% respectively, in the last seven days through early Friday morning in New York. 



Average increase for volumes across all DEXes popped 16% or so on the week. 



Unlike centralized exchanges, which are run by a single entity, decentralized rivals are built on decentralized infrastructure — including smart contracts — allowing traders to swap assets directly with one another, eliminating the need for an intermediary.&nbsp;



Their popularity has continued to grow following the fourth quarter collapse of the centralized FTX — leaving the funds of retail and institutional investors alike frozen to this day.



Decentralized exchanges that were battle-tested last year, have come out on top, according to Toby Chapple, head of trading for the Australian trading firm Zerocap.



“The use of smart contracts on public blockchains cures a large part of counterparty-related issues related to centralized single-point entities,” Chapple told Blockworks. “The smart contracts themselves handle the crisis exactly as the rules that govern them said they would — they liquidated market participants as per the terms of the DEX.”



That’s now especially true for some market participants up in arms over the SEC’s move against centralized entity <a href="https://blockworks.co/news/kraken-settles-sec-crypto-staking-program">Kraken to shutter its US staking operations</a>. Hester Peirce, a long-tenured SEC commissioner, went as far as to <a href="https://blockworks.co/news/sec-commissioner-speaks-out-kraken">blast her own agency as “paternalistic” and “lazy”</a> in terms of Gensler’s most recent crypto crackdown. 



The centralized exchange settled with the SEC without confirming, nor denying fault, and agreed to pay a $30 million fine in the process.  



“Staking is never going away,” Bill Hughs, senior counsel and director of global regulatory matters at ConsenSys, told Blockworks in a statement. “Access to it will only grow because that is what people all around the world will demand.”



Staking remains crucial to scores of <a href="https://blockworks.co/news/proof-of-work-vs-proof-of-stake-whats-the-difference">proof-of-stake networks</a>, providing a mechanism for reaching consensus — and providing reward-based incentives to validate transactions and ensure a blockchain’s stability and security. 



DAO governance participants — and other individuals looking to accrue cryptocurrencies outside of the scope of regulatory scrutiny — have continued to tap DEXes in large numbers as an alternative to centralized routes. 



The sentiment appears to be increasing, according to Chapple, as exchanges continue to roll out offerings designed to win over user trust, even considering current complications.



“Going forward, the growth of DEX&#8217;s will need to address the smart contract vulnerabilities to hacking risk that seems to still plague the industry from time to time, before mainstream adoption by TradFi can be contemplated,” Chapple said.



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DEX Trading Activity Picks Up Steam as Markets Spurn Centralization

Bessie Liu

Community members at the DAO behind the SushiSwap decentralized exchange have <a href="https://snapshot.org/#/sushigov.eth/proposal/0xf0353dcc69b766e96e2d1f65f76be2f13c03c1df7ed5ef483e9352e0da59a821" target="_blank" rel="noreferrer noopener">voted</a> in favor of retrieving 8.2 million SUSHI tokens (approximately $11 million) originally offered as rewards to early liquidity providers (LPs).



In the first six months after the launch of SushiSwap, LPs were rewarded with SUSHI tokens — two-thirds of the accrued rewards were locked up in a smart contract known as the Sushi Vesting Merkle Tree and could only be retrieved after an additional six months.



Now, over a year after the full release of these vested tokens, the Sushi community has decided that it will claw back the remaining SUSHI tokens from the smart contracts.



Clawback tokens will be deposited directly back into the Sushi treasury. LPs who still have locked up SUSHI tokens will have until April 23, 2023 at 9:00 am ET — exactly three months from today — to claim their tokens. After this date, the two Merkle Trees will be frozen.



This proposal received mixed responses from community members when it was first introduced in April 2022.



In a <a href="https://forum.sushi.com/t/sushi-vesting-merkle-tree-clawback-temp-check/10008" target="_blank" rel="noreferrer noopener">discussion forum</a>, pseudonymous user CryptoLamer said the clawback did not seem like the right move. 



“People have earned these SUSHI fair and square and we should not deny them the right to claim whenever they want — it was never mentioned that there will be an end period, so changing the rules may have a negative effect on our image,” CryptoLamer said.



Other users agreed with this sentiment and said it would be important to reach out to those who still had tokens locked up.



“We should do everything in our power to contact those people,” user SCNightshade said.



In the Snapshot vote, which ended today, the proposal received over 6.8 million SUSHI (99.85%) in favor of the clawback, passing the quorum that was set to 5 million SUSHI, with only 0.14% of voters voting against it.



The proposal directs Sushi’s core developers to implement the clawback plan.



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Sushi To Roll Unclaimed Governance Tokens Into DAO Treasury

David Canellis

SushiSwap DAO CEO Jared Grey has disclosed the operation’s Budget Snapshot for 2023, with more than $5.2 million slotted to maintain the decentralized exchange (DEX) next year.



The platform, stewarded by a DAO, will spend more than 80% of those funds across 15 salaries, including $500,000 in USDC to “head chef” Grey (salary recipient names were redacted on Twitter). That works out to be around $286,500 per team member on average.



The remaining DAO budget, about $919,000, will go towards SushiSwap operational overheads such as legal fees, subscriptions, freelance contributor compensation and social media management costs. 



One undisclosed freelancer is budgeted for $12,000 per month, just $500 less than the averaged monthly retainer for Sushi&#8217;s legal team.



Grey addressed the compensation-heavy budget and stated that transparency is a “critical component of a successful DAO.



“[For what it’s worth], any project is only as strong as its talent and community; talent requires proper compensation through grants or as a full-time contributor with a salary. The current team is dedicated and proven; 2023 will see Sushi deliver an innovative DEX model.”



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" src="https://flo.uri.sh/visualisation/12169307/embed#?secret=2epQy0v2QL" data-secret="2epQy0v2QL" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div></figure>



Grey’s tweet comes soon after SushiSwap <a href="https://twitter.com/jaredgrey/status/1602057430631940098" target="_blank" rel="noreferrer noopener">disclosed</a> a $30 million loss over the past 12 months. He said the protocol&#8217;s emissions-based reward strategy — which pays participants in native token SUSHI — failed to incentivize liquidity providers.&nbsp;



SushiSwap, which runs on Ethereum, competes with DEXs Uniswap and Balancer.&nbsp;Once one of DeFi&#8217;s largest protocols, much of SushiSwap’s dominance has slipped over the past two years due to <a href="https://blockworks.co/news/sushiswap-swaps-out-co-founder-0xmaki" target="_blank" rel="noreferrer noopener">leadership controversies</a> alongside allegations of improper spending, including $9,000 dinners and $5,000 tickets to industry mixers.&nbsp;



Its SUSHI token, which DAO participants must hold to vote on governance, has been hit hard by the bear market. SUSHI trades at $1.12, down more than 85% this year. For scale, bitcoin is down around 63% year to date alongside ether (ETH).



