SushiSwap chooses Panama & the Cayman Islands
On October 26, Sushiswap, a decentralized exchange (DEX) with yield farming capabilities, decided to adopt a three-entity legal structure based in the Cayman Islands and Panama.
The complete legal structure will encompass the following:
- A Cayman Islands foundation (“DAO Foundation”);
- A Panamanian Private Interest Foundation; and
- A Panamanian Corporation.
How does each entity work?
The Cayman Islands Foundation (DAO Foundation) manages the SushiDAO IRL through a Governance Board that has the “flexibility to manage the governance process of the Sushi blockchain” to facilitate off-chain activities.
In addition, the new foundation will be responsible for other important functions such as managing the treasury, grants, and on-chain governance processes, as well as facilitating proposal and voting activities.
“Panama Foundation” manages existing protocols including AMM/order book, oak, and staking-related contracts, and provides support to service providers.
Finally, the “Panamanian Corporation” will be responsible for handling the protocols associated with the GUI (front-end) layer.
This corporation will function as a wholly-owned subsidiary of the Panamanian Foundation, helping service providers to develop and maintain the GUI layer of the protocol.”
The SushiSwap community reacts
The proposal has already been approved, and the team behind SushiSwap is working on its implementation, but the scale of the change has sparked a lot of controversy among Sushiswap enthusiasts, and some users wonder if the protocol is making the right decisions.
Some are based between the Cayman Islands and Panama. This is because regulatory issues require preparation to comply with the regulatory framework.
- Read more about the 3 Reasons to Open a Private Foundation in Panama
As an example, Hamletmachine states: Restricting these open-source tools to everyone who wants to use them is unacceptable. Otherwise, build on top of Amazon AWS, apply for a Money Transmitter license, and be done with it.
Another user with the nickname “Neiltbe” appears to be part of the team that created the
proposal responded to the community’s concerns by stating that he proposed using Panama foundations and corporations for the following reasons:
(1) the nature of the protocol/GUI layer,
(2) the Panama Foundation is non-profit in nature and has no beneficial owners, making it ideal for deploying the protocol.
(3) Sushi respects FATF VASP (Virtual Asset Service Providers) policies and structures designed to avoid engaging in VASP activities as needed,
(4) the business formation process creates two entities that can house the protocol and GUI layers separately; reducing the need to form additional entities, and
(5) exempting these companies from corporate income tax.”
The proposal, which received the majority of the votes, calls for the establishment of a DAO Foundation, a Panama Foundation, and a Panama Corporation, each serving a different purpose.
Among other things, the DAO Foundation can manage treasury, grants, and on-chain governance processes to facilitate proposals and voting. The Panama Foundation will manage the existing Sushi protocol, including smart contracts related to automated market makers/order books, oak, and staking.
- Learn more about DAOs with our article U.S. Wrapped DAOs or DAO LLCs
Ultimately, the Panamanian company will operate the graphical user interface layer (or front end) of the protocol.
According to Sushi, “The purpose of the corporate structure and framework is to provide Sushi with maximum flexibility to move in whatever direction the DAO or governance is taking while mitigating risk.” Regulate. Discussion forum participants agreed that a legal structure was needed, but questioned the country and model of choice.
SushiSwap was launched in September 2020 as a fork of Uniswap, his AMM that has become synonymous with his DeFi token Sushi, associated with the decentralized finance (DeFi) movement.
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