The SushiSwap community offers a legal structure to reduce risk

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The community behind the decentralized exchange SushiSwap has proposed that the decentralized autonomous organization SushiDAO form an association or foundation in order to mitigate future risks.

The March 20 proposal was posted on the SushiSwap forum under the title “Sushi Legal Structure.” It aims to add a legal layer to the current DAO for current token holders and contributors.

The formation of a foundation or similarly structured organization will provide legal clarity regarding the rights and obligations of those involved in the project. Additionally, it would provide limited liability to token holders and create a system to handle DAO administrative issues.

The “Tangle” community member who posted the proposal said there were a number of jurisdictions being considered to form a DAO entity, but Switzerland was leading the way due to its favorable association law. Swiss.

Foundations are the way to go

The SushiSwap ecosystem is currently governed by a DAO like most DeFi projects, which keeps it decentralized to some degree. A foundation or association would introduce a formal legal element into the organization which might involve some form of centralization.

It was estimated that a one-time installation cost would be around $85,000 to $100,000 with recurring costs of $10,000. The proposal added that the first steps in its formulation would be to determine the members of the foundation, establish them, work on the distribution and transfer of tokens, and draft the articles of association.

Reaction has been positive, with most respondents saying the protocol is moving in the right direction with this proposal. Community member “pegbit” said, “Sushi is at a crossroads right now, and the path we take from here will determine whether or not we become a top project. While fellow “hamletmachine” commented:

“As long as the final legal structure does not require Sushi to move away from offering its services globally to all humans equally. We cannot afford to compromise our core crypto philosophy in order to appease growing global “regulatory demands”.

At the time of writing, the creation of a legal entity and the engagement of legal counsel in the “temperature check” phase had been 100% approved. If approved, it will be subject to a formal vote by Sushi governance.

Sushi Price Outlook

The native token of the platform did not react to the proposal having lost 2.2% on the day. SUSHI was trading at $3.26 at press time, having lost a bit since its weekend and two-week high.

The former darling of the DeFi world has dropped 86% since its all-time high of $23.38 in March 2021. DeFi Llama currently reports a total locked value of $3.69 billion for the DEX, down 48% from to its all-time high in November of nearly $7 billion.

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