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">As I promised in Sunday&#39;s tweet regarding Sushi&#39;s Budget Snapshot for 2023, I am making the DAO operating costs public. Transparency is a critical component of a successful DAO. You can see most budget costs are salaries. 1/ <a href="https://t.co/rVHXEJSfLR">pic.twitter.com/rVHXEJSfLR</a>&mdash; Jared Grey (@jaredgrey) <a href="https://twitter.com/jaredgrey/status/1602701300520652800?ref_src=twsrc%5Etfw">December 13, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3>SushiSwap DAO proposal for a sustainable business model</h3>



In an effort to get SushiSwap into shape, Grey recently <a href="https://forum.sushi.com/t/reinstated-increase-kanpai-treasury-allocation-to-100/11475" target="_blank" rel="noreferrer noopener">re-proposed</a> shaking up how the protocol structures its revenue flows. SushiSwap DAO <a href="https://www.bloomberg.com/news/articles/2022-10-03/defi-project-sushi-finds-a-new-leader-to-save-its-struggling-business" target="_blank" rel="noreferrer noopener">hired</a> Grey, a crypto entrepreneur and tech consultant, in October.



Dubbed the “Kanpai and Treasury Payout Ratio,” the move would allocate all protocol revenue (trading fees) to SushiSwap DAO’s treasury to pay budget costs. SushiSwap previously paid only 10% of fees to the treasury, and Grey said the DAO has around 18 months of runway as things stand.



If passed by token holders, the payout ratio will stay in place for one year or until new tokenomics are suggested and implemented. Projected revenue sits around $6 million (15% higher than its budget) and will be received by the treasury in the form of 50% ETH and 50% USDC. 



“The Kanpai proposal will reinforce Treasury diversification, secure its future runway and promote a successful pivot of the DEX business and token goals,” Grey <a href="https://twitter.com/jaredgrey/status/1602701303716651009" target="_blank" rel="noreferrer noopener">tweeted</a>. “Diversification allows Sushi&#8217;s Treasury to earn USDC and ETH without selling tokens.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Although tokenomics are a core part of restructuring the DEX business model, it&#39;s not the total solution. We&#39;ve redesigned how we bootstrap liquidity on the exchange; we no longer entirely subsidize liquidity with emissions but via a more equitable mechanism. 9/&mdash; Jared Grey (@jaredgrey) <a href="https://twitter.com/jaredgrey/status/1602057435530895364?ref_src=twsrc%5Etfw">December 11, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Despite a push for transparency, some community members believe SushiSwap DAO is overpaying its talent (the DAO <a href="https://thedefiant.io/sushiswap-votes-on-head-chef-salary" target="_blank" rel="noreferrer noopener">voted</a> in August to cut CEO $800,000 compensation by more than a third). Others have <a href="https://cryptoslate.com/sushiswaps-jared-grey-proposes-to-allocate-100-of-xsushi-revenue-to-treasury/" target="_blank" rel="noreferrer noopener">voiced</a> belief that SUSHI holders should receive a slice of the trading fees.



“Paying [$300,000] a year by employee without bonus just to add some effect on the UI, sponsoring a lot of crypto events around the world is not a good way to spend money,” pseudonymous DAO member GoldenNaim <a href="https://forum.sushi.com/t/reinstated-increase-kanpai-treasury-allocation-to-100/11475/22" target="_blank" rel="noreferrer noopener">wrote</a> in the proposal discussion.&nbsp;



Alex Shefrin, business development lead at SushiSwap, replied further down to suggest its core problems stemmed from past leadership decisions, which left the protocol without an underlying business model to “sustainably capture the value that we are creating.”



“[And] frankly we spend a lot of time here fighting this point,” said Shefrin. The Kanpai proposal currently has 97 voters, with 64% voting “Yes &#8211; Secure Sushi’s Future with Kanpai.”



A complete financial audit of Sushi can be expected in the first quarter of 2023, Grey said.



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SushiSwap DAO Budgets $5.2M, With 82% Going to Salaries

Jack Kubinec

<div id="highlights-block_6359a9a8d4e86" class="highlights">
 <ul>
 <li>SushiSwap, SafeDAO and Uniswap have all altered their legal structures in recent months</li>
 <li>New DAO legal structures are functionally very similar to LLCs, crypto lawyers say</li>
 </ul>
 
</div>



Major DAOs are moving to adopt legal structures as regulators ask tough questions about their legal liability.



Crypto trading platform SushiSwap just announced a new <a href="https://cms.blockworks.co/sushidao-seeks-shelter-in-cayman-islands-panama/" target="_blank" rel="noreferrer noopener">three-part legal structure for its DAO</a> and developer team. Earlier this week, Gnosis’ SafeDAO passed a <a href="https://snapshot.org/#/safe.eth/proposal/0x87c8091b5edc2cb489cc0f4231c8b675dbb1b11aa42c260c81ead9cf312f193f" target="_blank" rel="noreferrer noopener">Snapshot proposal</a> that “limits the liability of SafeDAO participants” in case the DAO gets in legal trouble. Uniswap <a href="https://cms.blockworks.co/uniswap-to-create-foundation/" target="_blank" rel="noreferrer noopener">launched a foundation</a> back in August that provides a clearer view of who is behind the DAO.&nbsp;



As crypto <a href="https://cms.blockworks.co/sam-bankman-fried-proposes-respect-for-ofac-in-crypto-regulatory-framework/" target="_blank" rel="noreferrer noopener">familiarizes itself</a> with regulators, DAOs are starting to adopt legal structures to try and get ahead of any compliance issues down the line.&nbsp;



The legally compliant DAO era could be accelerated when a decision is reached in the <a href="https://cms.blockworks.co/cftc-legally-served-ooki-dao-via-website-help-bot-court-rules/" target="_blank" rel="noreferrer noopener">CFTC’s case</a> against Ooki DAO for running an unregistered derivatives exchange. The case marks the regulators’ first lawsuit against a DAO, likely warning others in the space that they should step up their compliance efforts.&nbsp;



As regulators’ patience with DAOs runs thin, “many building in DeFi are running to whatever structures they can find to protect themselves,” <a href="https://www.linkedin.com/in/mike-wawszczak/" target="_blank" rel="noreferrer noopener">Mike Wawszczak</a>, general counsel at Alliance, told Blockworks in a Telegram message.&nbsp;



These slapped-together legal structures can cause DAOs to centralize, which is a shame, Wawszczak said, because “decentralization is the whole point.”&nbsp;



Still, that DAOs are reckoning with liability should be a relief to DAO participants.



