Quarterly Report for Synthetix, Quarter 2 of 2024: April — June.
👉Q2 Highlights
⭐ Spartan Council/CCs: V3 Scaling & Arbitrum Deployment
⭐ Ambassador Council: OP Grants
The previous few months have been a interval of dynamic progress and strategic growth for Synthetix, underscored by the profitable launch of Synthetix V3 on Base and Arbitrum, and a collection of thrilling new market listings and incentive packages. As we navigate these modifications, let’s take a second to assessment a number of the key highlights and challenges confronted by the Synthetix Protocol in Q2.
One of many greatest milestones that the Core Contributors (CCs) have been monitoring because the V3 launch on Base was the scaling of the Perps product to $100 million in every day quantity and $20 million+ in LP collateral. These milestones aimed to check two base instances — would customers be fascinated with buying and selling on-chain Perps wherever the strongest product existed with the bottom charges AND would LPs be fascinated with offering collateral aside from SNX (for a charge).
Though buying and selling volumes haven’t fairly hit the $100 million goal (although sometimes topping $50 million in a single day) it has been made clear that there’s an urge for food for LP alternatives. The LP milestone was reached only a month after the cap was raised from $10 million, peaking round $25 million. A lot of the efforts now have been centered on directing merchants in the direction of the product that integrators have been incentivized to spearhead through the V3 charge sharing mannequin.
One other pivotal second for the protocol this quarter was the deployment to Arbitrum, an Ethereum Layer 2 scaling resolution. This strategic transfer aimed to boost transaction effectivity, cut back prices, and enhance person expertise for the Synthetix ecosystem. By leveraging Arbitrum’s rollup know-how, Synthetix will be capable of proceed providing considerably lowered gasoline charges and transaction prices, enabling extra seamless and cost-effective buying and selling for customers on one more chain within the second remoted deployment of the yr.
This deployment reinforces Synthetix’s dedication to staying on the forefront of DeFi and showcases the protocol’s newfound agility in V3 to comply with sturdy person bases and spin up best-in-class Perps markets the place demand is strongest.
The deployment may even function help for yield-generating collateral, permitting LPs to gather rewards whereas sustaining publicity to a secondary yield supply. There was fairly a little bit of enthusiasm surrounding this deployment and, as with the Base deployment, charges shall be shared with Synthetix stakers through a buyback and burn mechanism.
Synthetix was awarded a grant on the finish of June from the Arbitrum Lengthy Time period Incentive Program (LTIP) and the plan to make use of these funds to draw liquidity suppliers was authorised by Arbitrum and commenced in the course of June. This program to this point has attracted almost $25 million in LP collateral!
Along with their function in securing the LTIP grant from Arbitrum, the Ambassadors have been instrumental in securing three further OP grants for ecosystem companions in Q2. The primary was the Polynomial Optimistic Indexer grant, which goals to develop a strong indexing resolution for the Optimism blockchain, bettering knowledge accessibility and lowering latency for customers. The second was the Superchain Buying and selling Instruments grant which seeks to boost the buying and selling infrastructure on the Optimism community, offering superior instruments and options to optimize buying and selling methods and execution. Lastly, the Strands Optimism Integration Acceleration grant focuses on accelerating the combination of Strands’ monetary know-how options with the Optimism ecosystem, selling innovation and broader adoption of decentralized finance functions on the platform.
Lastly for the highlights, we’d additionally like to present a shoutout to Synthetix designer Steve for the entire graphics you see on this weblog put up!🙏
👉Challenges
After an explosive first quarter for Perps V2, which noticed over $10 billion in buying and selling quantity, exercise appears to have cooled a bit in Q2 with solely about $6 billion in quantity recorded by way of the top of June throughout Optimism and Base. Open curiosity on Base peaked at round $8 million in June — only a small fraction of the out there cap house. With out further incentives to maintain LPs , buying and selling exercise, and the rewards generated from it, might want to sufficiently entice LPs to maintain their collateral tied up in that deployment.
