October 11, 2023
The following post contains a recap of news, projects, and important updates from the Spartan Council and Core Contributors, as well as the Grants Council and Ambassador Council from last week.
- PoC for cross-chain pool synthesis (SIP-312) is continuing — CCs are exploring a solution using Wormhole
- Testnet trading competition is still live, CCs have identified a number of core changes
- Focus is now shifting towards the staking dApp for V3
- SC & CCs had an extensive discussion regarding integrator profitability, read below for full details
- Grants Council update: Team is considering retroactive grant to Copin, Watcher Page is live, CT is working on finishing touches to governance doc, NFT free mint dropping soon, Notifi project with Matt is being tested with The 300
Spartan Council and SIP updates
Present at the October 4, 2023 Spartan Council Weekly Project Sync:
Spartan Council: Adam, Burt, cyberduck, Genefaesius.eth (Gene), Jackson, Millie
Core Contributors: Afif, Cavalier, KALEB, noah, Noisekit, sunny, troy
First up, for our work in progress update, proof of concept for the cross-chain pool synthesis SIP is continuing to develop. The CCs are exploring a solution using Wormhole, which is a cross chain messaging platform that allows developers to build decentralized applications that span the entire blockchain ecosystem. Wormhole is currently working on a product called cross-chain queries, which is closest to satisfying the technical spec required for Synthetix of any cross-chain messaging solution.
For markets, the testnet trading competition is still live! Most of the CC attention has been on the competition this past week, as they have identified a number of core changes. The focus is now shifting back towards the staking dApp for V3 as more realistic data comes in from the competition. The CCs are also in the process of reviewing the second audit report for SIP-337, Perps V3, and its fixes are close to completion.
In other discussion, the SC and CCs discussed integrator profitability last week, with Burt bringing up integrator costs. He mentioned that operating costs for Kwenta come out to around $200,000/month. Kwenta has received some grant support from OP, but that’s not expected to be an ongoing source of funding to cover operating expenses so, looking forward, fee sharing will have to provide enough incentive to continue maintaining Kwenta (and most likely other integrators).
Millie brought up that Synthetix generated $1.2 million in fees over the past 30 days, so three integrators at $200,000 per month would require a fee share over 50%. Burt countered by saying even some fee share would free up funds that could be used for further development and promotion that could drive volume increases. He continued, saying that the goal should be to set achievable targets for both profitability of integrators and net benefit to Synthetix.
Kwenta, Polynomial, and Rage have floated 30% as a starting point for the discussion (in some combination of fee share and locked SNX from the Treasury). This is the number at which integrators feel like they may be able to support their operations while also adding value for the ecosystem.
Adam said he most likely wouldn’t vote for any higher than 20% unless there was a clear, measurable plan for an increase in volume. He also highlighted that this creates an incentive for integrators to participate in growing the collateral base, which creates better alignment between partners. If a portion of that funding is diverted to SNX for staking, the effective rate would be closer to the 30% target, after staking rewards are factored.
Duck said he would also fall somewhere between 20–30%, maybe 20% in sUSD and a possible 10% in locked SNX. The idea of 25% while requiring 5% open market purchases was also discussed, which has the added benefit of supporting SNX price and creating more protocol liquidity that drives volume.
Gene is concerned that a flat fee share may pull value directly from stakers without necessarily having the increased volume outcome. Burt responded to this by saying Kwenta, as the largest driver of perps volume in the ecosystem, would benefit from a tiered fee share structure, but he thinks a flat fee is better optimized for creating competition. Gene countered by saying the tiered system incentivizes “growing the pie” and simply increasing the fee share wouldn’t necessarily compel integrators to chase more volume. He acknowledged that the model is not sustainable for integrators as it is now, and that the fee share needs to increase. But even at 20%, he said he would like to see it come with some conditions.
Present at the October 5, 2023 Grants Council meeting:
Grants Team: ALEXANDER, CT, synthquest
In Grants Council updates, the team is considering a retroactive grant for Copin, as well as various community members who contributed to the open source dev work. The Watcher Page is also live, and CT is working on adding finishing touches to governance docs. AND the NFTs will be launching soon as a free mint!! Keep your eyes peeled for an announcement there.
Also, that project we mentioned a few months ago with Notifi that Matt brought to the GC’s attention? Well, it’s almost finished! Matt actually shared Notifi with The 300 to help test it out. It will serve as Synthetix’s new notification solution, and will help deliver real-time notifications about C-Ratio, account summaries, rewards reminders, announcements, and more to users. If all goes to plan, this will be available publicly soon!
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SIP/SCCP status tracker:
SIP-312: Cross-Chain Pool Synthesis, Status: draft
SIP-337: Perps V3, Status: draft