“[Legal] wrappers provide some degree of comfort relative to a regimeless DAO,” Michael Selig, crypto lawyer at law firm Willkie Farr &amp; Gallagher, said in a message on Twitter.



And as crypto builds a financial system from the ground up, DAOs are in a sense discovering a building block of modern corporations — the limited liability corporation [LLC].&nbsp;



When corporations emerged as business structures, “the key feature of an organizational structure that was appealing from the perspective of capital formation was limited liability,” Brian Frye, a law professor at the University of Kentucky, said. “The dominant legal organizational form is actually the LLC at this point.”



Efforts to encourage the formation of DAO LLCs, such as <a href="https://sos.wyo.gov/Business/Docs/DAOs_FAQs.pdf" target="_blank" rel="noreferrer noopener">Wyoming’s recent law</a>, have been mostly unsuccessful. Wawszczak said DAO laws are unhelpful when organizations under the term are so amorphous — from centralized entities hoping to become a DAO to software using token voting to settle disagreements over upgrades.&nbsp;



Different DAOs “would use and deploy LLCs differently, and those who interact with [DAOs] might use LLCs themselves” in the same way freelance workers can use LLCs, Wawszczak told Blockworks.



But until DAOs adopt a clearer definition, Frye thinks US regulators should focus on the teams behind DAOs rather than token holders, as the CFTC indicated in its case against Ooki DAO.&nbsp;



“In a lot of ways, [token holders] are the retail investors that the regulators are, among other things, tasked with protecting,” Frye said.



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DAOs Rush To Restructure To Avoid Legal Liability

<div id="highlights-block_7dd1b740fa024ba548cd708c0322d92f" class="highlights">
 <ul>
 <li>The implementation of the new legal structure received unanimous support from community members</li>
 <li>DAO members cast 11 million voting tokens in favor of the proposal</li>
 </ul>
 
</div>



SushiDAO, the governing body of decentralized cryptocurrency exchange SushiSwap, is implementing a new legal structure after receiving <a href="https://snapshot.org/#/sushigov.eth/proposal/bafkreibawm6u4tsq4e5lqwz5yo3rg2k4p6upg5eqaeen33ghmuwxttiaqm" target="_blank" rel="noreferrer noopener">unanimous support</a> from community members.



Sushi’s current administrative structure includes a DAO of community members with voting privileges, alongside an execution team that manages smart contracts and the front end of the protocol.



The new legal structure will split Sushi into three new entities: a Cayman Islands DAO Foundation, a Panamanian Foundation and a Panamanian Corporation.



The Cayman Island Foundation will oversee all administrative aspects of the DAO, including treasury, grants and on-chain governance management. It will also facilitate proposals and voting, and enter into agreements with service providers as part of the grant-making process.



Smart contracts related to Kashi — the exchange’s lending and margin trading platform and automated market maker — will be handled by the Panamanian Foundation, as well as staking.



The Panamanian Corporation, which will be a wholly owned subsidiary of the Panamanian Foundation, will manage and assist with developing and maintaining the web-facing apps that make Sushi’s protocol accessible to the public.



According to <a href="https://forum.sushi.com/t/recommendation-for-sushi-legal-structure/11158" target="_blank" rel="noreferrer noopener">proposals</a>, Sushi also looked into setting up governance in Switzerland but determined that it was inappropriate as the regulatory and taxation model was “not favorable to growth companies.”



<h2>SushiDAO opts to avoid &#8220;flawed&#8221; DAO legislation in Wyoming</h2>



Panama is an attractive place to incorporate due to its free economic zones, non-existent income and tax withholdings and physical proximity to the United States.



But Neil Bhasin, a community member of SushiDAO, <a href="https://forum.sushi.com/t/recommendation-for-sushi-legal-structure/11158/16" target="_blank" rel="noreferrer noopener">said</a> Panama was chosen to host its protocol governance as “Panamanian foundations are non-commercial in nature and do not have beneficial owners.” 



Further, Bhasin highlighted that “the corporate formation process results in two entities that can separately house the protocol and GUI [graphical user interface] layers, which reduces the need to form additional entities.”&nbsp;



It is interesting to note that Wyoming, a US state which has catered to DAO LLCs, was not considered an appropriate home.



According to Bhasin, this was because “the Wyoming DAO legislation is widely accepted by those in the industry, including myself, as being flawed.”&nbsp;



“It’s also untested in the courts. We’re meant to be offering protection to devs and ops [developers and operations] folks, not exposing them to experimental, untested, poorly drafted legislation,” he said.



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SushiDAO Seeks Shelter in Cayman Islands, Panama

<div id="highlights-block_63471cb7b6e52" class="highlights">
 <ul>
 <li>An investor in Jared Grey’s earlier DeFi project accused the head chef of mishandling hacks, though admitted to Blockworks his case was “speculative”</li>
 <li>Sushi’s native token dropped 10% following the allegations</li>
 </ul>
 
</div>



SushiSwap’s <a href="https://cms.blockworks.co/sushi-dao-holds-election-for-chief-executive/" target="_blank" rel="noreferrer noopener">newly-elected</a> top executive — or “head chef” — has been accused of mishandling wallet exploits at his prior employer. 



The allegations appear flimsy, but they still present a headache for the DeFi platform accustomed to <a href="https://cms.blockworks.co/update-cto-resigns-as-sushiswap-struggles-arca-submits-restructuring-proposal/" target="_blank" rel="noreferrer noopener">leadership drama</a>. And legal action is brewing. 



