SNXweave Weekly Recap 125

February 14, 2024

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.

👉TLDR

• Currently $150,000 in daily perps volume on Andromeda and $2 million of cumulative trading volume, with $1 million in LP-backed collateral
• Next target for scaling Base Andromeda is $20 million per day and $10+ million in LP-backed collateral
• Kwenta will be adding a way to access V3 in their UI by the end of February
• Infinex will be opening deposits in the next week and trading will begin to ramp up in the next month
• The legacy market migration plan (which will migrate L1 SNX to V3 using the V3 legacy market) is being prepared
• The Perps V3.1 interest rate audit feedback is being reviewed
• SIP to launch L1 Perps is entering its second audit this week
• JUP listing is still waiting for the oracle to be ready
• The SIP to move elections fully on-chain is in audit
• Kain released another blog post that updated his vision for the Synthetix 2024 roadmap — more below
• SIP-354: Perps V3 Asymmetric Funding presentation recap
• SIP-2054: List PENDLE on SNX Perps V2 presentation recap
• SIP-357: Chainlink Node with Staleness Check presentation recap
• SIP-358: Introduce ‘lockedOiMultiple’ to Perps V3 presentation recap
• SIP-359: Perps V3 — Bypass Checks on Position Risk Reduction presentation recap

Spartan Council and SIP updates

Present at the February 7, 2024 Spartan Council Weekly Project Sync:
Spartan Council: Adam, bilby, cyberduck, Jackson, Kain, Millie, Snax Frens
Core Contributors: Afif, Cavalier, David, joey, jz, KALEB, Matt, meb, Mike, Steve, troy

Starting off with some numbers — right now there is about $150,000 in daily perps volume on Andromeda and $2 million of cumulative trading volume, with $1 million in LP-backed collateral. The next immediate target for scaling Base Andromeda is $20 million per day and $10+ million in LP-backed collateral.

With $1 million in open interest capacity, there is room for integrators to open up to more users. Before the end of the month, Kwenta will be adding a way to access V3 in their UI and make an announcement to traders. Some of the other upgraded features that they plan to offer alongside V3 are roughly 6 weeks out. Starting sometime in the next week, Infinex will be opening deposits and trading will begin to ramp up in the next month.

Next, the legacy market migration plan (which will migrate L1 SNX to V3 using the V3 legacy market) is being prepared. The Perps V3.1 interest rate audit feedback is being reviewed, and the SIP to launch L1 Perps is entering its second audit this week. Most of the feedback on the V2 to V3 (from L2 to L1) migration process has been addressed.

In other updates, the JUP listing is still waiting for the oracle to be ready (the vote will be set up, then parameters will be set in an SCCP), and the SIP to move elections fully on-chain is in audit.

Next, Kain released another blog post that updated his vision for the Synthetix 2024 roadmap and built on his previous October post, which proposed a series of market fit experiments. The new post reiterates the measures of success for the Andromeda release: are LPs willing to collateralize Synthetix with non-SNX collateral and are traders outside of the Synthetix ecosystem willing to trade Synthetix perps?

It acknowledges that the renewed interest in Base creates the optimal conditions for testing on both of these questions. He also touches on the planned L1 ETH perp and the role it can play in scaling new stablecoin designs. The rest of the post details what an SNX chain might look like and be used for in the future.

There were also several SIP presentations last week, so let’s briefly review each of them:

SIP-354: Perps V3 Asymmetric Funding

• Presented by Sunny and Afif, this SIP proposes introducing an asymmetric funding rate that adds to the net cost for traders when utilization of open interest is high
• Such a mechanism is especially useful in isolated deployments without the benefit of the deep liquidity pools that Perps V2 enjoyed, and is essential in order to scale liquidity from scratch on a new deployment
• Afif said, for all intents and purposes, V2 liquidity has essentially been infinite since the open interest has never reached even close to what the SNX debt pool can support
• This additive funding rate both incentivizes new LP collateral to enter the market and encourages the closing of positions in a timely manner
• Since V3 also introduces a collateral lock mechanism, which prevents LPs from withdrawing capital that is in active use, the asymmetric funding rate discourages the opening of new positions beyond a certain LP-use threshold to help ensure some collateral is always eligible for withdrawal
• The rates would be effectively zero as utilization increases to 80%, then sharply between 80–100% utilization if all of the LP collateral is in use by the markets
• If LPs try to abuse this dynamic, another option is to add fees for staking/unstaking
• Jackson asked if this would make Perps V3 less attractive than other centralized offerings, and Afif highlighted that this is likely only a symptom of early stage liquidity
• Once the pool reaches the point where it can support all of the OI, this fee is essentially eliminated and the fact that it goes directly to LPs should incentive more collateral to enter the system

SIP-2054: List PENDLE on SNX Perps V2

• Burt explained that there is Binance Perps liquidity and this listing seeks to capitalize on a big trend in DeFi (yield trading on top of ETH restaking)

SIP-357: Chainlink Node with Staleness Check

• This SIP proposes incorporating a staleness check on the Chainlink node used for SNX staking in the V3 system
• This is already a mechanism that exists in V2 but it wasn’t incorporated in V3 at launch
• This was pointed out by an integrator so the change is being made now

SIP-358: Introduce ‘lockedOiMultiple’ to Perps V3

• V2 had endorsed liquidators, but in V3 anyone can liquidate eligible positions
• Rather than liquidating large positions in one transaction, there is a rate limit to reduce market impact from these sales
• This SIP proposes briefly locking LP collateral during this period where large positions are in the process of being liquidated
• The main purpose for this SIP is to solve the timing problem between liquidations and reward distribution

SIP-359: Perps V3 — Bypass Checks on Position Risk Reduction

• This SIP aims to improve the user experience by allowing users to reduce a position regardless of the margin requirements
• Currently, there is a bit of a UX issue with a check that will not allow a user to reduce their position size without available margin to support the transaction
• This is unnecessary since a reduction in the position size is a net reduction in risk and requires no available margin

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SIP/SCCP status tracker:

SIP-2053: List JUP on SNX Perps V2, Status: draft

SIP-360: Synthetix V3 Cross-chain Elections System, Status: draft

SIP-354: Perps V3 Asymmetric Funding, Status: draft

SIP-2054: List PENDLE on SNX Perps V2, Status: draft

SIP-357: Chainlink Node with Staleness Check, Status: draft

SIP-358: Introduce ‘lockedOiMultiple’ to Perps V3, Status: draft

SIP-359: Perps V3 — Bypass Checks on Position Risk Reduction, Status: draft