Quarterly Report for Synthetix, Quarter 3 of 2024: July — September.
👉Q3 Highlights
⭐ Spartan Council/CCs: V3 Migration, SNAX Chain, & Referendum
⭐ Ambassador Council: Ecosystem Grants
Over the previous few months, the Synthetix Protocol has undergone important developments and confronted a variety of challenges because it continues to develop and evolve. On this report, we are going to discover a few of the key highlights, such because the profitable migration to V3, new market launches, and governance updates. We’ll additionally dive into the challenges which have surfaced, notably round liquidity, integration delays, and governance complexities. Let’s take a more in-depth have a look at each the achievements and obstacles throughout this transformative interval.
The migration to Synthetix V3 has been a serious focus over the previous few months, representing a important shift in how the protocol operates. This transition required an unbelievable quantity of technical execution, and the primary part started with the migration of the Synthetix Treasury. This migration required sturdy coordination between Core Contributors, auditors, and the Spartan Council, permitting migration to lastly open to all stakers in direction of the top of the quarter. Put up migration, the Treasury is now backing debt on V2X and V3 concurrently, which paves the way in which for the launch of the much-anticipated L1 Perp providing.
L1 Perps lastly made it to testnet this previous quarter and is anticipated to be reside on mainnet by the center of October. Although the progress was slower than initially anticipated, the product will add extra avenues for buying and selling on-chain Perps and can deepen the buying and selling exercise supported by SNX collateral. One of many key challenges was making ready the front-end interfaces and coordinating with integrators, like Kwenta, to assist Perps buying and selling and Vault performance.
One other important milestone this quarter was the introduction of SNAX Chain, which was designed to function the first hub for Synthetix V3 governance. Constructed on the OP Stack, SNAX Chain permits cross-chain messaging and decentralized governance, permitting voting to happen seamlessly throughout varied networks. The event of SNAX Chain was pushed by the necessity to deal with limitations within the present governance system, notably with election mechanics that had been restricted to Optimism Mainnet. This has been essential for bettering election programs and aligning governance with the wants of the protocol. SNAX Chain formally hit mainnet simply in time to host this previous epoch’s elections in September.
Maybe probably the most important improvement of the quarter got here simply days after the brand new Spartan Council was elected when Fenway, a long-time Synthetix group member and newly elected Councilor, proposed a referendum mechanism in SIP-408. The proposal represents a major shift in direction of a extra direct type of governance on delicate strategic points inside the protocol. This mechanism permits for particular adjustments or upgrades to be put to a token holder vote, relatively than being solely selected by the Spartan Council.
Beneath the proposal, a quorum of 75 million SNX could be required for a vote to be legitimate, with 67% of voters wanted to approve the proposal for it to cross. Shortly after the proposal handed in a unanimous meta-governance vote, a referendum was proposed, and subsequently handed, to fully reshape the governance panorama of the protocol. The transition is at present in progress however briefly, the Ambassador and Treasury Councils can be deprecated and a brand new Spartan Council can be created. This new Council can be comprised of 4 elected members who will then appoint 3 Core Contributors to make sure imaginative and prescient continuity. Take a look at our weblog put up right here, the place we reviewed the total referendum in depth.
👉Challenges
This previous quarter was actually not with out challenges and, to a point, these challenges are what motivated the governance overhaul. In SR-2, the Synthetix Reboot referendum, Fenway highlighted a number of facets of the protocol that seemed to be hindering development, together with delays and lack of accountability or course.
This has been most obvious within the constantly delayed launch of the L1 Perp product. In 2023, Ethena approached Synthetix with a request to create a bespoke Perps product on L1. Beforehand, the protocol steered away from providing L1 Perps, because of the excessive fuel charges on Ethereum. Ethena, nonetheless, was looking for extra alternatives to assist the yield on their stablecoin and was largely involved with deep perps liquidity in addition to deep liquidity on staked ETH. This was anticipated to be prepared initially of this 12 months however a number of stipulations, together with V3 migration and frontend integration, precipitated important delay.