Jared Grey was elected head chef of SushiSwap on Oct. 3 via an on-chain election <a href="https://cms.blockworks.co/sushiswap-election-settled-by-goldentree-cumberland/" target="_blank" rel="noreferrer noopener">dominated by venture capital firms</a>, and the accusations came as Grey was still an unfamiliar figure to many in the protocol. 



The purported misconduct centers around Grey’s alleged negligence during a string of 2019 insider hacks at DeFi protocol ALQO, as then-CEO. Twitter user @YannickCrypto, who worked with Grey to stem the ALQO hacks in 2019, outlined the accusations on <a href="https://twitter.com/YannickCrypto/status/1579536678972436480?s=20&amp;t=vlj8SBTOnVPFuO14W95xvA" target="_blank" rel="noreferrer noopener">Twitter Monday</a>. 



SushiSwap’s native SUSHI token, which had already fallen 90% from its 2021 high, <a href="https://www.coingecko.com/en/coins/sushi" target="_blank" rel="noreferrer noopener">dropped another 10%</a> on the news. The token had trended up following the election.



ALQO (since rebranded as <a href="https://twitter.com/eons_finance" target="_blank" rel="noreferrer noopener">EONS</a>) allowed users to store cryptoassets using its wallet software, Liberio. In February 2019, Liberio users began complaining of suddenly-missing funds. At the time, Yannick released on-chain data suggesting one of ALQO’s developer wallets had been involved. 



Months later, Grey and ALQO concluded the account exploits were coming from ALQO’s chief technology officer Kevin Collmer. Collmer was fired soon after.



Yannick told Blockworks via Discord that Grey “knew about [the hacks] and did nothing” in the months between the withdrawals first being reported and Collmer’s firing “to milk the last dollars out of ALQO.” Pressed to provide evidence for his claims, the on-chain sleuth conceded his case against Grey was “speculative.”



One early ALQO investor told Blockworks that Yannick soured on ALQO following the hacks.



“You could almost say he was obsessed with [destroying ALQO],” the investor wrote.



In November 2019, ALQO published a <a href="https://eons-finance.medium.com/liberio-a-detailed-report-regarding-unauthorized-access-95b9e7641f5a" target="_blank" rel="noreferrer noopener">blog post</a> concluding “Kevin Collmer’s actions contributed directly to the loss of user funds on Liberio.” Collmer maintains his innocence, telling Blockworks that German law enforcement searched his belongings but found no evidence of his involvement in the series of hacks.



Grey insisted Collmer was behind the exploits, adding the ALQO co-founder was terminated when he made off with investor funds as ALQO planned to expand.



“He stole the money, ghosted us for [two] months, and then after we demanded the money back via a demand letter, he never returned it, and we fired him,” Grey said in a Twitter DM.



Grey is now suing, or about to sue, Collmer in Germany, according to sources familiar with the matter. Grey declined to comment on the lawsuit.&nbsp;



Several hacked ALQO users told Blockworks that Grey was transparent about the hacks and refunded their coins — albeit at a lower price — following Collmer’s departure.&nbsp;



Following the allegations, Grey fessed up to business failures <a href="https://twitter.com/jaredgrey/status/1579668810713296897?s=20&amp;t=NxqpbzdbhOqqItFDhaJptQ" target="_blank" rel="noreferrer noopener">on Twitter</a> but denied any specific wrongdoing with ALQO. On Wednesday, Grey penned a <a href="https://medium.com/@jaredgrey/3307be8e4a52" target="_blank" rel="noreferrer noopener">blog</a> rebutting each of Yannick’s allegations.



In his first week as head chef, Grey returned his earmarked severance package to the Sushi DAO treasury and <a href="https://twitter.com/jaredgrey/status/1579606884835024896?s=20&amp;t=NxqpbzdbhOqqItFDhaJptQ" target="_blank" rel="noreferrer noopener">teased</a> SushiSwap stable pools.



But for the top executive of SushiSwap, controversy seems to come with the territory.



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SushiSwap Head Chef Hit by Controversy in First Week

<div id="highlights-block_633b45b1a1a3c" class="highlights">
 <ul>
 <li>Cumberland and GoldenTree cast a combined 8.1 million of 13 million votes</li>
 <li>11 million of 13 million total votes were cast by just five wallets</li>
 </ul>
 
</div>



<a href="https://cms.blockworks.co/sushi-dao-holds-election-for-chief-executive/" target="_blank" rel="noreferrer noopener">The SushiSwap DAO hoped to set a new precedent</a> for transparency and crypto governance by holding a first-of-its-kind election for its chief executive, known as the decentralized protocol’s “head chef.”  



But <a href="https://snapshot.org/#/sushigov.eth/proposal/bafkreifkvrkobnbzy6j7th244kcvbryg2qiq4digepljyaqgnnnlwdvyza" target="_blank" rel="noreferrer noopener">voter turnout</a> was collectively low, giving quite the runway to five whales — including the kingmakers GoldenTree and Cumberland — leading to what some SushiSwap community members have dubbed a lopsided result, carried out in the very early days of governance and activism in the Web3 world. 



While activism has had an established, and SEC-regulated, framework in equities for decades, corresponding Web3 governance proposals have been plagued by low voter turnout and dominated by deep-pocketed token owners.&nbsp;&nbsp;



Ultimately, the two venture firms cast the deciding votes. In fact, if every other voter opposed their pick, the financiers still would have come out on top, considering just 391 of some 18,000 eligible Sushi wallets cast a virtual ballot. Of 13 million votes — one per token — 11 million came from the five big-money wallets.



Jared Grey, former CEO of DeFi platform Eons Finance, carried the election with 83%, though Andy Forman and Kenneth Hurley, who finished second and third, respectively, each garnered more votes from unique wallets.&nbsp;



Grey received support from key whales. Ten million of his 11 million votes came from four anonymous whale wallets.&nbsp;



The largest whale wallets in the election, which cast four million votes apiece, belonged to venture capital firms <a href="https://www.goldentree.com/" target="_blank" rel="noreferrer noopener">GoldenTree</a> and <a href="https://cumberland.io/" target="_blank" rel="noreferrer noopener">Cumberland</a>, Grey and Hurley told Blockworks.&nbsp;



Representatives from the prominent traditional finance asset managers approached Grey and other candidates after one of <a href="https://www.youtube.com/playlist?list=PL03oyFX32uZfNpcT8_EYubJcoijIut-S-" target="_blank" rel="noreferrer noopener">Sushi’s AMA calls</a>, Grey told Blockworks. Hurley said the two firms pressured Sushi insiders to back Grey during a private meeting ahead of the election.



