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Arca Strongly Objects to SushiSwap's Phantom Troupe Proposal


coingape.com 17 July 2021 12:07, UTC
Reading time: ~3 m

Cryptocurrency assets management firm Arca has strongly objected to the Phantom Trope proposal of SushiSwap. Earlier last week, SushiSwap pitched its Phantom Troupe proposal as part of its broader Treasury Diversification plan.

Calling it a “strategic raise”, the proposal aims to use 51m SUSHI coins in the SushiSwap Treasury to onboard institutional investors. Community member 0xMaxi said that this move will help to strengthen SushiSwap’s position as a DeFi blue chip.

However, Arca, which is one of the biggest investors in SUSHI has strongly objected to it. Jeff Dorman, the CIO at Arca has called the Phantom Troup proposal “value-destroying”. He stated that “Arca will backstop a new proposal with a first tranche bid price 31% above current TWAP price.”

Arca believes that flooding more coins in the market just to woo institutional players will evaluate the price of SUSHI which isn’t good for the existing investors. Furthermore, the crypto investment firm believes that SUSHI is already undervalued at the current price. In his recent declaration, the Arca CIO writes:

“Sushiswap does not need money, as indicated by @0xMaki himself. We agree that there is merit to diversifying the Treasury, but not at current depressed prices, and there is no justification for the size of a $60mm raise”.

SUSHI Is Trading At Massive Discount

Arca has been one of the biggest buyers of SUSHI in the secondary market and holds 7.5% of the circulating supply. However, it notes that the proposed discounts are not indicative of a vibrant growth project.

“SUSHI is currently trading at a massive discount to its fair value, and now is absolutely not the time to be selling,” notes Dorman. He further added:

“We believe our expertise in capital markets and deal structuring can bring more economic and strategic benefit to $SUSHI and its existing investors/community than the current proposal.

Some of the VCs touting their “strategic benefits” are selling $SUSHI into a declining low-volume market to buy this new deal at cheaper levels. In other words, this looks more like an arbitrage trade than a strategic, long-term investment”.

Dorman notes that if the SUSHI community still remains strong on its intent of selling from the Treasury that they will be buyers at prices that are fair to the community. Calling for no further discounts, Arca is quite willing to pay ABOVE the current trading levels.

Dorman adds that the current price-to-sales ratio of the entire DEX market is 12.75x. If SUSHI has to trade at these levels, its actual price should be around $40. At press time, SUSHI is trading at an 8.37% high at $7.23.

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