The decline in buying and selling exercise wasn’t restricted to Base, nevertheless, as decrease volatility and onchain perps buying and selling quantity gave the impression to be a broad development all through the house. Final quarter, we reported the protocol had crossed the $50 billion milestone in cumulative quantity largely because of the sturdy efficiency of Perps V2 on Optimism. The second quarter noticed volumes drop greater than 50% on Optimism to $4.5 billion.
Regardless of these challenges, the protocol stays dedicated to innovation and progress. A SIP just lately made it by way of governance to ship on the protocol’s promise to construct a best-in-class orderbook Perps DEX which can entice a bigger person base seeking to commerce on-chain Perps on the lowest value.
Originally of the quarter, the Treasury council introduced a plan to allocate funding to construct out a Perps market on Solana. This triggered a governance debate that has surfaced a number of occasions within the present governance framework of Synthetix. The Treasury Council took this motion unilaterally and there have been a number of members of the Spartan Council who voiced some concern, provided that the Spartan Council is tasked with growing and executing the strategic course of the protocol.
The Treasury Council, nevertheless, has at all times had the discretionary authority to behave within the protocol’s finest curiosity as they see match and are elected in a non-quadratic, straight token majority vote to take action. Kain has been a staunch defender of sustaining a physique with this stage of freedom to behave on behalf of the token holders swiftly when such motion is critical. Nonetheless, some on the Spartan Council felt that the Spartan Council ought to be consulted on such plans.
Staying on the subject of governance, a a lot smaller difficulty arose in the direction of the top of the quarter when a SIP was proposed that may remove the necessity for presentation when including new Perps markets. Even with full help of the council, the query arose as as to if the SIP ought to be categorized as meta-governance or not.
It was later agreed upon that the SIP was actually meta-governance, however Burt flagged that there didn’t appear to be a selected set of pointers for making such determinations and supplied to put in writing a SIP clarifying the principles.
And the way can we neglect about SNAX chain. Whereas nonetheless not absolutely fleshed out, there are some in the neighborhood who consider an SNX Appchain may be capable of function a central governance hub for the protocol. The concept appears promising, however the council was cut up down the center with some councilors highlighting that the know-how continues to be in its infancy and the protocol has been burned earlier than being the primary movers. We will definitely be monitoring the progress of this dialogue within the coming months.
👉Protocol Stats
Overview of Synthetix Q2 Stats: April 2024 — June 2024.
👉Spartan Council
Q2 2024 Spartan Councilors: Afif, Cavalier, Cyberduck, Jackson, Millie, ml_sudo, Snaxfrens, and Snxmaximalists
Together with their contribution to the achievement of main Synthetix milestones this quarter, let’s take a minute to assessment the whole lot else that the Spartan Council was in a position to obtain in simply the final 3 months.
In April, the Council took the primary steps in the direction of deprecating non-sUSD spot synths with SIP-369. The spot synths generated much more danger publicity for the debt pool than delta impartial Perps markets with out producing sufficient charge income to justify that danger. The deprecation of those synths will finally pave the way in which for SNX L1 migration that may help a brand new Perps market on Ethereum mainnet. All holders of those synths got ample alternative to redeem them at favorable charges and the trade of those synths has been absolutely deprecated at this level. Customers have been directed to contact the Treasury Council to retrieve beforehand unclaimed funds.
The council additionally authorised SIP-376 which added Ethena’s sUSDe as a supported collateral kind on Arbitrum to scale the deployment quicker and 16 new markets to V2 and V3 together with for the primary time: an SNX Perp on Base! This was beforehand thought-about to be troublesome to help in V2 because the debt pool was comprised of solely SNX collateral.
In Might, the Spartan Council continued its efforts to boost the protocol’s performance. As a primary, we noticed help added for the yield-generating aUSDC for use as LP collateral on Perps V3. As Perps V3 was nearing the top of its early reside testing part, SIP-378 pushed by way of a number of integrator enchancment requests, together with eradicating acceptable value checks on order dedication and permitting 0 charge perp buying and selling.