Sushi DAO members were disheartened by the election’s dominance by whales.



<blockquote class="wp-block-quote">“I guess DeFi is no different than [TradFi], except that this has the veneer of choice,” a DAO member <a href="https://discord.com/channels/748031363935895552/1009910713017438228/1026027197250687036" target="_blank" rel="noreferrer noopener">wrote on Discord</a> after the election. </blockquote>



Venture capital backing aside, the Sushi community has <a href="https://discord.com/channels/748031363935895552/1009910713017438228/1026510556057829416" target="_blank" rel="noreferrer noopener">generally positive feelings</a> about Grey. For his part, Grey is unconcerned about venture capital participation in the election.



“I got the impression from those funds that I spoke with that ended up voting for me, that they’re very much in alignment with what people want,” Grey said.



SushiSwap, once <a href="https://web.archive.org/web/20201125082236/https://defillama.com/home" target="_blank" rel="noreferrer noopener">among the largest</a> DeFi protocols on the market, has been roiled in <a href="https://cms.blockworks.co/update-cto-resigns-as-sushiswap-struggles-arca-submits-restructuring-proposal/" target="_blank" rel="noreferrer noopener">leadership controversy</a> for much of the past two years, sliding to 19th in total value locked (TVL) among DeFi protocols, <a href="https://defillama.com/" target="_blank" rel="noreferrer noopener">per DeFiLlama</a>. Head chef candidates were under pressure to roll out detailed plans for how to restore Sushi to the upper echelons of DeFi.



In an interview with Blockworks ahead of the election, Grey said he hoped to “do a forensic style audit on [Sushi’s] treasury” and make the protocol “operationally lean.”



Hurley was less optimistic on venture capital’s alignment.



“When I talked with the one VC firm, he said, ‘Oh, well we all have the same goals in mind, and that’s to get the Sushi price up,’” Hurley said. “That’s not necessarily my goal. I want to move the crypto space forward.”



Grey stressed that DAO governance is a work in progress, considering DeFi is in its infancy and <a href="https://cms.blockworks.co/bipartisan-stablecoin-regulation-has-a-slim-chance-of-passing-this-year/" target="_blank" rel="noreferrer noopener">regulation</a> remains opaque. Sushi is currently weighing the <a href="https://forum.sushi.com/t/sushi-meiji-restoration/10969" target="_blank" rel="noreferrer noopener">Meiji proposal</a>, aimed, in part, to reduce the voting power of whales. In the meantime, Grey still sees the election as a step up from executives being nominated behind closed doors.



“At the end of the day, [the election is] one of the more fair ways to get executive leadership in these roles,” Grey said. “I’d like to see some version of this process get adopted by more DAOs, so we can improve on it.”



Cumberland and GoldenTree did not respond to requests for comment.



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SushiSwap ‘Head Chef’ Election Settled by GoldenTree, Cumberland

<div id="highlights-block_632494694dc7d" class="highlights">
 <ul>
 <li>The Sept. 26 election follows years of infighting among the DEX’s leadership</li>
 <li>“It&#8217;s really crunch time over the next 10 months for SushiSwap,” a head chef candidate said</li>
 </ul>
 
</div>



The decentralized organization behind crypto exchange SushiSwap is tapping its next chief executive.&nbsp;



Instead of having insiders interview and select a candidate, the DeFi platform’s “head chef” will be elected by holders of the protocol’s native SUSHI token following a public campaign.&nbsp;



The election represents a grand experiment in corporate governance and the viability of decentralized business models. But the nomination process has been mired in controversy and comes as Sushi struggles to keep its treasury afloat.



SushiSwap — by far the most important product in the Sushi dapp suite — is the <a href="https://defillama.com/dexs" target="_blank" rel="noreferrer noopener">sixth-largest decentralized exchange (DEX)</a> by trading volume, but the protocol’s next head chef will take over an organization battered by leadership tussles.



In 2020, the protocol’s creator stepped down after being <a href="https://decrypt.co/41547/sushiswap-chef-nomi-gives-back-14-million-ethereum" target="_blank" rel="noreferrer noopener">accused</a> of running an exit scam that drained $14 million from a developer fund. The next leadership team had its own imbroglio when Sushi’s project lead and chief technology officer <a href="https://cms.blockworks.co/update-cto-resigns-as-sushiswap-struggles-arca-submits-restructuring-proposal/" target="_blank" rel="noreferrer noopener">resigned in late 2021</a> amid developer team infighting and allegations of financial mismanagement. 



After a <a href="https://thedefiant.io/sushiswap-crisis-struggle-discord" target="_blank" rel="noreferrer noopener">failed merger</a> and a slew of <a href="https://www.coindesk.com/business/2021/09/17/3m-in-ether-stolen-from-sushiswaps-miso-launchpad/" target="_blank" rel="noreferrer noopener">uninspiring</a> product releases, the new leader will also be tasked with rebuilding the protocol’s finances.



“It&#8217;s really crunch time over the next 10 months for SushiSwap,” Andrew Forman, a head chef candidate, told Blockworks.



<blockquote class="wp-block-quote">“We don’t have the treasury that some of the other DeFi protocols have…and right now, our expenses are higher than our revenue,” he said.</blockquote>



SushiSwap’s treasury takes a portion of the protocol’s fee revenue, but its <a href="https://openorgs.info/organization/sushi" target="_blank" rel="noreferrer noopener">purse</a> is mostly denominated in SUSHI tokens, which have fallen in price from all-time highs of about $20 in 2021 to hovering around $1. 



In July, the SushiSwap team put forward Jonathan Howard as the first candidate for the head chef position. A protracted battle <a href="https://forum.sushi.com/t/election-of-jonathan-howard-as-head-chef/10874" target="_blank" rel="noreferrer noopener">ensued</a> over Howard’s proposed compensation of $800,000 yearly, with another $600,000 in vested tokens. In late August, Howard <a href="https://discord.com/channels/748031363935895552/1009910713017438228/1012114875155226665" target="_blank" rel="noreferrer noopener">announced</a> in a Discord message he was battling a bad case of the flu and would be dropping out of the election.



