SushiSwap Struggles to Overcome Lack of Management and Nixed Frog Nation Deal

SushiLead

SushiSwap doesn’t just need leadership, it also needs to sort out where all its keys are.

It can be hard for organizations to priortize who controls what (like the many web-based tools it relies on) when times are good. But when times are bad it’s easy for the same organizations to lose control of essential services after staff suddenly leaves.  

SushiSwap is going through this challenge right now in the wake of the exits of its top leaders and an apparently failed union with Frog Nation, the newly formed collective from Daniele Sestagalli and his allies.

Case in point: one of the most important services for any decentralized autonomous organization (DAO) today is its Discord server. The SushiSwap community has lost admin access to its server, which means scammers can openly run social engineering campaigns against the less sophisticated SushiSwap users right out in the open. No one has the power to ban these people right now.

Admin Access

Over the course of an audit of the key SushiSwap resources, remaining members determined that former CTO Joseph DeLong must be the one who has admin control of the Discord. Today, a poll went up on the SushiSwap governance forum calling on DeLong to turn admin access over to Tangle, from Sushi’s customer success team.

DeLong confirmed to The Defiant that before he acts he wants to see an official decision on who should lead Discord from the Sushi community. “As I stated simply in my resignation letter I am standing by to dutifully hand over control of any Sushi accounts still under my control should new leadership be selected,” DeLong told The Defiant via Twitter direct message.

Such issues became more urgent after Frog Nation’s CTO was revealed last week to be a co-founder of QuadrigaCX, the failed Canadian crypto exchange, SushiSwap itself quickly came out with a statement on Twitter:

“I am standing by to dutifully hand over control of any Sushi accounts still under my control should new leadership be selected.”

Joseph DeLong

“Sushi collective is aware of allegations pertaining to the larger ecosystem & are reviewing the situation. To be clear, Sushi continues to be independent in order to drive forward the goals of the protocol. Individuals in question have no access to operational/treasury wallets.”

Two days later, Frog Nation called it quits on taking over management of SushiSwap.

SushiSwap has been chaotic from the start. It’s original leader and creator, Chef Nomi, was ousted before the project ever took off. SushiSwap’s assets have still been taken care of by the multisig, but some workers haven’t been paid in months. Sorting out compensation is not possible with no one in charge. Teams have departed because they didn’t agree with the overall direction, and social engineers are ploughing through its internal channels. Nevertheless, SushiSwap has been crucial infrastructure for launching some of the weirdest, most interesting projects on Ethereum, so there appears to be broad agreement SushiSwap needs more organization. Where’s that going to come from? 

Draft Proposal

A new Discord channel has opened called Sushi Road Ahead, launched by a long time SushiSwap contributor and investor, Boring Crypto. Prominent and full time SushiSwap contributors have been showing up there to discuss what is and isn’t getting done right now, who is getting paid and who has control of which key Sushi assets (like its wallets and social channels). It was in this discussion where the team determined that DeLong was the most likely to still be in control of the Sushi Discord.

Rachel Chu, a manager and core team member at SushiSwap shared a draft proposal in the channel on Monday, with the title, “Proposal: Withdraw From Frognation and Endorse Leadership.” The proposal has been removed from the channel, but its main purpose was to put a leadership team in place.

Boring Crypto is one of the larger holders of SUSHI tokens and the designer of the Bentobox, a passive yield generating tool from SushiSwap. He told The Defiant via Twitter DM that getting a clear directive from the community that new management is wanted is the key.

“Once that vote passes it would be clear that this position will really be available and will attract some talent,” Boring Crypto said. “Nobody is going to step up while the team is infighting.”

Sushi has $4.8B in total value locked, according to DefiLlama. And it’s live on more blockchains than any other automated market maker. SushiSwap’s niche in the market has always been that it was the “community owned” decentralized exchange, one that gave everyone the same shot at gathering up governance tokens from the start.

Org structure chart made by Boring Crypto, posted in Discord on Feb. 1, 2022.

They are moving rapidly to audit their tools and who controls them and get this together now, however.

The Sushi.com domain appears to still be managed by the Future Fund, which bought the URL for the DAO (the organization has not responded to a request for comment from The Defiant). The social media accounts are controlled by one core member.

There’s debate underway about what to do in terms of continuing the pay of SushiSwap employees who are continuing to keep it functioning. Many of them were apparently receiving compensation through Sablier, the Polygon-based streaming payments service, but most such contracts seem to have run out with no one in place to renew them.

‘Lot of Conflicts’

“There has been a lot of conflicts over the past year, probably too many to dive into, but the main issue is that these become major distractions which grind productivity to a halt,” Matthew Lilley, the leader of the developer team, posted. “If we work together, things get done, everyone is relaxed, and things move along quickly. This is what I want personally, not to regress into the past, and have a repeat of last year.”

Some of the longstanding tensions in SushiSwap appear to be bubbling up again in the discussions about how to proceed. Some factions push for upping the transparency within SushiSwap and returning more control of personnel decisions to holders of the SUSHI token (technically, xSUSHI, since it has to be staked to vote).

However, a representative from Arca, a crypto company which apparently has significant holdings of SUSHI, noted that it would vote against proposals that put too much power over personnel in community hands.

Much in Flux

Alex Woodard Arca, the asset management firm, wrote in the thread, “We will vote against any proposal that requires every hire to go through governance, that is not how you scale an org and it is a waste of time for governance when participation is already low.” Arca has not responded to further questions from The Defiant.

Everything in the SushiSwap world appears to be very much in flux.

That said, Chu made a statement that team members are still ready to keep going if the community is behind them. “In general, people are willing to stay and fight for Sushi. They just need encouragement confidence and proper incentives from the community for them to run autonomously. This would require installing an appropriate leadership team with community mandate,” she said.

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