SudoSwap Announces a Controversial SUDO Token Allocation Structure

SudoSwap Announces a Controversial SUDO Token Allocation Structure

On Friday, 2nd September, SudoSwap announced their allocation of the recently created SUDO token. However, many questions arose from the community, especially concerning the distribution of SUDO tokens to the team. 

SUDO Token Allocation

On Friday morning, SudoSwap, a decentralized NFT marketplace, announced the allocation of SUDO tokens. SUDO is the governance token for the sudoAMM protocol.

In their blog post, SudoSwap mentioned that the SUDO initial supply is 60 Million. 41.9% (25.12 million) of the tokens will be distributed to XMON holders, 0.9 million to Oxmons NFT holders, 0.9 million for Retroactive LP airdrop, 15.08 million to the treasury, 9 million to initial team members, and 9 million to SudoRandom labs. 

Their blog went on to say; 

Note that the SUDO token governing the SudoSwap protocol has not yet been deployed. Please exercise caution.

Based on the report, most tokens will be distributed using XMON and NFT Oxmons. 

Controversies in the Token Allocation  

The token allocation structure has been seen as unusual by many community members. Many are concerned with the 41.9% token allocated to XMON holders. Community members are complaining about this project’s complete lack of decentralization. 

SudoSwap was created by anonymous developers called Oxmons, Oxhamachi, and zefram.eth. Oxmons NFT and XMON tokens are part of the SudoSwap ecosystem. Earlier, the founders claimed the project did not involve venture capital funds, hence would allot more tokens to the team and community. 

While the firm is trying to fulfill its obligation, the 41.9% token allocation to XMON holders is too much. Currently, the total supply of XMON tokens is 10k, distributed among about 3657 holders. Out of the 10k XMON tokens, about 7488.28 tokens (74.88%) worth around $260 million are in one wallet owned by the Oxmons team. The team will control approximately 31.37% of SUDO tokens released in circulation. 

Accordingly, SudoSwap allocated 15% of SUDO to initial team members and 15% to the SudoRandom labs team. When talking about this allocation on Twitter, one user commented:

Token distribution has many overlapping parts. For example Initial team members and Sudorandom Labs, these two teams may be the same team, or most of the members overlap. 15% plus 15% is 30%, It is means that 30% of the SUDO tokens will be allocated to your teams… 41.9% of the SUDO tokens are allocated to holders of XMON tokens. 74.88% of XMON tokens are held by the team. 31.37% of the SUDO tokens will be allocated to your teams. 30%+31.37% = 61.37%, At least 60% of the tokens are allocated to yourselves.

Indeed, this token distribution shows that the network is highly centralized, contrary to the whole ideology of DeFi and crypto. 

The Centralization Challenge

The centralization challenge could have dire consequences for cryptocurrency and token projects. If most of the tokens are held by one or a few people, they can easily attack the network or dictate how the network functions. SudoSwap launching a governance token that is quite centralized could mean the larger part of its community, i.e., over 20k investors, will not have a say in governance.

Julius Mutunkei

Julius is a blockchain reporter skilled at synthesizing all crypto-related information to make articulate texts easy for anyone to grasp. With a beginner's level certificate in Financial Analysis, Julius can read, interpret and report crypto findings to help investors exercise the best judgment in their decision-making process. When he is not caught up in the crypto frenzy, Julius likes playing a game of FIFA with his online buddies.