<h3>The final five</h3>



Five candidates have made it through Sushi’s <a href="https://sushi.com/blog/searching-for-a-sushi-head-chef" target="_blank" rel="noreferrer noopener">vetting</a> process and are currently campaigning and holding <a href="https://www.youtube.com/watch?v=Fos41cKqGDg" target="_blank" rel="noreferrer noopener">AMAs</a> ahead of the election. 



The SushiSwap election is a novel approach to what is essentially a CEO nomination. While Sushi’s electoral process has undergone ad hoc alterations in response to community uproar, the protocol hopes to model a new method of leadership succession for the emergent crypto industry.&nbsp;



“[The election is] bringing a lot of transparency into the process, and the whole purpose of blockchain is to shed light and transparency to areas that traditionally have been opaque. Finance hasn&#8217;t been the most truthful industry over the last few decades,” Jared Grey, a head chef candidate, told Blockworks.



Head chef hopefuls will debate on SushiSwap’s <a href="https://www.youtube.com/playlist?list=PL03oyFX32uZfNpcT8_EYubJcoijIut-S-" target="_blank" rel="noreferrer noopener">weekly Discord call</a> on Sept. 22 before DAO members vote based on their SUSHI holdings on Sept. 26.



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Sushi DAO Holds Election for Chief Executive

Macauley Peterson

<div id="highlights-block_6234c65660322" class="highlights">
 <ul>
 <li>Sushi has fallen out of the top 10 decentralized exchanges by volume, according to Coingecko</li>
 <li>Aave’s total value locked peaked at nearly $20 billion in October 2021</li>
 </ul>
 
</div>



As DeFi projects have lost their luster and trading volumes have tanked, two new blue-chip protocols are trying to once again catch the eye of big-money investors.&nbsp;



A new product from the DAO team at Sushi has launched its beta on the Polygon proof-of-stake blockchain. A new set of money Legos for the DeFi space, the project, dubbed Trident, is being billed as a “production framework for building and deploying AMMs.”



Aave V3, meanwhile, has launched on six different chains, enabling cross-chain transactions, among a host of new features.



The two protocols, well-regarded DeFi (decentralized finance) projects that originated from 2020’s “DeFi summer,” have a combined total value locked of around $16 billion — even though their DAO (decentralized autonomous organization) governance tokens have tanked.



SUSHI is down around 88% from its <a href="https://www.coingecko.com/en/coins/sushi" target="_blank" rel="noreferrer noopener">March 2021 peak</a> of $23.05, while AAVE has fallen 76% since a <a href="https://www.coingecko.com/en/coins/aave" target="_blank" rel="noreferrer noopener">May 2021 peak</a> of $631.26, per Coingecko.



As the hype around so-called <a href="https://cms.blockworks.co/the-investors-guide-to-defi-2-0/" target="_blank" rel="noreferrer noopener">DeFi 2.0</a> upstart projects such as OlympusDAO and Wonderland has faded in recent months, the product launches may signal a shift back to industry stalwarts.



<h3>A refreshed Sushi</h3>



The community of developers and Sushi adherents have been through a rough patch since a management shakeup last year, which saw <a href="https://cms.blockworks.co/sushiswap-swaps-out-co-founder-0xmaki/" target="_blank" rel="noreferrer noopener">Sushi’s co-founder depart</a> in September and <a href="https://cms.blockworks.co/update-cto-resigns-as-sushiswap-struggles-arca-submits-restructuring-proposal/" target="_blank" rel="noreferrer noopener">its chief technology officer resign</a> in December.



That inevitably led to delays in the progress toward Trident, but the DAO team announced the beta version rollout in <a href="https://sushichef.medium.com/launching-trident-phase-1-4e483fad0ae4" target="_blank" rel="noreferrer noopener">the group&#8217;s blog</a> Wednesday.



This system can be used for “creating any [automated market-maker] anyone would ever need,” according to the blog. Unlike the prior version, Trident allows anyone to create a liquidity pool, much like <a href="https://cms.blockworks.co/?s=Uniswap" target="_blank" rel="noreferrer noopener">Uniswap</a> does. Unlike Uniswap, the pools can have an imbalance of tokens rather than a 50-50 split — a feature of another rival decentralized exchange, <a href="https://balancer.fi/" target="_blank" rel="noreferrer noopener">Balancer</a>.



The full feature set is expected to be made available following the completion of security audits, and Trident will also eventually be pushed out to other chains, such as Ethereum’s mainnet.



<h3>Aave adds more Ethereum-compatible chains</h3>



Aave <a href="https://twitter.com/AaveAave/status/1504137636105043971" target="_blank" rel="noreferrer noopener">unveiled</a> its third-generation app this week. Aave’s DAO community approved deployments on Polygon, plus Ethereum layer-2s Arbitrum, Optimism, and other layer-1 networks compatible with the Ethereum virtual machine — Fantom, Avalanche and Harmony. Deployment to Ethereum’s mainnet is still in the works.



Among the goals of V3 are “greater capital efficiencies, increased security, and cross-chain functionality,” according to <a href="https://aave.mirror.xyz/2TnHYHQRnNhSG56Y4CcssulFArSVqrFbmAdYfU7Kxp0" target="_blank" rel="noreferrer noopener">the announcement</a>.



​​“This is a huge milestone for one of the most popular liquidity protocols in DeFi and furthers our mission to bring DeFi to the next hundreds of millions of people,” Polygon co-founder Sandeep Nailwal said in a statement.



A standout is the “Portals” feature, which allows DAO-approved bridging protocols to facilitate cross-chain transactions, so that assets within Aave can readily flow between disparate blockchains without a DeFi user having to withdraw, bridge and redeposit assets in separate transactions.



<blockquote class="wp-block-quote">&#8220;The cross-chain portal will enable users to port their own liquidity from one network to another, at their discretion. It will allow each iteration of the protocol on the various networks to scale quite quickly with the depth of capitalization,&#8221; Nicolo Stewen, Aave&#8217;s Director of Strategy, told Blockworks.</blockquote>



The app’s “High Efficiency Mode” allows borrowers to obtain greater buying power when using similar assets, such as stablecoins, as collateral.



“Isolation Mode” addresses one of the culprits behind many <a href="https://cms.blockworks.co/flash-loan-exploit-whips-cream-finance-for-130-million/" target="_blank" rel="noreferrer noopener">high-value exploits</a> — most recently the <a href="https://twitter.com/shegenerates/status/1503852338917908488" target="_blank" rel="noreferrer noopener">$11 million loss</a> on Agave, an Aave fork on the Gnosis Ethereum sidechain — having to do with the listing of new collateral assets that prove to be unsafe. By walling off certain categories of assets, V3 limits risk.



