March 29, 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 22, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, BigPenny, bojan, jj, Kain, KALEB, redmarglar, TerraBellus
Core Contributors: Andrew, Cavalier, Darius, Rafa
First, just to make sure everything is cleared up, all of the issues related to the election voting weight have been fixed. Voting has been re-opened, and will close on April 5th at 0:00 UTC. If you voted before, you must revote because none of the votes will carry over. SO DON’T FORGET TO VOTE! 🗳️🎉
Now moving on to our regular updates — while it may have been delayed, the Debt Pool Synthesis still came in swinging! Now that the debt pools have been merged, SNX inflationary staking rewards will be provided proportionally to all stakers (so no SNX reward difference between staking on Optimism or Mainnet Ethereum), and debt hedging will no longer be specific to the network you’re staking on — it will rely on the synthesized debt pool.
The Debt Pool Synthesis allows the protocol to have fungibility on both L1 and L2 — meaning synths can now be transferred between multiple chains efficiently. If you’d like to read more about the merge, check out the Synthetix blog post for a more in-depth description of it.
First Futures and now the Debt Pool Synthesis?? What’s next!
Well now that the Synthesis is complete, the Synth Teleporters SIP needs to be passed next in order to introduce this fungibility of synths across the two networks. Standard bridges do not support a combined debt pool because the usual way to transport tokens between L1 and L2 is to lock them on one network and create a new IOU token on the other network. However, this presents integration issues for other networks who may not be aware that the total supply of Synths is not readable from the token contract.
Synth Teleporters will therefore provide a solution by burning a Synth on one network and re-minting it on the other network. This is vastly superior because it’s highly capital-efficient, and there is no chance of running out of liquidity for a cross-chain transfer. Transfers between L1 and L2 would be instant on both sides, with no 7-day Optimism delay for bridging between L2 and L1.
Kain said “Technically speaking, Teleporters could be as little as 3 weeks away. We just need to decide on the tradeoffs and risk profile that we’re comfortable with.” So hopefully we should get another update here soon.
Last week, several SIPs were also presented so let’s review them:
— SIP-124: Formalizing the protocolDAO, which was presented by JJ, proposes updates to the original SIP that established clear criterion for a Core Contributor (CC) to be added as a signer to the protocolDAO. JJ explained that this would allow CCs to have discretionary input to bypass the current 6-month prerequisite for pDAO members. He added that the main factor for this SIP is wanting the pDAO to be a bit timelier given the globally distributed team. This was put to a vote and passed with all 8 Council members voting in favor.
— SIP-218: Move Curve sUSD pool reward to metapool was presented by GUNBOATs, who explained that we currently have 6,000 SNX as firewall liquidity mining, and this SIP proposes moving the inflation to the metapool. With the permissionless metapool deployment from Curve, moving sUSD to a new metapool would improve the exchange rate of sUSD on L1, stabilizing the peg.
- The motivation behind SIP-215 in particular is the amount of crypto donations that Ukraine has received. Access to these donations is still limited to a segment of the population, so SIP-215 will provide an opportunity to make a more meaningful impact on war-time aid in the form of crypto assets that can be easily converted to the native currency.
- As for SIP-216, Bill explained that adding a Rupee Synth could bring further volume to Synthetix, allowing the Rupee to enter the decentralized exchange market, while facilitating the conversation of crypto to fiat in the world’s largest population.
- The vote for these SIPs is open.
— SIP-203: Volume Source Fee, which was presented by Andrew, proposes an optional source fee as a transaction parameter that can be passed from any frontend to the Synthetix Exchange Contracts. Andrew explained that the objective is to give an incentive to generate volume for integrators, and that the SIP would use a “use it or lose it” model where traders would never experience a higher fee.
— SIP-217: Additional perpetual futures markets is the last SIP from last week. Presented by Arthur, this SIP is the second stage of the Futures rollout. The initial rollout was done with BTC, ETH, and LINK to reduce the complexity and potential for error in the beginning. This SIP now proposes adding markets for SOL, AVAX, MATIC, AAVE, UNI, EUR, GOLD, and SILVER. During the presentation, Kaleb suggested separating the synths based on the feeds that are currently available, so GOLD, SILVER, and LUNA will be in a separate SIP. The vote for SIP-217 is currently open.
During their meeting, the Spartan Council also discussed debt migration. Currently, SIP-208 defines the process of allowing users to migrate debt positions from L1 to L2 without burning sUSD. Kain said, however, he thinks there needs to be a SIP to describe the rationale for moving ALL debt to L2. One of the current solutions in place is of course to shift the inflation rewards. Kain added, however, that it would be difficult to get every staked position off of L1, considering the fact that there are very large wallets where the private keys have been lost.
One option here is to increase the c-ratio to force a liquidation. However, the issue with this is that in the new socialized liquidation mechanism, remaining stakers on L1 would be forced to absorb a lot of debt. Kaleb questioned whether it would be possible to migrate those positions on their behalf, but the problem doesn’t go away if that is done. TerraBellus added that targeted liquidation of “dead accounts” might be adding punishment to imprisonment for those who are serving time in prison and are therefore unable to retrieve their private keys. He emphasized that this suggested liquidation approach would be “at best unfair and, in a way, extrajudicial seizure.” It is certainly a tricky problem to solve, and one that will require more deliberation.
Present at the March 24, 2022 Grants Council meeting:
Grants Team: becahmom, CT, cyberduck, joey
In Grants Council updates, the Stats page is live! Check out the site here, where you can now view a wide range of information such as volume sources, total traders, APY, and more. As this page is still a work in progress, Futures Trading has not yet been integrated and optimizations will be made as time goes on. The team is also continuing to work with a designer to create a visually appealing version of the Stats page, which they leaked a screenshot of couple of weeks ago.
The Grants Council has also just published an in-depth Synthetix Futures Dune Analytics dashboard, which they funded @drethereum to build. The dashboard offers plenty of data like volumes by period and market, trades, traders, deposits, withdrawals, longs, shorts, fees generated, and much more. So go check it out and be sure to give any feedback or suggestions in Discord!
The Council is also discussing a possible new initiative for wrappers UI. This was raised during the gov call, since the wrappers don’t really have a UI and can only be interacted with through contracts. Several community members have expressed interest in helping build it, but aren’t comfortable working with contracts. The idea would be to create a dashboard that displays wrapper data (state of wrapper, cap space, fees, incentives, etc.), which would be beneficial.
Present at the March 22, 2022 Ambassador Council meeting:
Ambassadors: GUNBOATs, Matt, MiLLiE
In Ambassador updates, the team is planning to bring back regular Spartan City Halls! They have discussed the possibility of hosting the City Halls in the same weeks that L222 events happen, but this is still being decided. dHedge has expressed interest in coming back for a follow-up City Hall, so it will be nice to hear an update from them.
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SIP/SCCP status tracker:
SIP-165: Debt Pool Synthesis, Status: implemented
SIP-80: Futures, Status: implemented
SIP-204: Synth Teleporters, Status: draft
SIP-124: Formalizing the protocolDAO, Status: approved
SIP-218: Move Curve sUSD pool reward to metapool, Status: draft
SIP-215: Add Ukrainian Hrvnia Synth, Status: vote pending
SIP-216: Add Indian Rupee Synth, Status: vote pending
SIP-203: Volume Source Fee, Status: draft
SIP-217: Additional perpetual futures markets, Status: vote pending
SIP-208: Debt Migration, Status: draft