Solvency problems are quite a heated topic for debate during these trying times.
However, it is something that we as a community have to take seriously and discuss openly to ensure that we won’t repeat the same mistakes in the future.
The biggest news in the cycle right now is the proposal of the new management at SushiSwap to move all fees to the treasury wallet to fund current operations and protect the decentralized exchange from insolvency issues and fix existing financial problems that were caused by reckless spending and worsening market conditions.
The proposal is risky yet necessary
The change of management at SushiSwap was a move that many anticipated considering the mismanagement of funds and the peculiarity of the financial situation the exchange found itself in at the end of 2022.
The company can barely cover its operational expenses and the lack of funds may significantly affect both the bottom line and the financial well-being of users.
The treasury deficit was way too big to continue operating and getting leaner is the first goal of the platform.
However, additional funds are necessary to cover the transitional period and to ensure that the shift in various corporate processes occurs without any disruptions of service. The only way to achieve that is to add funds to the treasury.
Jared Grey, the Head Chief of SushiSwap, thinks that the lack of funds in the treasury is the biggest risk and that all fees collected by the exchange should be redirected to it immediately for at least a year.
This will affect plans for growth and development but maybe just enough for the company to make it through the crypto winter without losing everything.
Hard times demand hard decisions
All companies across the crypto industry and far beyond it are preparing for the difficult period ahead by cutting expenses, reducing staff, and focusing on optimizing their operations instead of throwing everything at R&D.
We hope that SushiSwap can recover which is more than possible considering how energetic and confident its new management looks in the light of financial struggles and uncertainty.