SIMP #3 - Vesting and the future of SushiSwap

Sushi Improvement or Modification to the Protocol SIMP Roadmap and Discussions #3

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Protocol Improvements:

Sushi Vesting (Proposed by LufyCZ)

Almost three months ago, we’ve agreed to vest ⅔ of newly minted Sushi for 6 months. There was no clear implementation of the vesting and it’s release, and it ended up being more of a workaround controlled by the multisig.

We’re slowly coming closer to the 6 month mark, which means that we start figuring out the distribution and it’s details.

Option #1: Airdrop the vested Sushi at the 6 month mark and get rid of the vesting. The transaction costs would be subtracted from the total airdrop amount, spreading the costs evenly between the receivers. The total number of vested Sushi at the 6 month mark should be ~ 47,040,732.

As of the day of writing (updated 19.1.2021), there are 11,368 addresses with non-zero vested Sushi balances. As we’re ~ 60% through the 6 month period, let’s get 100% of that - ~19,000. Airdropping 17,500 addresses would consume ~ 703,000,000 gas, which is ~ 56 full blocks, or ~ 14ETH at 20 gwei or ~ 35ETH at 50 gwei.

With today’s price of $7.2 / Sushi and $1400 / ETH, the cost would come out at ~ 2722 Sushi (at 20 gwei), respectively ~6834 Sushi (at 50 gwei), or ~ 0.14, respectively ~0.36 Sushi / address (some would pay more, some less depending on their share).

Option #1.1: Airdrop the vested Sushi monthly / bimonthly beginning at the 6 month mark (end of March) and get rid of the vesting. This would increase transaction costs a bit but at the same time would decrease the sudden inflation.

Using the figures from the previous calculations and using a linear increase in the number of users, the total costs would come around to ~ 9,550, respectively 23,909 total for a monthly airdrop.

Option #2: Using a similar approach to Balancer’s weekly claims, use a smart contract that would allow claiming every week / month. This would cost us almost nothing, but the receivers would have to bear much higher gas costs, possibly preventing smaller farmers from claiming their Sushi.

Claiming using merkle proofs is much more expensive compared to simply airdropping the tokens, but allows for a more flexible release schedule. Claiming a single week costs ~ 85,000 gas, and batching multiple weeks into one transaction saves ~ 45,000 gas per week (so it’s 85,000 + 40,000 for every week).

Claiming every week at 20 gwei at the ETH price of $1400 for six months (so 26 weeks) means spending 0.0442ETH ($61.88) at 20 gwei, or 0.1105ETH ($154.7) at 50 gwei.

Claiming everything after six months at the same parameters comes up to 0.0217ETH ($13.5625) at 20 gwei, or 0.05425ETH ($75.95) at 50 gwei.

Option #1+2 Airdrop vested balances under 1000 Sushi, use the smart contract approach for bigger balances.

Additionally, we would like to discuss the option of excluding big smart contracts (namely harvest.finance, dracula.finance and others) from receiving the vested Sushi. Instead, this Sushi would be spread among community members.

Vesting
  • Option #1
  • Option #1.1
  • Option #2
  • Option #1+2

0 voters

Release vested Sushi to contracts?
  • Yes
  • No

0 voters

2 Likes

While an airdrop could be easier and less gas intensive I’m not sure it would be better for $SUSHI holders, since it could trigger a massive sell-off.
On the other hand a balancer-like claim mitigates the sell pressure, so I think airdropping small balances to small farmers and, at the same time, locking bigger amounts in a SC is our best shot

4 Likes

I too agree on the balancer-like claim method to manage the sell pressure. Massive airdrops may create unintentional consequences that would ultimately harm the SUSHI community. A blend of both options work in this case.

1 Like

Is there a possibility where the Airdrop is staked straight into xSushi for each address? This would help mitigate some of the sell pressure.

2 Likes

Is it what you are thinking for arbitrage opportunities ?
Work in real time with Websocket, more pairs to come.

I think the #1+#2 is a great idea, although just #1 might do it. A few thoughts:

  • While it feels like a bad idea to release it all at once, releasing it over a longer period may put downward pressure on the price over a longer stretch. And if a sudden dump does drop the price, who doesn’t love some cheap SUSHI :slight_smile: The current price is where it is because people believe that this is the fair value. Therefore I’m in favour of dropping all in one day, starting with the smallest to the largest.
  • While I love the merkle proof system, it’s a smart contract and another point of failure. It will also require writing (although I think a proof of concept has already been made), extensive testing, audits and maybe formal verification because it will be holding a very substantial balance that must be safe.It will also need a UI. This will take time away from the team that can be used to actually improve the Sushi protocol. That hidden cost in man-hours certainly outweighs any gas costs.
  • Since the vesting system was imposed by the team (and community) I feel it’s fair to use the dev fund to pay for the airdrop. Let’s give our LPs the full balance of their earned SUSHI.
  • As to excluding Harvest and Dracula. While I’m all for the concept, I think we have to stay true to our word. Just because we didn’t implement a smart contract to deal with the vesting should not give us an excuse to change the terms after the fact. As much as we may not like the terms now, we set them and ‘code is law’.
    Let’s get this wrapped up simply and quickly so we can focus on cooler stuff :smiley:
9 Likes

Firstly, I’m not a fan for weekly claims system or initiatives that requires weekly onchain “actions” directly, even though that has worked for balancer and SNX. Whilst it mitigates some sell pressure, it prices out the smaller farmers - and that situation is worst now due to the high gas fees and ETH price. I believe that as a protocol, we should be fair and inclusive - and that means not pricing out smaller farmers.

