March 15, 2022
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.
Spartan Council and SIP updates
Present at the March 8, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, BigPenny, bojan, Kain, KALEB, redmarglar, TerraBellus
Core Contributors: Ana, Cavalier, Matt
During the Futures presentation, Arthur outlined the parts of the SIP that were updated to reflect the major differences in the code since the last time it was presented. These major differences include:
- Integration of dynamic fees — And if the price is too volatile, trades won’t happen (they will revert)
- Addition of next price orders, which allow for optional lower fees for arbitragers by using next oracle price instead of the current price
- Proportional liquidation penalty was added so that liquidators are incentivized to liquidate the larger positions, the riskier positions first
- The proportional skew is now calculated in a different way so that when the market is small, the funding rate is not unusable and that is not prohibitive (so that the markets can be bootstrapped without very high funding rates)
- No retroactive liquidations — it used to be written into the SIP, but now liquidations can only happen at the current price
- Also added methods to allow volume source fee sharing with integrations so trading will emit an event, and off chain calculations can be done so that partners can have a portion of the fees
Futures will be rolled out as a Mainnet beta release, keeping parameters fairly cautious at first. The Council thinks placing these initial limits for a couple of weeks is a good idea to see how things play out in the beginning.
SIP-148 for the upgraded liquidation mechanism was also presented last week, again, by Mark who said the SIP is finally in audit. Mark explained that for the new liquidation mechanism you no longer need sUSD. You can still get flagged and someone will perform a liquidate action — and these are both incentivized actions with a flat SNX reward:
- 10 SNX for flagging on L1, and 1 SNX on L2
- 20 SNX for performing the liquidate action on L1, and 2 SNX on L2
And then the rest of the remaining reward of the liquidated SNX goes to the liquidator rewards contract, which distributes it continuously based on your debt share balance. This SIP has been voted on and approved with 6 votes in favor.
SIPs 212 and 214 were also presented last week and propose to add Silver, Gold, and Oil synths on Optimism. Oil was originally supposed to be on the SIP with Silver and Gold, but since it will take a bit longer, it has been moved to its own SIP so it doesn’t hold up the release of the Silver and Gold synths. SIP-212 has been voted on and approved with 6 votes in favor.
In other updates, the audit for the Debt Pool Synthesis has finished and the debt pools will be merged later this week. This SIP will make changes to SNX rewards, sUSD rewards, synth issuance, fee pool closure, and loans. Be sure to read the blog post that Matt shared in the Discord for a more in-depth explanation of what the Debt Pool Synthesis will look like. This will go out on the next release, which may also include the SIP to add UNI and AAVE synths on Optimism.
During the Spartan Council meeting, Kain brought up SIP-198 to update the atomic exchange functionality, which he said he spoke to Andre about. He has also been talking to XBTO, a cryptofinance company that provides liquidity to major trading platforms, and they are working on a SIP to add more FX feeds to L1. Kaleb and Noah have also been going over SIP-198, and are doing some final tests before putting it in for audit.
There has also been continuous deliberation regarding Synth Teleporters — db and Kain have been trying to figure out the most trustless way to do it. Kain believes the fallback is the system that db has already built, which is a very light relayer. He said “it obviously requires some level of trust on the relayers themselves, so we need to run those until Chainlink can take over.” More to come here.
The Spartan Council also had another discussion about the staking ratio, with Kaleb arguing that, while there needs to be more incentive on L2 to increase the staking ratio, increasing it by 10% every week seems like a bit much. Kain thinks it will take at least 10 weeks to see any meaningful movement towards the target ratio, so he doesn’t think there is any cause for concern now. Kaleb voiced a concern about how high the inflation will get, and Kain agreed to re-evaluating at 8 weeks. He said if there isn’t any movement by 8 weeks, then it would be reasonable to look at the SIP again and either pause the increase or taper it via a SCCP.
Afif suggested having a maximum threshold that the inflation rate will not exceed. Since this would require a new SIP, as opposed to just a SCCP, but Kain recommended just having a spoken percentage consensus amongst the Spartan Council regarding what the inflation rate should not exceed.
Lastly, SIPs 207 and 210 were also presented late last week. SIP-207, presented by Andy and Ale, is for the new V3GM election module, which introduces one of the first components of the wider V3 governance module. It has been proposed to replace the existing Snapshot election process carried out by the Synthetix DAOs, while also providing a standard module that other protocols can use for their governance system. It would allow anyone to nominate themselves for the upcoming epoch, and all epochs thereafter. It specifically addresses four key things:
- Centralization of election strategy updating (both on the Snapshot team and Synthetix Core Contributors)
- Dependency on Core Contributors to collect nominations in Discord
- Dependency on Core Contributors/protocolDAO to transfer the Council/Committee NFTs at the end of an election
- Standardization of elections within the Web 3.0 space so other projects can replicate delegated governance
Andy cleared up several questions that people had during the presentation, so be sure to check out the recording of the call here.