These delays additionally highlighted some accountability considerations inside the protocol. Whereas the chase for ever extra decentralization has supplied some flexibility to the protocol, fragmented decision-making constructions have led to misaligned priorities and inefficient workflows. This was placed on full show with the failure to ship multi-collateral Perps to Arbitrum within the agreed upon timeframe. This compelled the protocol to return half of the initially awarded 2 million ARB grant to deploy Perps V3 to Arbitrum, which might have been used to incentivize buying and selling exercise as soon as the product launched with multi-collateral margin on the finish of July.
One of many options proposed in direction of the top of final 12 months to alleviate a few of these points was a broadcast roadmap that might function a north star for the group and stakeholders to carry Core Contributors and elected councilors accountable to a plan. The protocol struggled to ship on this promise for a 2024 roadmap and it was one other obvious challenge highlighted in SR-2.
Other than the extra operational considerations, curiosity in Synthetix Perps appears to have light within the final three months, even because the Arbitrum deployment went reside and the protocol positioned itself for the brand new L1 Perp. Whereas a part of this can be resulting from broader market headwinds, TVL on Arbitrum and Base have additionally dropped to simply over $10 million from a excessive of round $45 million. Mixed each day buying and selling quantity throughout the deployments has been underneath $10 million for the reason that buying and selling incentive packages dried up. The Arbitrum and Base deployments characterize two of 5 experiments Kain proposed on the finish of final 12 months to evaluate curiosity in buying and selling Synthetix Perps and delegating non-SNX collateral to again that buying and selling exercise on networks aside from Optimism. Whereas there was some early curiosity within the Base deployment, momentum appeared to gradual as soon as financial incentives ramped down.
👉Protocol Stats
Overview of Synthetix Q3 Stats: July 2024 — September 2024.
👉Spartan Council
Q3 2024 Spartan Councilors: Cavalier, Cyberduck, Fifa, Jackson, Millie, ml_sudo, Snaxfrens, and Snxmaximalists
Challenges apart, the Spartan Council nonetheless contributed to a number of Synthetix milestones this previous quarter, so let’s take a minute to assessment all the pieces that the council was in a position to obtain within the final 3 months.
In July, Synthetix introduced that it was shifting ahead with a governance proposal to introduce a brand new pool on Base — Degenthetix. This initiative launched a specialised market with a separate debt pool for long-tail property, providing a sandbox atmosphere for merchants to experiment with Perps buying and selling of extra unstable listings. This modern transfer highlights Synthetix’s dedication to increasing its buying and selling capabilities and catering to extra area of interest markets. The Spartan Council additionally gave the inexperienced gentle to carry Chainlink Oracles again into the combination. Perps V3 was designed to be oracle agnostic and, although Chainlink Information Streams are costlier, SIP-398 permits them for use on the discretion of integrators.
The most important achievement of the quarter was lastly getting the V3 migration over the road. Whereas V3 has been deployed on different networks for a lot of the 12 months, lastly delivering the SNX migration entrance finish will permit stakers, who had been beforehand solely backing V2X Perps, emigrate their debt positions to V3 the place they may be capable to collateralize buying and selling exercise on Ethereum Mainnet and Optimism (and share within the charges for doing so). The council additionally determined to solidify the price sharing mannequin that was agreed upon for the Base deployment throughout all chains that Synthetix is deployed on in SIP-385.
After some preliminary forwards and backwards throughout the first presentation to launch SNAX Chain, the elections had been performed this previous epoch for the primary time on the now central governance hub for the protocol. Among the preliminary objections had been largely directed in direction of the extra complicated implementations initially recommended — comparable to deploying Perps to SNAX Chain. The council did find yourself agreeing that centralizing the election infrastructure could show helpful for the protocol.
And at last, although it was a brand new council, SIP-408 to introduce the referendum mechanism was handed unanimously on the finish of the quarter. This modification hopefully marks a step in direction of extra community-driven governance, empowering SNX holders to have a better affect within the strategic course of the protocol and encourage broad participation.