While I like the solution of getting people to claim weekly or monthly, it’s just not viable and economically feasible today. I feel we can revisit this when SUSHISWAP has an L2 solution.

Interim solutions that are possible:

  • Airdrop (Option #1) to people and get rid of vesting
  • Not on the option currently, but thought we should consider airdrop in the form of xSUSHI to alleviate some selling pressure and encourage staking.

I’m completely against Option #1 + 2 as it makes the entire solution confusing and fragmented.

Voting for Option #1 for now. Let’s get this over and done with, not overcomplicate it, and let the developers work on cooler things next.

1 Like

yeah it makes sense…if option #1 is way easier, let’s stick with #1
I don’t like the idea of creating more volatility in an already volatile market but hey, the protocol earns on volatility after all :stuck_out_tongue:

We should also consider that an airdrop would be a huge marketing stunt…there’s no such thing as bad publicity.

We have to choose between volatility/potential price dump (option #1) and time/manpower spent executing #1+#2

Don’t you think that Option 1 (airdropping all the vested sushis at once) is a bit unfair, as the vesting period will not be the same for all users. Some will wait 6 months for their rewards, other 5 , 4, 3 months… some even less than a month if they start farming near the end of the period. In my opinion the vesting period should be the same for all users and they should be able to claim (or receive an airdrop) exactly 6 months after they started farming. And I agree with BoringCrypto that we should not exclude Harvest and Dracula, as it is not fair and will have negative effect on our image.

The problem with “waiting exactly 6 months” is, that there is no real way to achieve this. The real point of the vesting wasn’t to keep users from getting their Sushi, but to keep them from selling it and, as a result, tanking the price. This has now been resolved with a very good staking APY, and with the reduced emission.

The contract exclusion was @0xMaki’s idea, and I found it interesting, so I wanted to hear what everyone thinks about it. I do agree that it might be bad for our image, on the other hand, it would be voted for by the community in a formal vote anyway, so it’s not really on us, but on them.

Of course the “vote by community” thing might, and very possibly also is, very biased to the No option, as it’d mean more cash for the community, and especially to the bigger players.

The Yes option begs the question though - what are the projects going to do with the vested Sushi? Are they going to dump it? Release it to their stakers? Keep it for themselves? Will they be even able to claim it or is it going to be burned upon airdrop / addition to the Merkle tree contract?

My opinion is, that we should give the vested Sushi to contracts that have interest in it, and have a clear plan on what to do with it.

1 Like

I see. So Option 1.1 is what seems most fair to me. Airdrop once a month for 6 months

1 Like

I think option 1 is the fairest. Although it might shock the market a little bit, it will be less volatile in the long-run. Plus, if the community makes a plan, users will now have over two months to plan. Likely the large users will adjust their plans accordingly, and the free market will do a good job making the transition smooth.

Option 2 is dragging out this process for too long and isn’t fair to the stakers who have been operating under the information that rewards would be unlocked at the end of March.

Option 1+2 is the least ideal. Too complicated, let’s keep this process simple and vote for option 1.

1 Like

3 Likes

To me option 1 is the best, and I believe it’s a bit of a no brainer. TBH it’s just a bandaid that needs to be pulled, and obviously the quicker it’s ripped off the better it is for us.

The lockup accomplished what it was proposed to accomplished, and now that emissions are down to a respectable level I see no harm in airdrop the full amount at the end of the 6 months to all of our loyal LPs that stuck with us through the tough days.

I also personally think we can make much better use of our dev resources, and we have quite a bit on our plate that managing a lockup is not so much a good use of our time right now.

11 Likes

It gives me confidence and assurance to hear the SUSHI team prioritizing the protocol’s growth rather than worrying about the temporary economic consequences if we choose to go with option 1.

I for one wouldn’t mind buying more SUSHI if there were to be a minor price dip.

I’m im support of option 1. I’d rather the team focuses on protocol features and BentoBox than smart contracts on the vesting side.

I did initially vote for “No”. Mainly because I am a greedy bastard and didn’t think about it long enough :sweat_smile:
But the more I do, the No option leaves a bad taste in my mouth.

But this sounds like a good idea. It might be nice to get some positive exposure if they give it to their stakers for example.

Agreed that one is the simplest and most straightforward solution. In that same vein I think we should pursue the same with the rewards to the larger projects. Did they not contribute in some manner to earn it?

The Yes option begs the question though - what are the projects going to do with the vested Sushi? Are they going to dump it? Release it to their stakers? Keep it for themselves? Will they be even able to claim it or is it going to be burned upon airdrop / addition to the Merkle tree contract?

Considering all the outlined scenarios given from Lufy, what are the real negatives? Only if they dump it for a short term price effect? I think it is reasonable to keep the terms of the initial contract for that, all the other outcomes actually seem positive to me.

My thoughts were along the lines of:

  1. The owners keep the rewards and don’t release them to the community

  2. The Sushi stays stuck in the smart contract, ending up burned. This is probably not bad news for Sushi holders, but IMO it’s better if we just got it distributed to the community

I feel like the first scenario would be negatively received by the users of that protocol especially if we make it know we are disbursing them. Not sure this requires the additional optimization of community distribution.