SNXweave Weekly Recap 46
July 5, 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 28, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, calavera, Danijel, JVK, ksett, Mark
Core Contributors: Cavalier, db, jj, joey, Leo, Mike, noah, Steve
First and foremost — let’s talk election results!
- Your Spartan Council members for the upcoming epoch will be Afif, Burt Rock, Danijel, Ethernaut (Ale), ksett, Kain, SynthaMan, and TerraBellus
- Serving the community on the Treasury Council this epoch will be artsychoke, elliptic-crv, Jordan, and Spartan Glory
- Our upcoming Grants Council members will be ALEXANDER, CT, cyberduck, JVK, and Mike
- And lastly, your Ambassadors for the coming epoch will be mastermojo, Matt, and MiLLiE
Thank you to all who ran, voted, and participated in governance this epoch, and congratulations to our newly elected Council members!
Now onto our regular news updates: Mark confirmed last week that the team has finally cleared a significant portion of the remaining V2X SIPs. There are now only a few left, and they should be out over the next month or so. These remaining SIPs range from simple, community consensus implementations (such as inflation diversion), to more technically involved improvements (like volume source and eventually debt migration).
Mark is working with Mike and other Core Contributors (CCs) to come up with a more formal timeline for what’s left of the V2X scope — so we should hopefully hear from them on this front soon. The CCs also discussed their successful offsite in New York, where they mainly focused on the migration from V2 to V3.
While the Spartan Council chose to wait until this week to do another V3 update with the new Council, Cavalier said everyone left the offsite feeling very optimistic about V3 from the CC side.
Last week, the Council also discussed SIP-255 to redistribute sUSD fees to L2. It’s pretty clear from the name, but this SIP proposes changing the sUSD fee distribution to send additional sUSD to L2, where the amount is proportional to the amount of SNX on L2. In New York, the team noticed that since a lot of fees are being generated on L1, it may create an incentive for users to move back. The SIP will correct that in order to make sure the incentive to move to Optimism continues.
During the call, Danijel asked “With the proposal to divert inflationary rewards to futures trading incentives [which only happens on L2], do you see a scenario where fee rewards become lopsided towards L2?” Db answered saying that it could happen, but the consensus has been to always incentivize the use of L2. The proposal, however, can be modified to include flexibility for this scenario and he suggested an amendment with an SCCP configurable parameter.
Afif’s thoughts on SIP-255 were that it’s a half measure and doesn’t fully address the current issue. He said he thinks it instead creates a one-way valve for rewards in a system where debt moves freely. Danijel brought up, however, that anything more complicated would probably require a complex scope, so a short-term fix would be in the best interest of the protocol. And since the SIP itself is not difficult to implement from an engineering perspective, and the technical complexity is very low, it could be ready for release as early as this week, pending audit.
Present at the June 30, 2022 Grants Council meeting:
Grants Team: ALEXANDER, CT, cyberduck, Mike
In Grants Council updates, the team had a quick call last week to wrap up the epoch, where they recapped a few of their ongoing initiatives. They discussed integrations, which they are still trying to help drive by providing grant support where necessary. Mike said during the bear market, the thing that’s going to set the protocol apart is our fundamentals. So if Synthetix continues to drive user numbers and volume, that will reflect positively on the protocol.
Additionally, CT has been in contact with the developer who built the tools site, and the Council is thinking of working on a new UI for SIP/SCCP proposals. Duck will be going through the details of the project to see what it will take.
Lastly, the team was unable to get feedback from the Spartan Council on their margin matching idea, so they will be moving forward with a draft to present. Mike noticed that there seems to be quite a bit of back-and-forth debate about SIP-254 (Perps Trading Incentives), and it would probably be better not to wait for a resolution on that discussion before moving forward with the margin matching proposal. Duck added that their idea doesn’t really have to go through the Spartan Council, it could just be something led by the Grants Council, as long as there is the budget for it. They will be further discussing their next steps for this proposal this week.
Present at the June 28, 2022 Ambassador Council meeting:
Ambassadors: mastermojo, Matt, MiLLiE
In Ambassador Council news, the key performance indicator (KPI) report is in for June! As a reminder, this new KPI system came from the SIP that Millie wrote to give the Ambassadors more structure in their role and maintain accountability.
So here’s the KPI report for June 2022:
Uniswap 1bp pool on Optimism:
- Temperature check
- Consensus check
- Snapshot vote (passed with quorum, 12M UNI in support)
- Top 12 delegates for HOP protocol (488,366 delegated votes representing 2% of circulating supply)
- Euler delegation application submitted
- The Ambassadors, along with the Grants Council, contacted protocol aggregators to integrate Atomic Swaps. They reached out to Dodo, MetaMask, Cowsap, 0x, Matcha, Zapper, and Zerion with developments in the works.
- Spartan Space — Quixotic June 2nd (65 listeners)
- Spartan Space — dHEDGE & Toros June 9th (34 listeners)
- Spartan Space — Uniswap V3 June 14th (54 listeners)
- Spartan Space — Euler Finance June 30th (53 listeners)
And speaking of Spartan Spaces, the Ambassadors hosted another one last week, this time with Euler Finance. We got to meet Michael, who is the co-founder of Euler, and first explained to the audience that the protocol is named after a Swiss mathematician, whose name is actually pronounced like “oiler” (oy·ler)! So everyone jot that down.
They started the protocol in March of 2020, and found investors later that year in September. They were originally interested in the idea after the launch of Compound Finance a few years prior. Michael explained that they wanted to build Euler to be permissionless, where users could activate their own lending and borrowing markets. The protocol is effectively a rebuilt version of Compound, but with 10 to 15 distinguishing innovations.
The asset tiers aspect of Euler is part of what enables their permissionless design. Compound and Aave, by contrast, were built to support a limited number of assets determined by governance. Michael emphasized that this was a really important design decision for them to build a protocol that was robust enough to handle longtail, possibly malicious assets. He explained that there are 3 tiers:
1. Isolated: Every new asset starts here when it is first listed (you can borrow and lend, but can’t use as collateral; can only be borrowed in isolation)
2. Cross: Assets are available for ordinary lending and borrowing, and cannot be used as collateral to borrow other assets, but they can be borrowed alongside other assets
3. Collateral: Assets are available for ordinary lending and borrowing, cross-borrowing, and they can be used as collateral
Oracles are used to determine assets prices, and ratings are assigned to the feeds for each asset in the interest of transparency. This ensures that users have all of the information they need when making borrowing/lending decisions.
Michael also discussed a few factors they considered when determining risk profiles for assets:
— Borrow factor
- Designed to capture underlying volatility of an asset
- Can borrow less on volatile assets, and more on less volatile assets
- This protects the protocol from the volatility of longtail assets
— Sub accounts
- Useful feature for traders
- Each account can be broken into 256 sub accounts, and each sub account can be managed from 1 UI dashboard
- Much more gas-efficient than creating individual accounts
- Helps to silo risk — only assets in each account would be subject to liquidation
- Euler Liquidation Engine increases capital efficiency for borrowers
- Other lending protocols typically set a fixed percentage discount for liquidators to process liquidations
- Euler liquidations give a voice to the market as far as what liquidations should be
- More of a “Dutch auction” approach rather than an “English auction”
- Liquidation bonus is the difference between the loan health score and 1
- This makes Euler more attractive for bigger accounts!
The Ambassadors also asked Michael about Euler governance, and he explained that they have been exploring different models. They ultimately picked the governance contract that they felt provided the best ease of use while being the best audited, and it was launched just a couple of weeks ago! It’s not fully on-chain yet, but it will be launched in phases as they continue to do some testing.
During the call, the audience also got to hear Michael speak about deferred liquidity, reactive interest rates, and a possible Optimism launch. So be sure to check out the recording if you missed it!
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SIP/SCCP status tracker:
SIP-203: Volume Source, Status: SC review pending
SIP-208: Debt Migration, Status: draft
SIP-255: Redistribute sUSD fees to L2, Status: draft
SIP-254: Perps Trading Incentives, Status: draft