Scaling Andromeda

Introduction

The Andromeda Release is a strategic deployment encompassing Core V3 and Perps V3 on Base; this move will position Synthetix as a multi-chain protocol, leveraging the Optimism Superchain’s capabilities. With the deployment of Perps V3 to Base, Synthetix reinforces its position as a leader and innovator in the decentralized Perps space.

The journey to Andromeda is marked by progressive ramp-up periods. Andromeda is currently live, actively onboarding traders, developers, and integrators with low open interest and liquidity provider caps. Over time, LP and OI caps will be increased, and Perps V2 users will be transitioned to Perps V3, coinciding with the ramp-up of OI/LP Caps and support of existing perps markets.

The Spartan Council's Role in Andromeda's Ramp-up

The Spartan Council, Synthetix's governing body, will oversee the Andromeda ramp-up. Their decisions will shape the progression of this deployment on an ongoing basis. The below ramp-up stages are a rough plan based on discussions by the Spartan Council and Core Contributors, subject to change as development and governance continue to take shape on the topic.

Ramp-Up Stages

1. Initial Caps and Testing: The Synthetix Treasuary Council has initially seeded liquidity to ensure that open interest is supported by liquidity providers.
2. Build up Trader/Arbitrage Base: Run by market participants seeking to arbitrage. Automated trading bots will work to neutralize skew, akin to Perps V2. Once this is available, LP positions will be delta-neutral. 
3. Scaling LP and Expanding Trading Pairs: Once LP caps reach a satisfactory level, users will be guided to engage with LP dapps and trading integrators.
4. Perps v3.1 release - Interest rate (or asymmetric funding) SIP-354. Perps V3 implements locking of LP collateral to ensure that open positions are backed by the underlying collateral. To discourage the total utilization of LP collateral, the introduction of asymmetric funding acts as an incentive for additional LPs to enter the market while also encouraging the closing of positions to liberate LP collateral in a timely manner.
5. Increased Caps & Additional Market Pairs: Once integrations for trading partner integrators and arbitrage bots are complete, caps will be raised by roughly an order of magnitude higher. This increase will accommodate more liquidity providers and open interest, enabling the introduction of additional markets.
6. Multi-Collateral Margin Support: Additional perp margin collateral types can be accepted, including spot synths, sETH, sBTC, etc, yield bearing stablecoins & staked ETH tokens.

The Essence of Andromeda

The Andromeda Release will introduce several new key features, and benefits for both traders and liquidity providers. This isolated deployment on Base facilitates unique testing opportunities and direct comparisons with the existing Optimism Perps V2 deployment.

Key Features

• Multi-Collateral Support: Including USDC, and other approved synths in the future (sETH, sBTC, etc)
• Improved Liquidation and Settlement Processes: Protecting LPs and traders with MEV-resistant trading and liquidation experience.
• Isolated Deployment: Allowing for a distinctive testing environment on a new chain.
• SNX Buyback and Burn: Implementing a fee distribution model to SNX holders. 40% of fees generated will be used to buy back SNX and burn.

For Liquidity Providers and Traders

• Liquidity Providers: The introduction of USDC as collateral offers new avenues for liquidity provision and fee generation. This usage is much more capital efficient, as the collateralization ratio can be set much lower than with SNX in the past.
  • Example C-Ratio: SNX C-Ratio is set at 500% vs. USDC's 120% C-Ratio.
• Traders: Enhanced trading experience with cross-margin and multi-collateral options alongside a user-friendly onboarding process from integrator partners.

Any Questions

If you have any comments or questions, join the conversation on Discord.