On the security front, Aave&#8217;s V3 code has been <a href="https://github.com/aave/aave-v3-core/tree/master/audits" target="_blank" rel="noreferrer noopener">audited by multiple firms</a>, such as Sigma Prime, Trail of Bits, Open Zeppelin, ABDK and PeckShield, and has undergone verification by Certora.



Its open-source code is released under a business license similar to that of Uniswap V3.



As with the predominant V2, Aave V3 will integrate with popular DeFi apps and dashboards, including 1Inch, Debank, DeFisaver, Instadapp, Paraswap, Zapper and Zerion.



“Incredibly excited for what this means for the future of the Aave Protocol and the Aave Community as a whole, both in terms of its scalability and its flexibility as the space continues to evolve,” Stewen <a href="https://twitter.com/coconidodev/status/1504173409743343620" target="_blank" rel="noreferrer noopener">said</a>.



This story was updated on March 21 at 3:15 a.m. ET with comments from Nicolo Stewen



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Can New Launches from Aave and Sushi Usher in DeFi’s Comeback?

Morgan Chittum

<div id="highlights-block_60c9fc7f1690b" class="highlights">
 <ul>
 <li>Total crypto market capitalization remains above $2 trillion</li>
 <li>Amid an insider trading scandal, OpenSea&#8217;s former product head Nate Chastain, updated his Twitter bio to say “Past: @opensea” on Thursday</li>
 </ul>
 
</div>



DeFi token $SUSHI fell Friday on a string of <a href="https://cms.blockworks.co/sushiswap-swaps-out-co-founder-0xmaki/" target="_blank" rel="noreferrer noopener">news</a>, shedding 14% in the past 24 hours. 



SushiSwap, a decentralized automated market maker which created the token, had a roughly $3 million breach on its token launchpad platform. In addition, one of SushiSwap&#8217;s lead developers reportedly relinquished his leadership role to another. $SUSHI is trading at $13.28, as of press time. This is 43.2% lower than the token&#8217;s all-time high (ATH), according to <a href="https://www.coingecko.com/en/coins/sushi" target="_blank" rel="noreferrer noopener">CoinGecko</a>. However, in the past week the blue chip token is up 20.7%.



$AVAX, the native token behind Avalanche, continued to rise following the company&#8217;s funding <a href="https://cms.blockworks.co/avalanche-closes-230m-token-sale-backed-by-three-arrows-capital-polychain/" target="_blank" rel="noreferrer noopener">news</a> on Thursday. $AVAX hiked 2.46% to $64.78, as of press time. The altcoin has made gains of 114.73% in the past month and is 4.91% away from its ATH. The token is dubbed the twelfth largest digital asset with a market cap of $14.23 billion, according to<a href="https://messari.io/asset/avalanche" target="_blank" rel="noreferrer noopener"> Messari.</a> 



Major cryptos like bitcoin and ethereum were mixed. BTC was little changed up 0.3% and ETH shed roughly 2.5%, respectively. Despite its Friday decline, ether is still up 6.07% in the past week. Total crypto market capitalization remains above $2 trillion. 



<h3>DeFi</h3>



<ul><li>Terra ($LUNA) is trading at $35.07, declining 7.1% and trading volume at $1,065,496,649 in 24 hours.</li><li>Uniswap ($UNI) is trading at $26.38, advancing 0.8% with a total value locked at $4,897,757,636 in 24 hours at 4:00 pm ET.</li><li>DeFi:ETH is 32.1% at 4:00 pm ET. </li></ul>



<h3>Crypto</h3>



<ul id="block-1209f037-00c3-4876-ad37-a29ab610c717"><li>Bitcoin is trading around&nbsp;$47,301.79, up 0.32% in 24 hours at 4:00 pm ET.</li><li>Ether is trading around $3,406.51, down -2.62% in 24 hours at 4:00 pm ET.</li><li>ETH:BTC is at 0.071, rising 0.06% at 4:00 pm ET.</li></ul>



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="622" height="504" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/B0AC5D15-8891-44D1-BB0A-361DFF10F283.jpeg" alt="" class="wp-image-8221" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/B0AC5D15-8891-44D1-BB0A-361DFF10F283.jpeg?w=622 622w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/B0AC5D15-8891-44D1-BB0A-361DFF10F283.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/B0AC5D15-8891-44D1-BB0A-361DFF10F283.jpeg?w=317 317w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/B0AC5D15-8891-44D1-BB0A-361DFF10F283.jpeg?w=322 322w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/B0AC5D15-8891-44D1-BB0A-361DFF10F283.jpeg?w=270 270w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/B0AC5D15-8891-44D1-BB0A-361DFF10F283.jpeg?w=80 80w" sizes="(max-width: 622px) 100vw, 622px" /><figcaption> $SUSHI trading over the past day. Source:CoinGecko</figcaption></figure></div>



<h3>Equities</h3>



<ul><li>The Dow was down -0.48% to 34,584.</li><li>S&amp;P 500 fell -0.91% to 4,432.</li><li>Nasdaq declined -0.91% to 15,043.</li></ul>



<h3>Commodities</h3>



<ul id="block-d64d70c9-7052-4f1a-8167-3d370fe08354"><li>Brent crude was down to $75.33 per barrel, declining -0.45%.</li><li>Gold declined -0.23% to $1,752.6.</li></ul>



<h3>Currencies</h3>



<ul><li>The US dollar strengthened 0.33%, according to the Bloomberg Dollar Spot Index.</li></ul>



<h3>Fixed Income</h3>



<ul><li>US 10-year treasury yields 1.363% as of 4:00 pm ET.</li></ul>



<h3>In other news&#8230;</h3>



OpenSea, one of the largest NFT marketplaces, is at the center of an alleged insider trading scandal. Nate Chastain, former product head of OpenSea, updated his Twitter bio to say “Past: @opensea” on Thursday, Blockworks <a href="https://cms.blockworks.co/openseas-nate-chastain-calls-it-quits-after-insider-trading-allegations/" target="_blank" rel="noreferrer noopener">reported.</a> Devin Finzer, co-founder of OpenSea, <a href="https://opensea.io/blog/announcements/employee-information-use-at-opensea/" target="_blank" rel="noreferrer noopener">admitted</a> in a blog post that someone at the company was involved in insider trading, but didn’t explicitly name Chastain.



