Now that 2/3 of Sushi emissions are locked for 6 months, while the sell pressure issue is solved, this has a considerable impact on LP compounding revenue. So I propose that the locked Sushi to be converted to xSushi and after 6 months, LPs would be able to harvest their tokens with some return on them.
As a Liquidity Provider and as someone who intends to stick with Sushiswap for the long term, I found my ROI slashed quite a bit, now that 2/3 of my Sushi harvest is being locked for 6 months.
The issue is not that I have to wait for 6 months to harvest, but in these 6 months, those tokens just sit idle not doing anything and compounding rewards over such a long period of time are considerable. Until the lock was implemented, I would occasionally harvest Sushi and do one (or a mix) of the following:
- Convert harvested Sushi to xSushi
- Provide liquidity to the ETH / Sushi pool
- Convert harvested Sushi to another token, so that I would provide liquidity in another form and receive some return from there
Bottom line is that, anything that I harvested, I would put in another form of investment and wouldn’t let it just sit idle in my wallet waiting for “Sushi price go up”. Now, having access to only 1/3 of my reward as an LP, I’m not able to do that as efficiently anymore.
Also, it needs to be taken into consideration that this issue is unique at the moment only to Sushiswap exchange. Liquidity providers on Uniswap or Balancer can compound their rewards (in the case of Uniswap, it is done automatically).
So while I understand the purpose of the initial proposal to cap supply to 250m tokens and lock 2/3 of new Sushi emissions for 6 months, this measure has a big impact on Liquidity Providers revenue.
The technical implementation would be whatever the devs find easier to write code for.
- Either convert the Sushi in the dummy pool (the one where all the locked Sushi is currently sent) into xSushi and after 6 months enable the user to directly harvest xSushi.
- Either convert the Sushi in the dummy pool into xSushi and after rewards become unlocked, convert it back to Sushi and enable normal Sushi harvesting.
Retaining Liquidity Providers
I’m not sure if there are any negative side effects to this, if implemented. But let me know in the comments below.
- Yes, stake locked Sushi , so that LPs get compounding returns on the Sushi that they can’t use until 6 months pass
- Yes, but let’s resolve the diminished LPs returns it in another way
- No, let’s keep everything as it is