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Decentralised synthetic assets

OΞ update

OΞ update

In January we kicked off the first phase of the transition to the Layer 2 scaling solution Optimistic Ethereum (OΞ). As expected, the community for not just Synthetix but across all of DeFi is eager for news about the progress being made by Synthetix core contributors and the Optimism team, so this post is intended to provide some context and give the answers to the most common questions we get in Discord.

How has the migration gone so far?

The migration to OΞ has been amazing to watch so far — as of the time of writing, the Synthetix to OΞ deposit contract has over 4.5m SNX in it, with a value of over $78m!

The synthetixDAO has committed to supplying 25,000 SNX per week in staking rewards on OΞ until at least Phase 1. Until Phase 1, OΞ stakers can earn these rewards without being exposed to any fluctuations in the debt pool (since in Phase 0, only sUSD can be minted on OΞ and there are no Synth exchanges).

What are the next phases in the transition?

There are still no changes currently planned to the phases outlined in the original transition blog post, as following:

Phase 0 (complete)

  • One way SNX bridge from L1 to OΞ including escrowed SNX
  • SNX & sUSD will be non-transferrable on OΞ
  • Minting of non-fungible sUSD
  • Claiming of SNX (funded via the sDAO)

Phase 1

  • Synth exchanges
  • Chainlink oracle support
  • Transferable SNX and Synths between OΞ wallets

Phase 2

  • Two way SNX bridge from L1 to OΞ including escrowed SNX

Phase 3

  • Unified debt pool
  • Debt pool snapshot syncing
  • Fungible Synths
  • Synth teleporter
  • Parallel minting on L1 and OΞ
  • SNX inflation redirection

Phase 4

  • L1 staking deprecated
  • L1 liquidations for presumed ‘lost’ wallets with debt
  • L1 Synth disabling
  • Fee pool bridge

Why has it taken longer than initially expected to reach Phase 1?

Firstly, it’s always difficult to predict ahead of time how long engineering projects will require. We offer estimates but these expectations should be held loosely as there can always be complications. Secondly, the Optimism team began work to take learnings from the first weeks of the Mainnet trial to stabilise and harden their system to support the additional anticipated load. This means that when Synthetix does reach Phase 1, other projects will be much closer to being able to join Synthetix on OΞ!

What needs to be done before Phase 1?

Before Phase 1 can begin, the Optimism team will finish preparing OΞ for additional Synthetix contracts and price feeds supplied by Chainlink.

The Spartan Council has voiced concerns about SIP-118, which proposes bypassing fee reclamation on OΞ in some cases. For this reason, before we launch Synth exchanges on OΞ (as per SIP-117)  we are hoping to run a OΞ trading competition on Kovan (if there is sufficient engineering bandwidth to support it) to ensure the system is protected against frontrunning.

Will we ever need to have OΞ ETH to execute transactions on OΞ?

At some point in the near future, Optimism will stop subsidising transactions on OΞ. This will mean that users will need to pay for gas, though it will be considerably less than on L1. This will involve the depositing of Ether from L1 to fund OΞ activities, though for instance minting and claiming each burn about 100x less gas than on L1. Stay tuned for when this is introduced!

Thanks for reading — come join us in Discord if you have any more questions!