Sushi Jumps 10% After Top Avalanche Developer Proposes Takeover

Although Sushi has seen an exodus of developers and talent in the past months, the broader community isn’t losing hope.

Dec 13, 2021 at 9:21 a.m. UTC
Updated Dec 13, 2021 at 4:34 p.m. UTC

Sushi tokens jumped as much as 10% in early European hours to over $6.19 from a low of $5.30 on Sunday night, data from markets tool CoinGecko shows. Prices retraced slightly to $5.90 at press time as traders likely took profits from the bump.

The move came shortly after Daniele Sestagalli, a top application developer on layer 1 blockchain Avalanche, proposed joining the platform in a post on the project’s governance forum.

“Sushi’s expansion and growth have been nonstop – it’s time to give Sushi additional resources and autonomy to continue and better define its mandate and governance during a time when it needs it the most,” the proposal read, claiming Sestagalli’s addition to the project could help end its ongoing woes.

“SushiSwap is bedeviled by a number of internal crises that are blurry to outsiders,” Shirokov Konstantin, CMO of DeFi tool Bonded Finance said.

“Traders are likely betting on the upside given the deep blockchain development experience and success of Sesta with previous projects like Wonderland, Popsicle Finance and Abracadabra in the competitive DeFi space,” he added.

Sestagalli and the ‘Frog Nation’ Collective

Sestagalli is behind top Avalanche projects like Wonderland, a treasury-backed currency protocol, and Abracadabra, a platform that provides collateral based on yield-bearing assets deposited by users.

SPELL, TIME and MIM – three tokens associated with the two projects – have a combined market capitalization of over $5.9 billion, data from CoinGecko shows, making Sestagalli one of the most influential developers in the crypto ecosystem.

Protocols like Sushi are open source, community-run and rely on proposals for further plans. Any community member – in this case, Sestagalli – can write up a proposal on the governance forum, and it is wholly up to community members to either take up the changes or ignore proposals.

Sestagalli proposes making Sushi a part of the multi-billion Abracadabra and Wonderland ecosystem, buoyed by the latter’s strong community that brands itself as the Frog Nation collective. Other changes include ending the issuance of “xSushi” – a token rewarded to Sushi stakers – deprecating the legal entity that controls development on Sushi, and adding Sestagalli and others to the core Sushi development team.

Comments on the proposal ranged from good to bad. “I always had a feeling Dani was going to be the perfect fit,” one member commented. “I personally will take a stance against this proposal. While Dani has done a great job with his projects they lack any real vision,” said another.

Community woes sour Sushi

Sushi is a multichain decentralized finance (DeFi) platform, which started out as a fork of Ethereum-based decentralized exchange Uniswap but quickly became one of the few “blue chip” DeFi assets in mid-2020.

DeFi is a blanket term that refers to lending, trading and other financial activities carried out on a blockchain without traditional middlemen.

It relied on smart contracts to execute crypto-to-crypto trades, and later branched out to include lending, staking, and non-fungible token (NFT) services. Developers further expanded Sushi’s capabilities to include nearly 24 other blockchains and layer 2 solutions, a move that helped it lock over $10 billion in assets at one point.

But the platform has seen an exodus of top developers. Core contributors ‘0xMaki’ and Mudit Gupta left earlier this year, and chief technology officer Joseph Delong stepped down this month amid controversy regarding his position.

Reports of in-fighting also made the rounds in crypto circles, and the technical capabilities of the current team were questioned. Such actions caused community sentiment to gradually fade.

The likes of Sestagalli, however, want to keep development on Sushi alive: “Together we can move DeFi in the right direction where Sushi builds an accessible decentralized exchange, used on all chains by everyone,” he wrote in his proposal published on Monday.

Sushi tokens touched record highs of $23 in March 2021, as per data from CoinGecko, and have returned over 5,248% to early traders and investors. It has a market capitalization of $1.1 billion at press time.

UPDATE (Dec. 13, 11:24 UTC): Adds analyst comments in fourth and fifth paragraph.

DISCLOSURE

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.