Thread by @liesleichholz

1/ My original @SushiSwap token analysis was based on an inflation rate of 100 $SUSHI minted per block.

But there is a proposal to reduce this to 50 SUSHI for the first two years, with continued reductions thereafter:

snapshot.page/#/sushi/propos…

https://twitter.com/liesleichholz/status/1303680443687079936

2/ The proposal looks set to pass tomorrow, with 94.36% of votes currently in favor.

How will the proposed reduction in inflation impact the rate of inflation?

3/ The token supply will climb more slowly, reaching under 400m $SUSHI after 2 years.

(Note that the official proposal cites a value of 463m. I'm not sure what's causing this disparity - possibly different estimations of #Ethereum's block rate).

4/ At a daily trading volume of $400 million, the "sustainable" price point (at which new SUSHI minted is equal to the number of SUSHI purchased by the protocol) is $0.62.

Note that, intuitively, this is double the previous figure of $0.31.

5/ With these new figures, the rate of inflation decreases notably - but it is still above zero for any price greater than $0.615 (at a trading volume of $400m).

6/ Making the previous assumptions of a SUSHI/WETH pool weighting of 21% and liquidity & volume of $40m, we get some revised figures.

At any price higher than $0.57, it will still be more profitable for an investor to sell half of their SUSHI for ETH & become an LP.

7/ Once again, this price point continually decreases over time (at least for the first two years, before inflation decreases to 25 SUSHI per block).

8/ If (when) it passes, this proposal will almost certainly slow the decline of the SUSHI price.

But it does not solve the ultimate problem of inflation.

9/ Thanks to @CryptoCamel3 and @SatoshiMacamoto for pointing out the new proposal.

All data is generated for @glassnode.

Check out the full analysis 👇

insights.glassnode.com/sushi-token-ec…