SIP-210, which was the last SIP presentation of the week, proposes creating a DAI/sUSD wrapper. This SIP aims to solve an issue related to the debt pool skew, which is expected to spill over to L2. Leverage is on the rise and price volatility will impact debt negatively because of it. This occurs because several synths are backed by ETH and the sETH that was minted with wrappers went to stables. The original idea was to adjust the parameters of the wrappers and encourage movement from stables to sETH. But unfortunately, there isn’t a lot of LUSD liquidity available, which limits the flow in the preferred direction. This SIP therefore proposes a DAI wrapper in order to supplement that liquidity. However, it has been brought up previously that DAI is maybe not the best stablecoin to use, so this SIP has revealed several conflicting viewpoints.
As a result, the Spartan Council has set up a Snapshot poll to gauge SNX stakers’ sentiments.
Present at the March 10, 2022 Grants Council meeting:
Grants Team: beachmom, CT, cyberduck, joey, Mike
In Grants Council updates, the Universe.xyz design team has been working on a couple of new concepts for the Synthetix NFT project and are ready to move forward with them. The team is also reviewing a few lore concepts, so we should hopefully hear some updates there soon. But for now, check out these blurry boi sneak peeks of a couple of concepts that the Grants Council leaked during the gov call last week:
I know we’re all anxiously waiting for the Stats page, but perfection takes time.😉 The Grants team met with the designer and gave her feedback and clarification on her pitch so that she can incorporate it into the page. They will be following up again this week to provide additional feedback. Here’s a sneak peek for the work in progress of this sexy first iteration:
As for the Hackathon, the dates are set for April 14, 15 and 16. Since these dates line up with the start of the next epoch, the Council is working to have everything organized by the end of March.
Lastly for Grants Council updates, the team has received some proposals for their translation project and is currently reviewing them. CT emphasized that trust is a big part of this project, because even the slightest deviation in a translation could create a huge difference in the way that the information is interpreted. They are therefore brainstorming with the marketing team on how to best create a framework for disseminating information and content to each country with an active Synthetix community.
Present at the March 10, 2022 Ambassador Council meeting:
Ambassadors: GUNBOATs, Matt, MiLLiE
In Ambassador Council updates, the Ambassadors are planning the next few L222 Twitter Spaces. Optimism is scheduled for next week, on the 22nd, and we might see dHedge or Thales back on this week.
Next, Millie had a conversation with Lito, the author of the community proposal for Uniswap to incentivize liquidity on Optimism and Arbitrum that the Grants Council helped fund. He said the process for putting the proposal forward involved making modifications to the staking contract permissionlessly and without direct collaboration from the Uniswap team. While this means it’s taking a bit longer than expected, the audit is almost complete. There is also possibly still some work to do on the UI component, but Millie says we are optimistically looking at a May/June timeframe for its release.
Millie also had a call with Rafa and the devs from Across protocol, where they discussed using Across to enable SNX transfers between L1 and L2 with a Core Contributor running a relay. The Ambassadors are very happy about this, and Millie said “This is a win for the Ambassadors because it actually stemmed from our Spartan City Hall with Across.” We love to see it!
Lastly, the Ambassadors discussed the possibility of making loans available for ecosystem partners. The idea would be to have very high collateral requirements to create the safest possible lending product at a very low interest rate. Millie said “it’s like an auxiliary option for smaller holders who maybe don’t want to stake, and it lends credibility to the protocol.” Matt will be discussing this idea further with Kaleb, so more to come soon.
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SIP/SCCP status tracker:
SIP-80: Futures, Status: SC review pending
SIP-148: Upgrade Liquidation Mechanism V2, Status: approved
SIP-212: Add Commodity Synths on Optimism, Status: approved
SIP-214: Add OIL on Optimism, Status: SC review pending
SIP-165: Debt Pool Synthesis, Status: approved
SIP-213: Add AAVE and UNI to Optimism, Status: approved
SIP-198: Update to Atomic Exchange Function, Status: SC review pending
SIP-204: Synth Teleporters, Status: draft
SIP-207: V3GM Election Module, Status: vote pending
SIP-210: Create Dai Wrapper and Adjust Wrapper Parameters, Status: vote pending