Sushi CTO's Handwritten Note: What We Have Done in the Past Few Months
Despite the difficulties in governance and finance, the development of Sushi has never stopped.Original Author: Matthew Lilley, CTO of Sushi
Translator: Azuma, Odaily Planet Daily
On June 22, Sushi CTO Matthew Lilley published a lengthy post on his personal Twitter, disclosing some internal development trends at Sushi over the past few months, involving the existence and iteration plans of several sub-product lines such as Trident, MasterChef, Sushi Smart Pools, RouteProcessor, and SushiXSwap.
Below is the full text from Matthew Lilley, compiled by Odaily Planet Daily.
This is a long-overdue summary, mainly about the development status of Sushi in the past few months.
Trident (Note: Sushi's self-developed AMM new model) is being phased out. It was an interesting experiment, but a product born from chaos cannot be competitive, and its architecture is not attractive to liquidity providers (LPs) who need flexibility, nor does it improve market efficiency.
SushiSwap V3 has now been deployed on 20 blockchains, with 5 more chains set to be deployed soon. To my knowledge, this is the most widely covered Dapp to date. Since its deployment, the protocol's TVL and trading volume have been steadily increasing.
MasterChef and MasterChef V2 (Note: both are Sushi's liquidity incentive contracts) will also be gradually phased out. Although MasterChef has some innovation, over time it has proven difficult to scale in terms of multiple rewards, and as an incentive mechanism, it is not particularly efficient; in fact, its effects can be achieved simply through liquidity mining.
MasterChef V2 is even a downgrade from the original MasterChef concept, bringing many new problems, such as insolvency. Moreover, MasterChef V2 is also difficult to scale and has become a technical debt that is quite bothersome within Sushi.
After multiple attempts and failures, we have established a more innovative incentive mechanism to replace MasterChef. Our conclusions include:
- Forcing LPs to passively stake is a form of reverse innovation, leading to "regulation" of LPs, which is not attractive to LPs who need flexibility.
- Blindly incentivizing LPs without considering performance is a very inefficient incentive measure. Every SUSHI consumed should not only incentivize liquidity but also encourage that liquidity to achieve maximum market-making efficiency.
For us, the solution to this problem is to adopt the Merkl product from Angle Protocol. It has the potential for unlimited incentives for individual pools and supports parameter settings, allowing us to not only incentivize liquidity but also encourage that liquidity to achieve maximum market-making efficiency, ultimately providing users with better trading prices.
Currently, Merkl has been integrated with Sushi protocols on several blockchains, including Ethereum, Arbitrum, Optimism, and Polygon, with plans to expand to more chains. As Merkl is integrated, MasterChef will also be shut down at the appropriate time.
So, what’s next?
Sushi Smart Pools (Note: Sushi's newly launched strategy-based market-making service) is supported by the GOATs product from Steer Protocol. As of the publication, there are 9 market-making strategies available, with more strategies in planning. The integration with Sushi's frontend is underway, and users can currently try it out through the UI provided by Steer Protocol.
Since the launch of this product has not been well promoted, let me briefly explain that through the market-making strategies provided by Sushi Smart Pools, LPs can perform more efficient market-making on SushiSwap V3, thereby increasing yields.
RouteProcessor (Note: Sushi's trading aggregation service) is rapidly iterating. We have learned from painful lessons that this carries certain risks, but we are committed to covering more liquidity sources.
RouteProcessor V3 is now live, and V4 is actively under development. We expect to cover most liquidity sources in the market by the third quarter and then begin to focus on some lesser-known liquidity sources.
For Sushi users, this is obviously good news, as it means we can provide more competitive quotes for a large number of tokens, which we were unable to do before. For Sushi's LPs, this does not affect their continued support for Sushi's market-making, as our aggregation routing will lean more towards Sushi's own pools.
SushiXSwap V1 (Note: Sushi's cross-chain exchange service) has been running for over a year, and active users have been steadily increasing. SushiXSwap V2 is in development, which will enable cross-chain exchanges between more chains and will fully utilize RouteProcessor.
In summary, we have been very busy. The team is in good working condition and has been very efficient; we have encountered some minor issues, but that is part of the game. If you never fail, it only means you have never tried. Believe me, we are working hard.
We can proudly say that over the past two years, despite facing governance and financial difficulties, Sushi has been able to sustain operations independently without needing funds injected from the treasury or elsewhere.
