SushiCoin seeks 30% discount venture funding? FTX and various venture capitalists weigh in, Arca confidently responds: We'll take a premium!

SushiSwap core developer 0xMaki recently proposed a diversified financing plan. He believes that the product is mature enough to transition from community-based to institutional-based funding. The proposal involves allocating a portion of tokens to institutions for investment. However, this move has sparked strong backlash from the community, with opinions from FTX, Uniswap founders, and venture capital firm Cinneamhain Ventures.

On the 17th, Arca's Chief Investment Officer Jeff Dorman boldly proposed, "No need for discounts! We'll buy directly from you." They believe that 0xMaki's proposal is detrimental to the value of SUSHI. They hope the community will support their proposal and are willing to pay a price 31% higher than the time-weighted average price TWAP for the initial transaction.

SushiSwap Multifaceted Financing Proposal: Phantom Troupe

The Phantom Troupe proposal was initially announced on 7/8, suggesting the sale of tokens worth $60 million from the team's treasury to venture capital firms, with a maximum of $10 million allocated to community members.

After a 6-month lock-up period, there will be an 18-month linear unlocking period; the received SUSHI will be converted to xSushi, yielding xSushi rewards at the end of the lock-up period.

The financing proposal will be carried out through Sushi's token issuance platform MISO, with a minimum investment of $250,000. There are already 21 confirmed strategic investors, including well-known names such as:

• 3AC
• Jump
• DeFiance
• Polychain
• Future Fund
• Pantera Capital
• Blockchain.com
• Multicoin Capital
• Dragonfly Capital
• Blockchain Capital

SushiSwap Community Discord

Due to the sale of tokens to institutions at a "20 to 30% discount" based on the 30-day weighted average price of SUSHI at the end of the proposal, this has sparked discontent within the community.

Additionally, 0xMaki stated that the $60 million token sale represents about 25% of the team's holdings, but in reality, with a 30% discount, the tokens sold would make up around 45% of the team's treasury. Therefore, the community generally believes:

1. A 45% share is excessively high
2. Why didn't institutions buy coins from the open market
3. Why didn't institutions engage in strategic investments through liquidity mining
4. A 30% discount may lead institutions to dump, harming agreements and token prices

0xMaki Summarizes Opinions for Further Community Discussion

The proposal by SushiSwap has sparked heated community discussions. 0xMaki has summarized the opinions of many and hopes to delve deeper through public discourse to discuss:

• Transparently reduce the financing cap to no more than $60 million; based on a 30% discount, the aforementioned 27 institutions have subscribed to $50 million
• Excessive discounts. If discounts are reduced, institutions can lower their subscription amounts, killing two birds with one stone
• Some institutions have inquired about a 40% discount with a 4-year lock-up plan; all proposals can be further discussed
• Some institutions already hold SUSHI but have not disclosed it, indicating that SUSHI is currently only "liquidity assets" for institutions, not an "investment portfolio," which is also considered in the proposal
• The team's treasury will not be harmed and can achieve greater returns through long-term strategic partnerships
• Consider the approach of UMA range tokens, similar to convertible bonds
• Establish a whitelist of liquidity providers

FTX Founder: Too Chaotic

Sam Bankman-Fried SBF stated that it is a good idea, but he did not participate in the financing, and the process is too chaotic. Coupled with community opposition, it may lead him to abandon the proposal. However, he believes that the advantages brought by financing include:

1. Some influential, well-connected, knowledgeable, and intelligent venture capitalists
2. Some venture capitalists will fight for you, which is what you want, and it's even better if they meet the first criterion

However, SBF also mentioned downsides, as besides the process being very tricky, some venture capitalists are completely useless and may require a discount. So, how can 0xMaki eliminate the community's concerns about discounts? SBF proposes the following optimizations:

• Market price sale, with an exercise price of $12 and a 5-year expiry option as a package, no discount required; or directly offer a 25% discount
• Allocation to which institutions: After one-on-one discussions with institutions, invite 10 founders to anonymously vote on venture capitalists
• How much allocation to give institutions: The top 5 in votes receive $10 million each, 6-15 receive $1 million each, and the community $10 million, first come, first served
• Venture capitalists must release SushiSwap-related updates quarterly over four years, detailing current assistance provided by venture capitalists

Data review: SBF's past venture capital observations

Uniswap Founder: Misaligned with Sushi's Original Intent

Despite being a rival derived from its own creation, Hayden Adams seems to acknowledge that SushiSwap is a community-based DeFi protocol. He stated:

Strongly opposed. Raising funds from venture capital is great, but it feels completely contrary to the community's desire for SUSHI. I received hundreds of complaints from the SUSHI community.

He emphasized that overall, funding SushiSwap through venture capital feels unconvincing.

Venture Capital Partners: Community Misconception of Sushi's Success, Reasonable Discount for Venture Capital

Adam Cochran, data analyst and partner at venture capital firm Cinneamhain Ventures, also provided a series of opinions, believing this is a great opportunity for SushiSwap, but communicating with the community is a very challenging task.

SushiSwap's Great Opportunity

He believes this is an opportunity for SushiSwap to grow tenfold, a hundredfold, but 0xMaki's financing amount is too high, and the community does not understand the rationale for discounts, making the proposal difficult to pass. This is also a common challenge for most DAOs: "managing community expectations."

Community Misconceptions

The community believes that SushiSwap has become a world-class product, but it has not. Many DAOs just hoard a vast amount of "idle funds," which is wasteful. People must understand the growth goals of fundraising and how they are utilized.

Some in the community also see venture capitalists as "evil money grabbers," but some exceptional venture capitalists are essentially expert advisors, assisting startups in overcoming specific domain expertise, rather than for exploitation.

Cochran also points out that filtering good venture capital firms is difficult; therefore, small-scale financing should be conducted. After confirming the added value of venture capitalists, follow-up large investments can be made.

Discounting Venture Capital is Reasonable

The community believes a 30% discount is terrible, but Cochran argues that considering the time cost of institutional liquidity assets and capital dilution, a 30% discount is actually reasonable, with some institutions even suggesting a greater discount.

He believes that the community's misunderstanding of discounts simply requires communication and the presentation of facts, as the assets institutions invest in are indeed different, and he is therefore considering using a different asset packaging or range token, which may be a better way to differentiate; but this would fall under securities regulations, so he believes this proposal should not be crowdfunded to the community.

Cochran suggests fundraising but offers several recommendations:

• At least a two-year lock-up period
• Regular updates required from venture capitalists
• Detailed explanation of fund usage
• Detailed explanation of the value sought from venture capitalists
• Filtering venture capitalists based on investment portfolio size and fund type

As of 7/15, in a survey conducted by 0xMaki, 62% opposed the financing proposal, while 38% agreed.

Arca: Proposal Degrades Value, Optimal for Premium Investment

Arca Chief Investment Officer Jeff Dorman proposed that the Phantom Troupe proposal undermines SUSHI's value. As holders of 7.51% of the xSUSHI circulating market, they strongly oppose this proposal. They believe SushiSwap is not short of money and want to know the reasons and purposes of the $60 million. Arca believes SUSHI is currently undervalued and not suitable for sale.

Arca believes that fundraising should be conducted through SushiSwap's new limit order function, raising funds at different price ranges designed with a premium from the 6/25 low, giving every community member a chance to participate. They argue that since many institutions are bullish on SushiSwap, discounts should be abandoned, declaring them as strategic investments. Moreover, having more small and medium-sized investors is better than just a few large investors.

If the proposal is accepted, Arca will also purchase at least $10 million in the next fundraising round. This proposal will also save SushiSwap over $20 million and reduce the dilution of four million SUSHI tokens.