👉Ambassador Council
Q3 2024 Ambassador Councilors: Dsacks, GUNBOATs, MasterMojo, Matt, Westie
Whereas the lately handed referendum will deprecate the function of the Ambassador Council, the Ambassadors nonetheless had a productive quarter selling the pursuits of the protocol by governance participation, varied DAO collaborations, and group assist. So let’s assessment what the Council achieved in Q3:
✅ Retroactive Funding
In July, the Council assisted ecosystem companions in making use of for Optimism’s Retroactive Funding Spherical 4 and, consequently, a number of initiatives had been awarded OP for retroactive funding! The Optimism Collective allotted 10M $OP to reward Superchain builders on this spherical, and a complete of 573,000 $OP was distributed to the next initiatives that obtained help from the Ambassadors:
- Synthetix — 256k $OP
- Kwenta — 167k $OP
- Thales — 54.8k $OP
- dHEDGE/Toros — 10.4k $OP
- Polynomial — 13.9k $OP
- TLX — 8.2k $OP
- Copin — 4.9k $OP
- Keng Lernitas — 11.79k $OP
- Pyth Community — 1.09k $OP
Matt, MasterMojo, and Westie are Optimism Badgeholders, and so they reviewed and took part in Spherical 4 of Optimism Retroactive Funding. Spherical 5 is at present going down now.
✅ OP Grants
Spherical 6 of Optimism Grants is at present ongoing and can final till the top of November — the checklist of Mission Requests (Grants) will be discovered right here. The Ambassadors contributed to some OP Grants this quarter, together with:
- Creating Optimism Mission Requests:
- TLX — 50,000 $OP
- TLX is a leveraged tokens protocol that permits customers to mint and redeem leveraged tokens for over 50 property with as much as 20x leverage.
- This grant was utilized for to assist improve person interplay on TLX by distributing OP rewards to customers who purchase, maintain, and promote leveraged tokens.
- Strands Backed Audit — 73,000 $OP
- Strands Finance, nonetheless in alpha, is a world Fintech conglomerate that makes use of sensible contracts and transactional gateways to develop conventional and decentralized institutional instruments.
- This audit unlocks important alternatives for Strands, and can encourage extra customers and builders to have interaction with Strands, contributing to a safer and extra modern DeFi atmosphere on Optimism.
✅ Governance
1. Normal Governance
The Ambassadors at all times need to be certain they’re staying clear with their voting. As at all times, their exercise will be adopted by their wallets on Snapshot and Tally.
Voting Exercise will be tracked utilizing these hyperlinks:
2. Optimism Governance Discussion board Exercise:
The Ambassadors OP Voting Energy noticed an general improve this previous quarter:
The AC additionally remained a serious voice in Optimism Governance general, and their respective OP Governance Discussion board Actions will be discovered utilizing these hyperlinks:
3. X/Twitter Engagement
The Council additionally posts fast governance updates on X, and posted one this quarter in August. Of their governance replace the Ambassadors introduced, amongst different issues, that they ran within the Kwenta elections and had been voted in by the group to be on the Kwenta Council.
4. Companion Help
Present Companions
- This quarter, the Ambassadors continued to examine in on companions and work with them on any suggestions, assist requests, DeFi grant help/steering, and so on.
5. Spartan Areas
Whereas not technically a Spartan Area, Matt joined a name hosted by CyberDEX, which is a decentralized perpetual swaps buying and selling platform performing on Optimism and powered by Synthetix.
What’s subsequent for the Ambassadors?
As beforehand talked about, SR-2 will deprecate the Ambassador Council. Nonetheless, it was extensively agreed upon throughout the City Corridor that the function of the Ambassadors is extraordinarily very important. Going ahead, these roles will seemingly be employed, full-time Core Contributor positions. Keep tuned for extra updates from SNXweave as this develops.
👉Greatest Memes from Q3
The quarter in fact wasn’t with out humor, so listed here are our favourite memes:
