The SushiSwap DAO has voted in favor of a key restructuring proposal.
Increasing scrutiny of DAOs by market regulators likely contributed to this move.
The proposal will form three new entities which will be responsible for the management and development of the DAO.
The Sushi community voted overwhelmingly in favor of the proposal with virtually no opposition.
Decentralized exchange (DEX) SushiSwap is set to undergo a major legal restructuring after its decentralized autonomous organization (DAO) approved a landmark proposal with overwhelming support.
The purpose of the entity structure & framework is to provide maximum flexibility for Sushi to proceed in whichever direction the DAO or governance takes it, while also mitigating risk.” the proposal read.
The restructuring was proposed on 23 September at SushiSwap’s governance forum. The increased scrutiny of DAOs by regulators, including the Commodities Futures Trading Commission (CFTC), likely contributed to the proposal. Fellow DeFi platform Ooki DAO was sued by the CFTC on 22 September for allegedly violating U.S investment laws.
SushiSwap to be overseen by 3 new entities
The vote saw 100% of the community members in favor of the legal restructuring. As per the proposal, three new entities will be created, with each one catering to different elements of the SushiSwap DAO.
The first entity, which will be known as the DAO Foundation, will be set up in the Cayman Islands. This entity will have a governance council which will oversee Sushi DAO’s administration. This will include oversight of all matters related to the treasury, grants, proposals, and voting, among other things.
The second entity will be set up in Panama and be known as the Panamanian Foundation. This entity will focus on the existing Sushi protocol and oversee all matters related to smart contracts, staking, Kashi, etc.
The third entity will also be set up in Panama as a wholly-owned subsidiary of the Panamanian Foundation. This entity will be known as the Panamanian Corporation and it will be responsible for the development of the GUI layer or the front end of the protocol.
Another proposal will be brought forward soon, which will select service providers for the protocol. All the entities will enter into service agreements with the selected service providers.
SushiSwap has estimated that the restructuring process will complete by the end of November 2022. The DAO had looked into other alternatives while weighing their options, including Swiss-based entities, but ruled them out due to unfavorable taxation and regulatory policies for Sushi products.