SNX staking live on Optimistic Ethereum L2!
We are extremely excited to announce that staking on Synthetix is now live on L2 mainnet, Optimistic Ethereum (OΞ)! This marks a huge next step not only for Synthetix, but the entire Ethereum ecosystem, as OΞ is the first scaling solution with full cross-layer porting capabilities for smart contracts without rewriting them. (Read more about why Optimism’s L2 solution was chosen).
The migration process to OΞ has been designed to protect the core functionality of Synthetix, with multiple phases over several months to ensure the protocol is sufficiently robust by the time both staking and Synth exchanges are both fully live on L2. (Read more about the phased migration process). This first phase of migration was designed for smaller SNX holders who might be priced out of interacting with L1 due to high gas costs.
Note: Before you read on, please remember that migrating to L2 in this first initial phase may not be the optimal strategy for all SNX stakers, particularly larger holders. At this stage, it's an entirely optional move, and rewards are limited in the initial phases. More information about the rewards are available later in the post.
Also please note that there is currently no utility for L2 sUSD — if you desire to use your minted sUSD for any kind of strategy then migrating to L2 is not the best option for you.
How to migrate your SNX to L2
This first phase of migrating to OΞ uses a bridge at https://staking.synthetix.io/l2 that allows SNX holders on L1 to migrate to L2. Before migrating, if SNX holders have been participating in SNX staking on L1, they must pay back any staking debt in sUSD they have accrued to unstake their SNX. Please make sure you have enough sUSD to repay your debt before burning.
While the migrating process accepts several different kinds of wallets, unfortunately on L2 the dApp only accepts Metamask for the moment. Support for more wallets will be added next week.
Once any debts have been paid by burning sUSD, the SNX can be migrated to L2.
Please note that migrating your escrowed SNX is optional — see the relevant section further below. Once you have migrated your SNX to L2, you can view it on L2 Mintr. There is a time delay of ~5 minutes after migrating until your migrated SNX balance appears on L2, so do not panic if there is a lag until it appears.
The experience of interacting with OΞ on L2 will be similar to interacting with L1. An Ethereum wallet set to the Mainnet network is required, but given that such popular interfaces as Etherscan and Metamask look at L1, activity for interacting with L2 will not be visible in the same way. There is a block explorer available at https://mainnet-l2-explorer.surge.sh/.
Users will not require L2 ETH for the time being as gas fees are initially subsidised by Optimism, but they are required to sign messages that are relayed by the dApp to the Optimism provider.
Migrating escrowed SNX to L2 (optional)
Escrowed SNX can be migrated to OΞ in the new Synthetix Staking dApp, but please note that initially it will not be possible to migrate escrowed SNX back to L1 (this time-frame is expected to be up to a few months). Non-escrowed SNX can be migrated back to L1, but there will be a waiting period of one week. At this stage sUSD cannot be migrated back either though.
Before migrating escrowed SNX from L1 to L2, you’ll need to migrate to the new, L2-ready escrow contract. This can be done by following the prompts at https://staking.synthetix.io.
Unfortunately the gas costs for migrating escrowed SNX to the new escrow contract may cost up to 0.5 ETH (subject to variable GWEI requirements). But as per SIP-60 the Synthetix community decided that SNX holders with <1000 SNX in escrow would have their escrowed SNX instantly available for vesting after the escrow migration to reduce the gas costs as much as possible. The aim for this decision was to compensate for the gas costs of migration.
After migrating to L2
After migrating to OΞ, SNX holders can stake their SNX and mint sUSD. Staking will not be launched until next week on the Staking dApp, so initially it must be done through L2 Mintr. Again, please note that there is a time delay of ~5 minutes after migrating until your migrated SNX balance appears on L2.
In the initial phases of L2, stakers on L2 will not receive inflationary SNX rewards or Synth exchange rewards from L1. However, the synthetixDAO has committed to providing SNX rewards during this phase of L2 migration. It is expected that in the future, the Synthetix community governance process will divert part of the weekly SNX inflationary supply (currently allocated to L1 staking rewards) to L2 rewards. If the rollout runs smoothly, the L2 rewards from the sDAO will be the following:
- Week 1: 10,000 SNX
- Week 2: 10,000 SNX
- Week 3: 25,000 SNX
- Week 4: 25,000 SNX
- Week 5 onwards: the sDAO will assess the option of increasing the SNX rewards to incentivise further migration.
Initially, SNX sent to L2 and sUSD minted on L2 will not be transferable to other L2 wallets for at least a few weeks.
Testnet trial rewards
During Synthetix’s various testnet trials of OΞ, there were SNX rewards allocated to participants. It was initially communicated that to be eligible for rewards, SNX holders needed to do the following:
1) migrate some SNX to L2 testnet,
2) stake the SNX on L2 testnet,
3) claim SNX staking rewards on L2 testnet, and
4) withdraw SNX from L2 testnet back to L1
But as some SNX holders experienced some difficulty completing the withdrawal process, we have decided to amend step 4 to requiring participants to initiate a withdrawal, but they did not need to complete the withdrawal process.
The distribution of rewards has been calculated with the following method:
- A total of 200,000 SNX has been awarded by the synthetixDAO
- The rewards were allocated proportionally based on how much SNX a user claimed as “staking rewards” on L2 testnet.
- An example: if Alice claimed a total of 12 SNX in “staking rewards” on L2 testnet, and there was a total of 1,200 SNX claimed as “staking rewards” by all eligible L2 testnet participants, then she receives 1% of the 200,000 SNX. This would be 2,000 SNX.
The full list of testnet trial reward recipients is available here, and has already been airdropped to those wallets. To understand how much SNX you have received, you can use this ETH converter to paste the “distributedSNX” amount and convert it to the number of SNX units. For example, if the “distributedSNX” amount for a user was 21741826280489551920, then they received 21.741826280489551920 SNX.
Any airdropped rewards should be viewable on L2 Mintr.
As always, if you have any questions about anything featured in this post, please come join the Synthetix community in Discord!