In-depth investigation: Internal conflicts persist, what exactly is happening within Sushiswap?

Author | rekt

Compiled by | Gu Yu

Recently, Sushiswap has been embroiled in negative news regarding disputes with several former members, being accused of having an internal clique, forcing out 0xMaki, taking kickbacks, and inaction, among other issues, leading to a decline in token prices. In response, well-known crypto investigative blogger rekt conducted an in-depth investigation, interviewing insiders and gaining access to Discord developer chat channels, to reveal the details of 0xMaki's departure, the BIT bonus distribution process, and the events surrounding the theft of over a million dollars from Omakase and the request for multi-signature wallet compensation from the foundation. This can be considered the best article to understand the entire internal dispute within Sushiswap.

Internal disputes, whistleblower firings, and developer dismissals have brought a dark period to the once-popular "community-led" decentralized exchange Sushiswap.

After Nomi (note: Sushiswap founder) left, 0xMaki was seen as orchestrating an impressive turnaround, helping the struggling protocol. However, after he stepped down on September 18, rumors began to circulate.

Recently dismissed Sushiswap team members publicly claimed that due to internal conflicts, "Sushi is heading towards failure."

Other team members (confirmed to be different informants) subsequently contacted us to provide more information. The evidence they provided corroborated the accusations we had seen elsewhere.

In recent days, the turmoil within Sushiswap has gradually come to light, but many issues remain unspoken.

We are here to change that.

This investigation has gathered on-chain and off-chain evidence to help you understand the reality within one of the largest DeFi protocols.

Although we have made every effort to verify all claims in this article, the final judgment is still up to you.

01

0xMaki did not decide to leave Sushiswap voluntarily. He was dismissed in a carefully orchestrated vote by Joseph Delong (note: Sushiswap CTO).

In a vote held on September 9, 11 out of 17 members in the Sushi developer chat channel voted on whether to "ask Maki to serve as an advisor to Sushi and leave the core team."

91% voted in favor. Nine days later, 0xMaki announced he would "resign" from his position at Sushiswap.

Why did this happen?

Multiple sources have told us that an internal power circle formed within Sushiswap, consisting of Joseph Delong, Omakase, Keno, and Rachel.

We now know that 0xMaki was placed in a special situation by JOKR, where he had to leave Sushi, or the other six developers would leave, meaning Trident (note: Sushiswap's next-generation AMM mechanism) would not be launched, and much of his work would go to waste.

Since 0xMaki was the only one in Sushiswap with a three-year contract (other members had one-year contracts), JOKR could not dismiss him, so they "made him an advisor" without consulting the community.

After 0xMaki was forced out, JOKR's actions became even more suspicious.

During NFTNYC (note: New York NFT conference), a $9,000 dinner for "sushi partners" was never reported to the DAO, and $5,000 VC remix event tickets were provided for Joseph, Rachel, and Keno, but no funds were raised.

21 servings of steak and lobster - cheers for SUSHI holders.

But wait, there's more…

In the subsequent BitDAO MISO sale, BitDAO insisted on directly allocating 2.6% of the BIT circulating supply (note: 3 million) as rewards to Sushi core members.

0xMaki believed this bonus should go to xSushi holders, ultimately reaching a compromise of 50/50 xSushi/core members.

However, the airdrop to xSushi holders never occurred, and the tokens remained in the Sushi multi-signature wallet, apparently for "legal reasons"…

The unequal distribution of these funds is another point of contention caused by the divided core team.

Joseph, Omakase, Keno, Rachel, and 0xMaki received more bonuses than other core team members.

When asked by other team members, Omakase claimed the unequal distribution was 0xMaki's idea, while in reality, Rachel scapegoated 0xMaki, who actually requested that all bonuses be directly allocated to xSushi holders.

At the time of writing, the normal bonus was worth about $200,000. The larger bonus was worth about $700,000.

Tensions among other team members escalated when 0xMaki returned the bonus to BitDAO.

After the BitDAO token sale, the SEC targeted Sushiswap and its U.S. team members, who are now very cautious not to give them further grounds for investigation.

This spreadsheet created by Rachel shows the unequal bonus distribution.

The number of leaked documents proves the level of dissatisfaction among Sushi team members since Delong took over as CTO.

It is not difficult to find people willing to testify against the current management, but we also did our own detective work.

rekt.news gained access to the Sushi Core chat (which was set to public access at the time), where we saw the results of an internal poll conducted by Sushi team members.

Screenshot taken on December 12, 2021

We had to vote to see the results, but don't let our opinions distract you from the content…

Rachel narrowly escaped from the vote, and her handling of the bonuses seemed to disturb many of her colleagues.

Is this transparency, or have we gone too far?

02

What did Omakase do?!

This core member engaged in day trading using community funds from a personal account.

He deposited tokens worth hundreds of thousands from the BitDAO MISO sale into a personal wallet and told others it was "community funds for purchasing NFTs."

Using and managing team funds without their approval is clearly unacceptable, especially when you understand how this core member manages his personal finances.

After the recent Cream exploit attack, this core member told other team members that he lost 111,591 SUSHI (worth about $1.2 million at the time).

He then attempted to hastily complete a transaction to refund his losses from the Sushiswap multi-signature wallet. This transaction was rejected.

We heard that Rachel defended her actions and prepared to refund this core member, but ultimately he did not receive a refund.

Even in his request, the core member stated it was "his negligence," so why should others pay the price?

Rachel and the core member were so severely incompetent, while AG was dismissed just for speaking out; how could they keep their jobs?

AG tweeted the following after being fired during an all-hands meeting (at 12:30 AM local time, without her participation) for "a pattern of behavior leading to a deteriorating work environment."

(Transparent Red is the former COO of the MISO project Strips Finance.)

"Omakase started the poll, Joseph pinned the poll, and Rachel began making false accusations against her. Soon after, her Google access was revoked."

We asked Joseph for a statement:

rekt.news:

Hello Joseph,

We have received documents containing multiple allegations of abuse of power within Sushiswap - we believe you are now aware of all this. Every story has two (or more) sides, and we would like to hear your perspective on the events before publishing anything.

Joseph Delong:

These allegations and narratives come from a disgruntled employee who was terminated for ongoing malice and cyberbullying. While it is within your rights to publish, we do not believe that this baseless public positioning culture and norm can promote, elevate, or entertain. Internally, we have a zero-tolerance policy for repeated violations of workplace conduct. The attempt to spread this narrative indicates that the termination was the right course of action, and we can only wish AG/sushijokr the best in her career.

It is worth noting that Joseph did not respond to any allegations but dismissed them while explaining the reason for AG's dismissal. He did not reply to any further requests for information.

Four days after we received his statement, Sushiswap released an official report regarding AG's dismissal.

While neither statement explicitly addressed the power dynamics described by the whistleblower, the official post-analysis did imply an update to the Sushi contributor framework.

Joseph Delong has now publicly discussed the entire story in a Twitter post, highlighting some frustrations that come with his position.

In the post, he described the "harsh reality" that Sushi needs to align with a more formal structure, creating a natural hierarchy in the process. He also stated that while former team members publicly opposed him, there are "many who do not have a voice" supporting him.

Delong also complained about his compensation, and before responding in a less than diplomatic manner, he issued the following ultimatum.

The following quotes were provided to us by a well-known but anonymous source.

Joseph Delong's contract will expire in one month. The DAO must hold him accountable for the work that has already been completed and seek another CTO to move forward.

Uniswap v3 has been released for six months, Balancer and Bancor v2 have come, but Trident has not launched. This is a failure for Sushi.

Sushi has done well in supporting new tokens and amazing projects like OlympusDAO, Convex, Illuvium, etc., but all of this has been overshadowed by a CTO who is consumed by endless influence and narcissism, exposing a delusional stream of consciousness to everyone in broad daylight.

03

When we look at the TVL of the three major decentralized exchanges, it is clear that Sushiswap has been lagging behind for some time.

Although Sushiswap was a strong contender among the three major DEXs in March, it has clearly failed to keep pace with the growth of other DEXs.

At one point, everyone wanted a piece of Sushiswap. Venture capitalists, Yearn, influencers, and degenerates all fell in love with the "community-led" DEX.

Where did it go wrong?

Was it ego and greed that left Sushi behind, or was it simply mistakes and mismanagement?

Even at the peak of Sushi's popularity, there were always those who hoped to see it fail…

What would Chef Nomi say?

Will Joseph Delong step down?

Is 0xMaki trying to regain control?

Many things remain uncertain…

04

Despite the abundance of negative information about Sushiswap, we must try to view the story from both sides.

DeFi is energy-intensive. The pressure of working under public scrutiny and handling millions of dollars of other people's funds can quickly lead to losses. Most importantly, the pressure from social media is difficult to manage, even for a CTO who spends most of their working hours on Twitter.

Sushiswap has tried to be transparent, but they chose the wrong information to promote. Fully disclosing team members' salaries does not benefit anyone, nor is there a moral excuse for lying about the distribution of funds.

This is just a story that, in reality, shows that the operation of large DAOs is closer to normal companies than many of us are willing to believe. Even if they are not integrated offline, human nature means that power will accumulate to those who seek it.

This does not always have a positive impact.

Even in the most "decentralized" autonomous organizations, hierarchies, seniority, and most importantly, ego are very much present.

When team members strive to push themselves to the top of these "flat" hierarchies, conflicts are bound to arise. This is normal.

In the midst of memes, anonymous accounts, alliances, and competition, real power is at risk.

Sushi is certainly still valuable and not dead yet. But now, who will save it?