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SNXweave Weekly Recap 44

SNXweave Weekly Recap 44

June 21, 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 June 14, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, calavera, Danijel, JVK, Kain, ksett, Mark, SynthaMan
Core Contributors: Ale, Cavalier, KALEB, Rafa, Steve

First some election-related news: with just 10 days left in this epoch, voting for all of the Councils has kicked off! Be sure to tune in this Thursday at 8pm UTC in the governance stage for SNXweave’s live Spartan Council panel where we discuss hard-hitting topics with this epoch’s candidates.

And of course, with the end of the epoch starting to wrap up, so is V2X! The Denebola release has gone out, implementing SIP-243 to deprecate sDEFI. Next up will be the Algol release, which should include the majority of the remaining V2X SIPs.

Among these last few SIPs will be one to fix liquidatable escrow — meaning, escrowed SNX will also be available for liquidation. So if a user has crossed the liquidation threshold and doesn’t have enough transferrable SNX to cover the liquidation, escrowed SNX will also be liquidated. Once it is liquidated and redistributed via the liquidation mechanism, the 12-month lockup period will start over. Kain said “while this is something that will be handled natively in V3, we don’t really have the luxury of waiting for that on this issue.”

And speaking of V3, the V3GM election module appears to be functioning well. Voting is happening fully on-chain, rather than with snapshot. Because of this, each vote requires a transaction on Optimism. Ale actually presented the V3GM SIP again last week because it only got 7 votes the first time it was voted on, and requires all 8 votes since it is a meta-governance SIP.

During this second presentation, Danijel brought up the possibility of optimizing all 4 votes into a single transaction to reduce the cost to users. Ale said this is definitely something that could be implemented for the next epoch, because it would require delaying the election if it were to be implemented for this epoch. The requirement to vote in order to claim is also being waived this epoch, but may return in the future. This change was made to the SIP, and it was voted on and approved with all 8 votes this time. So don’t forget to cast your ballots for each of the Councils before the last day of the month!

During their meeting last week, the Spartan Council also discussed inflation. Calavera asked if there is any plan to bring it down, but Kain said he is opposed to overreacting with any change that would affect staking right now. He believes the focus should be on reducing instability. There was then some discussion about possibly diverting inflation to trading incentives — Kain said he has already started drafting a SIP for this. The consensus, however, was to push the decision to the next Council.

Grants Council

Present at the June 16, 2022 Grants Council meeting:
Grants Team: ALEXANDER, CT, cyberduck, Mike

In Grants Council updates, the team has reviewed some of the lore for the NFT project and is providing feedback. They have also overseen some updates to the dune analytics section of the Tools site, and are constantly searching for additional resources to add to the site. A lot has been updated since its original launch, so be sure to check out the site and make use of its convenient and user-friendly format!

The Stats page is also coming along nicely, the dev has done a lot of work to get the data in and should be able to start focusing on UI now. And speaking of UI, the Council is also on top of the Wrapper UI project. They currently have 2 developers working on this, and the best one will be implemented, pending CC review.

Ambassador Council

Present at the June 16, 2022 Ambassador Council meeting:
Ambassadors: mastermojo, Matt, MiLLiE

In Ambassador Council news, the team discussed the Uniswap incentives proposal, which Leo is working on. There was a minor issue on testnet, so he had to redeploy. It should, however, be live by the end of the month — the major hurdle is just getting all of the UNI delegated to push it through. They are also seeking delegations from Euler finance, which is a permissionless lending protocol, and plan to have them on for a Spartan Space next week.

And speaking of Spartan Spaces, the Ambassadors hosted another successful one last week, this time with UniswapV3 experts David and Gill. David is a developer who has worked on several projects associated with Uniswap around incentivization, and thinks UniswapV3 is a really amazing piece of software. Gill is a professor at Cornell University, with a background in applied physics, and has been intrigued by UniswapV3 since its launch last year. Together, David and Gill have collaborated on a modification to the original UniswapV3 contract and have really in-depth knowledge of what it can do.

They discussed some notable improvements from V2 to V3, such as:

  • Easier to automate swapping
  • Much more capital efficient
  • Enables users to specify a certain range to their liquidity (because of this, liquidity can be concentrated more effectively, achieving up to 2000x the capital efficiency of V2)

Millie asked the guests how they came up with the new UniV3 incentive contracts, which was Lido’s proposal. They said the proposal only included very liquid assets, and the objective was to bring liquidity to other L2s (essentially paying users for behavior that is good for the ecosystem). It also introduced a minimum “tick” width, which is the unit used to measure the range of liquidity you can provide. Another improvement brought by this proposal was gas/fee optimization for L2s.

When asked what strategies are effective for being a liquidity provider (LP), Gill said it helps him to think of it as options trading and draw inspiration from the options trading world for possible strategies. He said the first decision has to be how long you want to hold a position for. For instance, if you set your range to 7%, you will likely have to rebalance daily. Whereas, if you set it to 40%, you might be able to wait a month between rebalances.

Millie also asked the guests what the best way to remain delta neutral is when it comes to your Uniswap LP position. They said it can all be done on-chain and is especially easy now with lending protocols like AAVE, Compound, etc. Most of the time, however, providing liquidity is inherently a delta positive strategy because in order to achieve long-term profitability, the token you’re providing liquidity for needs to appreciate faster than ETH.

Lastly, the Ambassadors asked “how do you respond to criticism from large market makers on centralized exchanges that AMMs are not the most efficient pricing tools?” David and Gill responded simply: democratized liquidity providing — essentially anyone can provide liquidity. They added that Uni volume already sometimes exceeds centralized exchange volume since new markets can be added permissionlessly.

It was overall a very interesting and informative call, so be sure to check out the recording if you missed it!

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SIP/SCCP status tracker:

SIP-243 to deprecate sDEFI, Status: implemented

SIP-252: Liquidation of SNX Escrow, Status: draft

SIP-207: V3GM Election Module, Status: implemented