That&#8217;s it for today&#8217;s markets wrap. I&#8217;ll see you back here on Monday.



<hr class="wp-block-separator"/>



Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.



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Bitcoin Hovers Below $50K as DeFi Token  $SUSHI Topples: Markets Wrap

<div id="highlights-block_6144a1b00ee14" class="highlights">
 <ul>
 <li>Pseudonymous lead dev will issue a statement Friday regarding his changing status</li>
 <li>The Sushi DEX has been deployed on more than twice as many blockchains as any other</li>
 </ul>
 
</div>



0xMaki, the pseudonymous co-founder and project lead of decentralized automated market maker (AMM) SushiSwap, is reportedly stepping down from his leadership role, though he may remain tied to the protocol though an advisory role.&nbsp;



The departing developer was expected to release a statement related to the matter on Friday, <a href="https://thedefiant.io/oxmaki-steps-down-sushiswap-advisory-role/" target="_blank" rel="noreferrer noopener">sources told The Defiant</a>, and <a href="https://twitter.com/0xMaki/status/1438913109964595207" target="_blank" rel="noreferrer noopener">subsequently confirmed</a> by 0xMaki on Twitter. That came in the form of a lengthy <a href="https://forum.sushi.com/t/transition-into-advisor/5533" target="_blank" rel="noreferrer noopener">post on the Sushi forums</a>, late Friday, in which he outlined his new role as an advisor.



<blockquote class="wp-block-quote">&#8220;I’ll be moving away from day-to-day operations into an advisory role to help foster the next generation of teams building on top of Sushi, supporting from the sideline, and helping without affiliation the broader DeFi ecosystem regardless of where they are deployed.&#8221;</blockquote>



0xMaki was elected as a multisig member — one of the lead decision makers in the community-run ecosystem — in September 2020. His &#8220;owner&#8221; rights were removed from the operations multisig wallet on Tuesday, September 14, <a href="https://etherscan.io/tx/0x10eb58b83b37cd3e18837c6d7a60200738229f03b977516e703daab1959601ca#eventlog" target="_blank" rel="noreferrer noopener">Ethereum transaction details</a> revealed. 



Operations was a five-member multisig where members are responsible for adding and removing protocols, approving transactions and any changes to smart contracts. 0xMaki was still listed as a member of the community&#8217;s Treasury multisig, which oversees some $154 million in assets — mostly the protocol&#8217;s native governance token $SUSHI — as of Friday.



In 0xMaki&#8217;s follow-up statement, he noted, &#8220;I’d like to remain on the treasury multisig but if this isn’t desired by the community [I&#8217;m] ready to step back there after a snapshot vote.&#8221; Snapshot refers to a governance tool that allows $SUSHI token holders to vote on actions without spending ether in the form of fees on Ethereum&#8217;s mainnet. 



<h3>Rise from controversial origins</h3>



0xMaki was instrumental in rescuing the project after its original lead developer, Chef Nomi, quit shortly after the protocol was launched. The project’s admin keys were transferred to FTX CEO Sam Bankman-Fried, before the current multisig solution (of which Bankman-Fried is also a member) was deployed.



SushiSwap began as a clone of Uniswap, and drained liquidity from the leading AMM by offering users incentives to migrate their assets in what is referred to as a “vampire attack”, at the end of what became known as “DeFi Summer.”



<div class="wp-block-image"><figure class="alignright size-full is-resized"><img decoding="async" loading="lazy" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/kashi-color-flat_sm.jpg" alt="" class="wp-image-8204" width="166" height="181" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/kashi-color-flat_sm.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/kashi-color-flat_sm.jpg?w=275 275w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/kashi-color-flat_sm.jpg?w=236 236w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/kashi-color-flat_sm.jpg?w=239 239w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/kashi-color-flat_sm.jpg?w=201 201w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/kashi-color-flat_sm.jpg?w=73 73w" sizes="(max-width: 166px) 100vw, 166px" /></figure></div>



Despite early tensions, Uniswap founder Hayden Adams <a href="https://twitter.com/haydenzadams/status/1438833605493596160?s=12" target="_blank" rel="noreferrer noopener">tweeted praise</a> in response to the news, calling him &#8220;an impressive community builder&#8221;. Under his leadership, the automated market maker expanded into <a href="https://sushi.com/" target="_blank" rel="noreferrer noopener">a diverse ecosystem</a> that encompasses a digital asset money-market protocol called Kashi, staking and yield farm products.



Sushiswap has also expanded to a dozen other blockchains, making it the most widely deployed decentralized exchange by a wide margin.&nbsp;



The intense pace of work on a leading DeFi project with <a href="https://defipulse.com/sushiswap" target="_blank" rel="noreferrer noopener">over $4 billion in total value locked</a>, has taken its toll on the developer, according to the statement.



<blockquote class="wp-block-quote">&#8220;On a personal level, I’ve put Sushi before my physical &amp; mental health, my relationships, my family, and my friends. I’ll be slowing down for the next month or two.&#8221;</blockquote>



Not cited in his statement was the topic of developer compensation, but he did <a href="https://twitter.com/0xMaki/status/1435025850932490240" target="_blank" rel="noreferrer noopener">recently reveal on Twitter</a> that core developers own less than 1% of the protocol, signaling that may have been a contributing factor.



An ecosystem <a href="https://medium.com/sushiswap-org/sushi-miso-the-perfect-combo-9883548706b1" target="_blank" rel="noreferrer noopener">addition in May</a>, MISO, which provides a way to launch new tokens, was exploited Thursday for 865 ETH (or about $3 million), in <a href="https://cryptobriefing.com/sushiswaps-miso-token-launchpad-suffers-3m-exploit/" target="_blank" rel="noreferrer noopener">a suspected inside job</a>, but the funds were subsequently returned in full on Friday.



Amid the multifaceted turmoil, $SUSHI is down about 19% in the last 24 hrs. At time of publication, $SUSHI was trading at $12.90, down significantly more than the tokens of rival DEXs Uniswap, Balancer and Bancor, which have seen declines of 3-6%.



Updated, Saturday, September 18, 9:00 (UTC) with 0xMaki&#8217;s statement.



<hr class="wp-block-separator"/>



Are you a UK or EU reader that can’t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.



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