May additionally noticed large buying and selling incentives added to Perps V3, rebating as much as 90% of person buying and selling charges for 10 weeks and the approval of multi-collateral margin. Multi-collateral margin was a function that was purported to be out there on the launch of Perps V3 however bumped into some implementation challenges. Somewhat than delaying the launch, the Spartan Council opted to make Synthetix Perps buying and selling on Base out there as quickly as doable and delay the much-anticipated multi-collateral margin function.
In June, a brand new framework for automating Perps listings was authorised unanimously by the Spartan Council. SIP-387 highlighted that the method is all however automated anyway with no significant objections being surfaced in any of the displays so as to add these new markets. A lot of the danger evaluation occurs within the parameter setting SCCP anyway, which already requires no presentation. It grew to become clear that there could also be some worth in having the ability to get well-liked new tokens in the marketplace quicker than is feasible within the present presentation course of, given the council meets solely as soon as every week to listen to these displays.
Synthetix V3 was additionally deployed to Arbitrum in June and SIP-389 was authorised, greenlighting help for much more yield producing collateral choices to assist enhance liquidity rapidly.
To spherical out the quarter, the council heard and authorised a proposal so as to add a brand new grocery store/pool on V3, coined Degenthetix, to function a sandbox for experimentation with Perps buying and selling for longtail belongings.
👉Ambassador Council
Q2 2024 Ambassador Councilors: Dsacks, GUNBOATs, mastermojo, Matt, and Westie
The Synthetix Ambassadors have closed out one other quarter of selling the pursuits of the protocol by way of governance participation, numerous DAO collaborations, and neighborhood help. As seen within the graphic under, the ever-growing Synthetix ecosystem creates an online of DeFi companions all through which the Ambassadors have stayed lively.
The Ambassador Council’s three primary focuses remained throughout Q2:
- DeFi Governance: Optimism Governance (which concerned Token Home and Citizen Home), in addition to different DeFi DAOs (similar to Arbitrum, Gearbox, Protected, Lyra, Aave, and so forth.)
- Integrator help: Present & future — Guiding core contributors, integrators, and extra by way of the processes of grants, retroactive funding, and different methods to safe precious funds
- Advertising and marketing Assist: Spartan Areas & Twitter involvement
Now let’s get right into a extra detailed listing of what the Council has achieved this quarter:
✅ OP Grants
The Ambassadors remained vigilant of their help of ecosystem companions within the Optimism Grant course of. This quarter, in addition they helped Synthetix safe a LTIP Grant on Arbitrum, on prime of three Optimism Grants:
1. Artificial Arbitrum LTIP : 2 million ARB
For particulars in regards to the Arbitrum Grant Liquidity Incentive Program take a look at this weblog.
2. Polynomial Optimistic Indexer: 40K OP
The aim of this grant is to develop a strong indexing resolution for the Optimism blockchain, which is able to enhance knowledge accessibility and cut back latency for customers.
3. Superchain Buying and selling Instruments (Troy): 40k OP
This proposal seeks to boost the buying and selling infrastructure on the Optimism community, offering superior instruments and options to optimize buying and selling methods and execution.
4. Strands Optimism Integration: 35k OP
Lastly, this grant will speed up the combination of Strands’ monetary know-how options with the Optimism ecosystem, selling innovation and broader adoption of decentralized finance functions on the platform.
For individuals who utilized for Optimism Grants and didn’t make it by way of on this spherical, the Ambassadors need it to be recognized that the choice was purely budgetary. They’ve labored one-on-one with protocols to make sure that they’re able to go for subsequent rounds, which is able to begin on the finish of July. The following spherical of Optimism Grants may even embody the Superchain, which now permits grants on Base! The Council is anticipating to work with many ecosystem tasks within the subsequent spherical to organize them for this.
✅ Retroactive Funding
In June, the Ambassadors additionally assisted ecosystem companions in making use of for Optimism Retroactive Funding Spherical 4. Throughout this spherical, the Optimism Collective allotted 10 million $OP to reward Superchain builders, deciding to dedicate this spherical particularly to on-chain builders with a view to:
1. Incentivize contributor progress and community exercise
2. Be extra inclusive in the direction of longtail contributors
3. Construct upon the numerous progress in developer actions since Spherical 3
The Synthetix Ambassadors labored with ecosystem companions to make sure that they understood the factors and choice course of, and in consequence a number of tasks made the Ultimate Reduce:
- Synthetix
- Kwenta
- Thales
- dHEDGE/Toros
- Polynomial
- TLX
- Copin
- Keng Lernitas
- Pyth Community
The funding quantity secured ought to be launched within the coming weeks.
✅ Governance
1. Common Governance
The Ambassadors at all times need to be sure that they’re staying clear with their voting. As at all times, their exercise may be adopted by way of their wallets on Snapshot and Tally.
Voting Exercise may be adopted utilizing these hyperlinks:
2. Optimism Governance Discussion board Exercise:
The Synthetix Ambassadors stay a serious voice in Optimism Governance, and their respective OP Governance Discussion board Actions may be discovered utilizing these hyperlinks:
3. X/Twitter Engagement
The Ambassadors additionally put up fast governance updates on X, and posted two this quarter:
Ambassador Dsacks additionally did a deep dive into TLX on X, right here, following the Council’s Spartan Area with the protocol.
4. Accomplice Assist
Present Companions
- The Ambassadors have continued to examine in on companions and work with them on any suggestions, help requests, DeFi grant help/steerage, and so forth.
Future Companions
- The Council plans to give attention to Perps V3 and Synthetix V3 within the subsequent epoch in the case of future partnerships. They’re at the moment in talks with future companions to construct on prime of Synthetix Perps both as a frontend or in any other case, and they are going to be persevering with these efforts into the brand new quarter.
- They’re additionally monitoring modifications to retroactive public items funding (RPGF), which seems to be fruitful for Synthetix on Base & OP as onchain builders and ecosystem companions
✅ Spartan Areas
Spartan Areas continued to function vital neighborhood advertising and marketing instruments this quarter, with the Ambassadors internet hosting a number of different DAOs on behalf of Synthetix.
1. Cyberdex (Size: 35 minutes)
- CyberDEX is a decentralized perpetual swaps buying and selling platform performing on Optimism and powered by Synthetix.
- Friends: Cyborg (founder), Config (entrance finish dev), NotAPriest (dev), Picante (head of progress), and Mohammed (product designer)
- Recording right here
2. TLX (Size: 1 hour)
- TLX is a brand new leverage token protocol constructed on Synthetix.
- Visitor: Max
- Recording right here
✅ Synthetix Governance Proposals
1. SIP-382: Listing FRIEND-PERP on Perps V3 on Base (writer: Dsacks)
2. SIP-388: Including Assist for EtherFi weETH to Arbitrum V3 LP (writer: Dsacks)
3. SIP-389: Including Assist for Yield Tokens from Aave and Lido to Arbitrum V3 LP (writer: Dsacks)
What’s subsequent for the Ambassadors?
Within the subsequent quarter, the Ambassador Council plans to give attention to the next:
- Acquiring extra Arbitrum delegations and increasing into Arbitrum governance
- Different DeFi DAOs (Lyra, Gearbox, Protected, and so forth)
- Integrator help: serving to CCs and integrators with grants, retroactive funding, and so forth.
- Persevering with advertising and marketing help
- Pursuing additional progress methods for Perps and Synthetix V3
- Exploring alternatives to scale synth provide
- Rising presence in Optimism governance (Optimism Token Home, Citizen Home, Grants, RPGF)
- Increasing affect in DeFi & DeFi Governance
👉Greatest Memes from Q1
The quarter of COURSE wasn’t with out humor, so listed below are our favourite memes from the quarter:
