Following the proposed changes to the $SUSHI raise, below is an update for the Sushi community on Arca’s involvement, and our interpretation of the new proposed deal, as discussed yesterday on the community call with @OmakaseBar, @amytongwu
@0xChu & @Crypto_Alex17
Thread 👇
@0xChu & @Crypto_Alex17
Thread 👇
2/ As mentioned previously, Arca is one of the largest holders of xSushi. Our ownership of $SUSHI was the same as everyone else’s - we bought on the open market, and we ride or die with the success of the project and the community.
https://twitter.com/jdorman81/status/1416192504601321472?s=20
3/ Originally we had no intention of participating in this raise. Our only objective was to help protect the community by blocking a bad deal. We thought the original proposal hurt the long-term value of $Sushi by disenfranchising the community.
https://twitter.com/jdorman81/status/1416192502873214977?s=20
4/ Since then, we have become heavily involved - constant talks w/ the Sushi team leading the raise, the community, & with @lightspeed / @amytongwu on how to properly align $SUSHI's needs w/ that of the community.
5/ We listened to everyone’s goals, & are thrilled with how this decentralized governance process is playing out.
The $SUSHI team's goals are:
a) Diversify the treasury
b) Add new strategic partners who can add-value
c) Raise enough money to fund a few years of growth runway
The $SUSHI team's goals are:
a) Diversify the treasury
b) Add new strategic partners who can add-value
c) Raise enough money to fund a few years of growth runway
6/ We liked our counter-proposal, but it excluded some strategic investors (one of the top priorities). We believe the current version of the new proposal aligns $SUSHI's needs, the goals of the community, & strategic partners.
We are happy to join and support this proposal
We are happy to join and support this proposal
7/ How does the new deal differ from the original?
$20m raised today (1/2 strategic 1/2 community). No discount. 1yr cliff, 3yr vest for strategic but NO lock-up for community. Community gets same terms as buying on open market but also plays part in diversifying the treasury
$20m raised today (1/2 strategic 1/2 community). No discount. 1yr cliff, 3yr vest for strategic but NO lock-up for community. Community gets same terms as buying on open market but also plays part in diversifying the treasury
8/ But those who buy the $20mm deal also get an attached warrant.
The warrant portion of the deal seems to be causing the most confusion.
The warrant portion of the deal seems to be causing the most confusion.
9/ For each $SUSHI bought by both the strategics & community, the buyer has the right to buy 1 more Sushi at a minimum strike price 2x the current spot price after 2 years (still TBD). If these add’l tokens are purchased, there is a 2y vest. All investors get same warrant terms.
10/ This is not “giving away a call option”. This is “attaching a warrant to a deal”. There are very nuanced differences between an option and a warrant. 
11/ Yes, a warrant has value, but the value accrues to the Sushi treasury itself in the form of a higher sale price in the future. Since the warrant is generating the majority of the confusion, ping @Crypto_Alex17 or I with questions.
cc @mgnr_io and his giant thread
cc @mgnr_io and his giant thread
12/ So what does this deal accomplish? Adding the warrant is just a creative way of accomplishing the same objective that Arca originally proposed -- it helps $SUSHI sell more tokens at higher prices at predetermined future prices.
https://twitter.com/jdorman81/status/1416192525346304000?s=20
13/ The new $SUSHI proposal leads to an avg sale price of $12.96 -- a 114% price increase & -53% less tokens being sold than the original proposal. These saved (unissued) tokens can be used for future value accretive proposals.
14/ So who gets hurt here? Even if $SUSHI jumps 100% to the strike price the day after the raise, the owners of the Warrants still have to wait 2 years to buy, and Sushi itself still owns 28mm+ tokens in their Treasury. Investors win / Sushi wins!
15/ Each member of this amazing, active community should be proud
We're making history w/ decentralized governance - the community hated the original deal, & collectively created a much better deal for all stakeholders.
Every involved party benefits!
We're making history w/ decentralized governance - the community hated the original deal, & collectively created a much better deal for all stakeholders.
Every involved party benefits!
https://twitter.com/FUTURE_FUND_/status/1418356514499174404
16/ During this groundbreaking public governance process, the $SUSHI team & @amytongwu / Lightspeed asked Arca to co-lead the new deal, if it is passed by the community.
We accepted this offer in order to ensure that all stakeholders are aligned and treated fairly.
We accepted this offer in order to ensure that all stakeholders are aligned and treated fairly.
17/ This new investment is small compared to our already large position, but we recognize the importance of helping to get this deal done. We will help $SUSHI in the same way we help all of our investments (behind the scenes like $HXRO & $AXS or in a public manner like $GNO)
18/ We don’t take this responsibility lightly. Sushi wants strategic investors to be just that - strategic - so we are going to transparently lay out for the community exactly how we will bring TradFi background in capital markets to the $SUSHI project. Here is our value-add:
19/ a) Continue to be active power users of the platform, active participants in governance, and active participants in community AMA’s. This is something that we will continue to do regardless of whether or not the community accepts the new plan.
20/ b) Treasury mgmt: We focus on public markets, & w/ 20+ yrs of i-banking & debt/equity/crypto investing experience, we can help $SUSHI diversify into other digital assets, generating a return on unproductive capital from treasury to grow the treasury & fund growth initiatives
21/ c1) Work with $SUSHI on financial planning & transparency initiatives - building projections & growth models to create a sustainable runway & properly allocate capital to fund future growth. This should be public for the community to keep track of the health of the project.
22/ c2) Transparency: work with $Sushi on monthly financial reports similar to $YFI & $MKR. Now that Sushi is multichain, it is time for a better analytics page. The goal is to close the discount in Sushi’s price vs comps via increasing awareness of Sushi's revenues / growth.
23/ d1) Tokenomics: There is a lot to be done with oSUSHI, and in moving to Trident, there is potential to provide a larger % of revenue to xSushi holders due to the liquidity in bentobox earning add'l yield. We will explore w/ the Sushi team and publish to the Sushi community.
24/ d2) As more of Sushiswap’s product suite comes online, we can help optimize the % of revenues that flow to xSushi holders to best to incentivize growth. We will work with the $SUSHI team & the community to get to optimal outcomes for growth, LP’s, and xSushi yields.
25/ e) I-banking for MISO - we will help draft "industry best practice standards" for projects listed on MISO to use $SUSHI as a funding platform.
This includes:
- Majority owned by community
- Transparent vesting schedules (no early insider vests)
- Strong Tokenomics w/ CFs
This includes:
- Majority owned by community
- Transparent vesting schedules (no early insider vests)
- Strong Tokenomics w/ CFs
25/ f) Regulation: It’s coming at some point, & we are well positioned to help address. We’ve been dealing w/ regulation for decades. Arca co-founder @raynesteinberg built early ETFs as co-founder of WisdomTree...
26/ … Chief Legal Officer @PhilipLiu has 25 yrs of legal experience as a securities lawyer. @peterdhans82 ran a Washington Policy Research firm. We have also spent 3+ years working with the SEC on our own registered BTF product.
27/ Conclusion - We believe digital assets were created to solve governance challenges, and governance is about compromise. While negotiations started far apart, we now feel everyone is clearly aligned in the future success of $SUSHI.
28/ More importantly, $SUSHI is a real life case study playing out publicly to demonstrate to the world that decentralized governance works. Historically governance tokens have failed because there was nothing worth governing. The Sushi community has flipped that script.
29/ Sushi is the first project to prove token holders have a voice, & that decentralized governance is a fairer, more balanced democratic system. The $SUSHI team has done a great job gathering thoughts from all stakeholders - now let's put it to a vote and enact positive change.
30/ And guess what? It’s a small $20mm raise for a project with a very liquid, $1 bn+ mkt cap, publicly traded token… both strategic & community members are going to get less $SUSHI than what they want to buy, and they can all go buy more in the open market. Free market!
31/ This is the kind of community victory that turns casual observers into $SUSHI owners, & turns outsiders into #Defi users. What started as a project benefiting a select few morphed into “Sushi against the world”.
Use their products, evangelize, & grow the ecosystem together!
Use their products, evangelize, & grow the ecosystem together!
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