December 13, 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.
- Perps V3 audit is complete & is just pending its final report before the vote is opened
- SC and CCs had a discussion regarding Perps markets and OI scaling on Base
- SIP-2043: End SNX Inflation presentation recap
- SIP-351: Implement Cross-Chain SNX Token Transfers on Base via Chainlink CCIP presentation recap
- Ambassador Council update: Spartan Space last week with Infinex and Lit Protocol, discussion of OP votes for two new recent votes, and conversation about projects that are in RPGF round 3. Every project in the Synthetix Ecosystem Public Goods list has passed quorum, and the Ambassadors played a vital role in securing votes and amplifying our ecosystem to other. MasterMojo is planning to release a new Governance twitter post to summarize the results.
Spartan Council and SIP updates
Present at the December 6, 2023 Spartan Council Weekly Project Sync:
Spartan Council: Adam, Burt, cyberduck, Genefaesius.eth (Gene), Jackson, Kain, Millie, ML_sudo
Core Contributors: Afif, Bex, Cavalier, joey, jz, KALEB, Matt, meb, Mike, Nikita, Steve, sunny, troy
The Perps V3 audit is finished and is just pending its final report now before the vote is opened. Kain asked how the CCs saw Perps markets and OI scaling on Base — Afif responded saying the first live tests of V2 highlighted some minor issues that needed to be corrected before OI and markets could scale. The same initial cautious approach will be taken with V3 to allow testing in a low risk environment. Another prerequisite is initial LP TVL — there needs to be some critical mass of USDC LP activity on Base before Perps becomes a functional product there.
The technical aspects of the release should be ready to scale up in mid to late January, and the economic aspect is still an unknown. Afif estimates roughly $50 million USDC to replicate V2X functionality, but the product could launch with more limited caps around $10 million. Kaleb added that arbitragers are an important part of the way V2X functions and there needs to be incentive for them to participate on Base (where their participation will be monitored as part of the scale up).
Markets will rely exclusively on Pyth oracles on Base and, due to their design, they are available on any chain that Synthetix deploys on (instead of having to deploy new contracts to each chain for push oracles). With V2 possibly reaching a maturity stage in terms of the number of markets it can support, there will be an opportunity to launch new markets on Base that will be exclusive to that deployment.
There were also a couple of SIP presentations last week so let’s briefly review them:
SIP-2043: End SNX Inflation
- If this SIP is implemented, inflation will be reduced to zero in the claim week following the vote
- Inflation was introduced in 2019 to incentivize staking in the recently deployed Synthetix network, following the pivot from Havven
- It was critical that the staking ratio was high in the early period of the network to scale liquidity
- Kain believes the reputation of SNX as an inflationary token is harming the protocol
- Even if inflation were to be reduced to a very low level, it’s difficult to cut through that narrative
- As inflation has changed over the past couple of years, there has been limited change in the staking ratio, which represents the protocol participation rate for SNX holders. So there is no evidence that reducing or eliminating inflation will harm the SNX staking pool
- It may, however, make more people willing to hold the token without fear of being diluted by inflation
- Kain added that this is a great time to do it with the launch of Andromeda to maximize the impact of that launch
- Adam said he has spoken with VCs who are even more dialed in than your average user, and still believe that SNX is hyperinflationary, and have therefore avoided the token as a result
- It’s too complicated to explain how inflation has dropped vs a simple “inflation is over” explanation
- This move may also free up more sUSD for trading, as stakers would not have to hoard the stablecoin to manage their c-ratio
- Network health would have to be monitored closely in the early days of this new experiment, but Kain thinks the liquidation penalty is enough incentive for LPs to maintain their c-ratio
SIP-351: Implement Cross-Chain SNX Token Transfers on Base via Chainlink CCIP
- This SIP proposes enabling CCIP for secure cross-chain SNX token transfer between Ethereum and Base
- No modification is required for the existing SNX token contract on Ethereum and no changes are needed for existing V2X contracts
- This bridge would allow users to avoid the 7-day lock-in from L2 to L1
- L2 to L2 transfers are also possible via this bridge, and the Synthetix protocol would maintain ownership of the token contracts that enable the bridge
- Each token and ‘lane’ (direction of travel between networks) can be configured with its own rate limit
- CCIP has been developed with security in mind and the capability to handle advanced transactions in the future
- Execution networks act separately from anomaly detection and risk management systems, but all three must achieve consensus for any transaction to be executed
- There are currently a handful of tokens enabled for CCIP bridge transfer including snxUSD and GHO (AAVE stablecoin)
Present at the December 6, 2023 Grants Council meeting:
Ambassadors: GUNBOATs, Kevin, Mastermojo, Matt, Westie
Lastly, the Ambassadors had a Spartan Space last week with Infinex and Lit Protocol, with over 55 listeners. And during their meeting last week, they discussed their OP Votes for the two new recent votes that ended a few days ago (which can be found here), and they hashed out some projects that are in the current Optimism RPGFunding round. Every project in the Synthetix Ecosystem Public Goods list has passed quorum, which is HUGE! The Ambassadors played a vital role in securing votes and amplifying our ecosystem to other badgeholders. MasterMojo is also planning to release a new SNX Ambassador Governance twitter post to summarize it all once he gets the results back. Their most recent summary can be found here.
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SIP/SCCP status tracker:
SIP-337: Perps V3, Status: vote pending
SIP-2043: End SNX Inflation, Status: implemented
SIP-351: Implement Cross-Chain SNX Token Transfers on Base via Chainlink CCIP, Status: draft