The proposed new “head chef” of SushiSwap could pocket more than a third of the crypto exchange’s total SUSHI coins allocated to staff over the next four years, according to an analysis of the compensation package by The Defiant.
The token would have to hit some ambitious targets and trigger performance bonuses to reach hat level. If you add up salary, guaranteed SUSHI, and incentives, using current prices, the tally comes to a potential $10.6M payday.
The news may enflame tensions in the SushiSwap community as it clashes over the proposed hiring of Jonathan Howard to head the fifth-largest decentralized exchange and ease a leadership crisis that’s been brewing since last year.
The donnybrook also casts a spotlight on the thorny governance challenges DAOs are grappling with as the bear market cranks up fiscal pressure on projects. SushiSwap is governed by a decentralized autonomous organization.
On July 27, The Defiant reported that many on SushiSwap’s community were aghast at the size of the pay package for a new chief. While Howard, a seasoned crypto vet, pledged to bolster the SushiSwap’s dev team and invest in its nascent NFT marketplace, DeFi analysts warned the kerfuffle could undermine confidence in the platform.
“Sushi governance needs unity and focus above all else,” Cam Crossley, an analyst at web3 venture studio NotCentralised, told The Defiant. “If a vote passes as proposed, the new Head Chef won’t exactly be starting on the right foot.”
The possible election of Jonathan Howard as Sushi’s new head chef, which the protocol’s governance forumgoers are voting on through Aug. 4, also earmarks a base salary of $800,000 worth of stablecoins — which would account for 14% of the total payroll budget of $5.75M USDC.
Poll Under Way
If passed, the measures will be escalated to a community-wide snapshot vote, which would determine whether Howard is elected.
So far, the poll has received 125 votes, 57% of which are in favor of Howard becoming the new head chef.
But Howard’s proposed salary has sparked push-back, with many members taking to social media decrying the proposal as a sign declaring that SushiSwap is no longer a community-driven project. Detractors argue the terms of his election could hand over too much of the project’s war chest to a single individual.
The proposed severance package is a real sore point. It could result in Howard pocketing millions in the event of termination.
Currently boasting a total value locked of more than $1B, SushiSwap was a darling in the DEX space during the bull run of 2021. Yet SUSHI has tumbled 84% this year compared to a 49% drop by its rival Uniswap.
The Road Ahead
The appointment of a new head chef was one of the top priorities outlined in the recent Sushi 2.0: A Restructure For The Road Aheadgovernance proposal, which the Sushi community passed in May. The proposal was intended to create the roadmap for a fresh start following months of infighting and instability.
The roadmap’s core objectives included the creation of a formal compensation committee initially spanning core team members Neil and Matthew Lilley and the establishment of a formal legal structure for the SushiDAO.
If elected, Howard would be paid a base salary of $800,000 in stablecoins annually plus 600,000 SUSHI tokens (currently trading at $1.56 each) over a four-year vesting period, with 350,000 SUSHI allocated for bonuses to be awarded as new products are shipped.
An extra 1.2M SUSHI has been earmarked as incentives for Howard should SUSHI’s price rise above certain thresholds during his tenure, with the payouts steadily increasing as SUSHI’s price rises above $3, $5, $7, $9, and $11. If the price of SUSHI exceeds $11 under his leadership, Howard would receive $8.35M worth of bonuses through the incentive scheme.
Sushi is also offering a severance package in the event of Howard’s termination equal to 24 months of base salary, with the payout reducing with each month served down to a floor of six months’ compensation. The head chef would not be eligible for severance if they resign or are removed due to “professional malfeasance such as crime.”
Speaking to The Defiant, Neil of Sushi’s core team and compensation committee, confirmed that the SUSHI component of Howard’s proposed compensation would be paid from the 6M SUSHI allocated to funding current and future staff in the Sushi 2.0 roadmap.
Neil said the base salary would be paid from its operational multisig wallet. He said that Sushi was able to “swap out some of the altcoins in its treasury prior to the recent market collapse,” and that “not a single $SUSHI would have to be sold by the treasury to fund [Howard’s] salary.”
Yet some community members are coalescing around the argument that it’s a mistake to offer such a sizable share of Sushi’s operational budget to the head chef.
“Assuming the funds for this proposal comes out of the operational multisig, which has 2.67m USDC and 250k SUSHI, if this guy leaves day one he will take with him 60% of the USDC and ALL of the sushi with still 50k yet to be paid,” Dranon911 posted on Sushi’s governance forum.
As for the proposed severance package, C3 Group, a web3-focussed compensation consulting firm said it “does not make sense.”
“Equity-based incentives are never included in severance, and unvested awards are typically forfeited entirely upon termination without cause,” a representative of the firm said on the forum. “Otherwise, equity serves no retentive or motivational value.”
Neil said that the compensation for head chef could be tweaked should it prove an untenable sticking point for the community. Yet Neil added “the candidate has to be open to it” and warned changing the package could “risk a tremendous candidate walking.”
It isn’t just the pay that’s roiling the community. The process for nominating Howard has also come under fire.
BoringCrypto, a prominent Sushi contributor, questioned why the community didn’t have the opportunity to vote on the proposed compensation package for the position of head chef before voting on whether to elect Howard.
Boring also took exception to a clause in the terms of Howard’s nomination noting that the core Sushi team’s current price-based bonuses will be lowered to the same price tiers and ratios as those offered to Howard.
“There’s a hidden renegotiation of team incentives hidden in this,” they said.
The proposal asserts that the current thresholds were set during the bull market and “are so high they don’t carry much weight in motivating.”
But Mountain_Goat, a Sushi “community tomodachi”, warned that if passed, the proposal would allow the members of the compensation committee — which Howard would join upon appointment — to decide their own allocation of future tokens.
“It’s akin to a blank cheque,” they said.
On Discord, Mountain_Goat also claimed that the voting process is being “manipulated” by the core Sushi team. “When this or their 2.0 comp deal goes live it comes preloaded with team yes votes prior to community seeing it’s live,” they said.
Unfair Head Start
“F**king with the ballot box is low. It’s a temp check on the team’s recommendation yet they feel the need to manipulate optics and give this temp check [an] unfair head start.”
Neil dismissed the allegation and told The Defiant there is “no truth” to the claim. “Obviously, the team was in favor of the candidate and the team has bots that ping when things go up, so it’s quite reasonable that the team would vote prior to folks with other priorities,” he said.
The latest chapter in Sushi’s leadership drama has reignited concerns that the once community-driven project has been captured by the interests of a small minority of stakeholders.
Pegbit, a Sushi core developer, said the Sushi 2.0 roadmap was only approved by the project’s investors with the inclusion of an add-on clause that the team quickly select a new head chef. “They pressured the existing team to select one ASAP, or they wouldn’t vote… the investor bunch wants to move towards a VC run path, rather than Sushi being community-run.”
“Time to drop the ‘community’-centric charade. Temp checks get overrun with new users, governance is overrun with VC bags,” said Graine.
When asked about accusations that Sushi’s governance has become centralized among a small group of investors and core team members, Neil told The Defiant that Sushi’s token-based voting means that “naturally those that have spent the most and put the most skin in the game will have more of a vote.”
“There’s no puppetry going on, those guys run their biz, vote on stuff, and Sushi builds DeFi and web3 products,” Neil said. “I do see how it sucks if you’re a little guy and don’t have as much money, but no governance is perfect. What can you do? Those are the rules of Sushi voting & governance and we abide by the rules of the road. Most of these were established long before many of the present contributors joined so that’s just something to deal with.”
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