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SNXweave Weekly Recap 8

SNXweave Weekly Recap 8

October 1, 2021

The following post contains a recap of news, projects, and important updates from the Spartan Council and core contributors this week, as well as some performance highlights of those involved in governance. Election results are also discussed.

Present at the September 28, 2021 Spartan Council Weekly Project Sync:

Spartan Council: Bojan, Danijel, Jackson, Kain, Michael, Spreek
Core Contributors: Afif, Andrew (Kwenta), Daniel, David, Jordan, Mike, Rafa

First off, for L2 Shorting Daniel says that he and Mark ran into a gas limit issue and that the solution would be for Optimism to increase the block size limit, otherwise they just have to wait for the upgrade at the end of October. Kain said it’s unlikely that Optimism will do anything to modify the system given the upcoming regenesis, which means this SIP will likely be delayed about a month.

On a more positive note, Daniel says the Wrappr Factory SIP is progressing nicely and is almost at a point where it’s ready for audit and a second round of reviews with the protocol engineers. Afif brought up that he would like to see a mechanism for this SIP to wind down wrappers; or if we come up with a new wrapper, a mechanism that allows us to get people to move to the new one. Daniel will add a line to this SIP that allows negative burn fees.

We should also see some progression from the Futures SIP soon, as Jackson says they’re working on capturing feedback and hoping to get the incentivized testnet up around the second week of October.

This week, Afif presented SIP-184, for Dynamic Exchange Fees, to the Council. This proposes a very helpful risk-management and anti-frontrunning tool that will also enable lower base exchange fees.

The first component of this SIP incorporates a dynamic fee that looks backwards. This means that it will look at how much the price actually moved from, say, the n-minus-1 Oracle update to the current Oracle update. Then, if it is over some set threshold, the dynamic exchange fee will get boosted by that amount.

The second component incorporates natural decay by looking at the previous dynamic fee update and applying some decay constant to reduce it for the next update. However, if there’s another deviation that exceeds the threshold, it can be boosted again.

Spreek asked if there is anything in place for a user to protect themselves from paying an unexpected additional fee, to which Afif responded saying it is deterministic for a current Oracle update and therefore will not change on you between updates. So at the moment that you submit your order, it’s always deterministic.

If approved, this SIP will initially be put on L2 to see how it does before considering if it would be worth putting on L1 as well.

Kain added that this SIP is more easily implementable than SIP-181 for Simulated Liquidity, another SIP that aims to mitigate frontrunning risks, and would be a quicker win for futures and spot on L2. The prioritization of the Simulated Liquidity SIP has therefore been moved down, in favor of this Dynamic Exchange Fees SIP being implemented first.

Spreek agreed with this plan, but he emphasized that the only issue would be the increased market manipulation risk. However, most of the synths that are in danger of that manipulation have been deprecated, so it would just be a bit of a block getting some of those less-liquid synths back on until SIP-181 is up.

Also presented this week was SIP-185, Jackson’s Debt Shares proposal to replace the current debt register system. Debt Shares is a token mechanism to calculate a staker’s percentage of total debt based on their number of shares. Stakers get debt shares tokens when they mint sUSD.

During the presentation, Kain asked if having to check debt shares balances for every staker would be prohibitive. Jackson will look more into gas costs and get back to the Council on how much it will cost to do, for instance, 8,000 or 7,000 wallets on L1. Kain would like this information before putting this SIP to vote.

Michael asked if there is potential for other features to be added, such as the fungibility or the transferability of debt shares if they aren’t ERC 20 standard. He also asked if these assets can be used in other ways if they are just sitting in someone’s wallet.

Jackson explained that this is a bit out of scope for this SIP, as it mainly aims to help people migrate from L1 to L2. He said, however, that there is hope to most likely build a functionality that allows people to burn the debt shares and the equivalent amount of SNX in their wallet, instead of burning all the debt on L1 to migrate to L2. He added that it opens up that functionality in a way, but it wouldn’t be fungible where you could transfer some of your debt shares to another wallet because the cost of re-architecturing this on L1 for the existing system might not be worth it if we’re moving to v3.

Kain simplified everything by saying this SIP is intended to solve two things: 1) to allow for the new liquidation mechanism to be implemented, and 2) to help with the debt pool migration.

This SIP will not be voted on this week, as Jackson will be doing a bit more feasibility on the migration and documenting out the migration steps before it is voted on.

Lastly, Andrew told the Council that the Kwenta TreasuryDAO and Interim Council candidate lists are ready, so expect these positions to be announced imminently.

And of course, in case you missed it, the election results are in! 🗳️ ☑️

  • This epoch’s Spartan Council members are Kain, Justin (jj), Danijel, Michael, Afif, BigPenny, KALEB, and bojan.
  • Your pioneering Treasury Council members are Rafa, SpartanGlory, Jordan, and ConvexMonster.
  • This epoch’s grantsDAO team will include clem, ALEXANDER, rubber^duck, CT⚔, and Mike.
  • And lastly, your ambassadorDAO members for this epoch are MiLLiE, andy, and GUNBOATs🌈🌝.

Thank you to everyone who participated and voted!

SIP/SCCP status tracker:

SIP-135: L2 Shorting, Status: approved

SIP-182: Wrappr Factory, Status: approved

SIP-80: Synthetic Futures, Status: feasibility

SIP-184: Dynamic Exchange Fees, Status: SC vote pending

SIP-181: Simulated Liquidity for Synthetix Exchanges, Status: approved

SIP-185: Debt Shares, Status: SC review pending