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SNXweave Weekly Recap 53

SNXweave Weekly Recap 53

August 24, 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 August 18, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, Ale, Burt, Danijel, Kain, ksett, SynthaMan, TerraBellus
Core Contributors: db, jz, KALEB, Mike, noah, Steve, sunny

SIP-249 was implemented last week! This SIP created a BNB-PERP market on Optimism. Kaleb is confident that this will be a good feed, which should allow for relatively low fees. The SIPs for a Futures markets for the DebtRatio, XMR, and DOGE on Optimism have also been implemented, the team is now just waiting for SCCP-222 to pass and unpause BNB, DOGE, and DebtRatio. This is expected to happen this week.

XMR, however, was a more contentious addition to these PERP proposals, with Kaleb explaining that the withdrawals between exchanges for XMR is unusual due to different policies on different exchanges. As for the OP-PERP SIP, the team is waiting for a bit of latency improvement before unpausing it.

Debt Migration is still a high priority right now, with Kain adding that it’s a hard dependency to get to the point where V2X can be shut down. Ale said they will be allocating additional resources to it after the direct integration work is done.

SIP-252, which will update the SNX liquidation functionality to allow SNX escrow entries, is finished with its audit and is currently being staged for the next release. This SIP should be on testnet this week, and we should get an update on the expected Mainnet release soon.

There were also several SIP presentations last week, so let’s briefly review them:

SIP-307: Router Proxy Architecture (V3)

  • Presented by Ale, this SIP proposes the base architecture for the Synthetix V3 system, as well as all V3 related systems, such as governance instances (spartan-council, etc). This new architecture minimizes complexity during releases, provides a novel way of overcoming the EVM’s smart contract size limits, and makes system upgrades very explicit to the community.
  • Essentially a diamond proxy
  • V2X uses call and this new proposed architecture for V3 uses delegatecall
  • Delegatecall has some risks associated with it (storage collisions), which can be mitigated with proper tooling
  • The next big consideration with proxies is where to put the upgradability code (in the proxy or implementation). Decision was made to put in the implementation (called “universal proxies”), which makes them very cheap and gas efficient.
  • Updates to the router proxy:

— Router allows multiple implementations to exist behind the same proxy (Ale said the entire Synthetix V3 system can exist behind a single proxy, which means they no longer have to worry about smart contract size limitations)

— It also allows for inter-module communication without calls (another gas cost reduction)

— Significant effort was put into easing the developer experience

SIP-302: Pools (V3) & SIP-303: Markets (V3)

  • Afif presented these SIPs simultaneously because they describe the staking process together
  • Goal of V3 product design is to take what V2X does and make it more flexible and permissionless

SIP-303: Markets (V3)

  • V3 proposes that products and offerings be broken up into several different markets, rather than a single blended debt pool
  • Theoretically, this allows stakers to pick individual markets that they want exposure to
  • Afif said a good way to think about markets is as autonomous contracts that are transacting with end users or other protocols and just passing the associated debt or credit to stakers
  • Kaleb ask about the scaling features like wrappers, and Afif said this will be presented as a separate SIP

SIP-302: Pools (V3)

  • This SIP proposes the creation of pools in V3 of Synthetix which serve as an intermediary by accepting collateral from accounts and providing liquidity to markets.
  • Afif: “Working through the details of markets, it became clear that a lot of users may want a simpler experience similar to what is offered now where the Spartan Council manages the exposure of each product, which is where the idea of pools comes in.”
  • The analogue in V2 would be that there is a Spartan Council pool and everyone stakes to it
  • V3 will start out this way as well but eventually, when pool creation is permissionless, users will be able to decide their allocation to different pools

SIP-270: Add Synth EUR on Optimism

  • GUNBOATs presented this SIP, which proposes adding a EUR synth on Optimism, with a 15 bp synthExchangeFee
  • There’s already a demonstrated use case for EUR on Optimism

SIP-304: Liquidations (V3)

  • This SIP proposes a mechanism for liquidations in V3 where liquidated positions have their collateral and debt distributed among other participants in their vault. If an entire vault is liquidated, all (or part) of its collateral is seized by the system and sold to repay debt.
  • This is similar to the current liquidation mechanism, but applied to the proposed permissionless pool model
  • Liquidations would be socialized among participants in individual pools which silos the risk to each individual pool
  • Terra asked if there is anything stopping a market actor from joining a pool just prior to liquidation to get discounted collateral. Afif answered saying no, but that’s not necessarily a bad thing because it would mean more liquidity being added to a market in a crisis. And worst case, the implications are no worse than the prior liquidation dynamic.

Grants Council

Present at the August 18, 2022 Grants Council meeting:
Grants Team: ALEXANDER, CT, cyberduck, JVK, Mike

In Grants Council updates, the team is considering the parameters for a possible NFT mint whitelist and has met with the Universe team to hash out the details for this. Mike noted, however, that the performance of a whitelist mint could impact the performance of the main mint which is something to consider. The plan is for these NFTs to be sold to generate more funds for the Grants Council.

Next, the Wrapper Site is fully up and operational! And while capacity is already full, the UI can still be used to unwrap.

Lastly, in other ongoing Grants work:

  • Designer, Jade, has begun work on the design for the Loans UI
  • The writer for the NFT lore is working with the team’s feedback to update the different story lines
  • Alexander created an ad to attract content creators to create videos and be paid retroactively — check it out here!

Ambassador Council

Present at the August 15, 2022 Ambassador Council meeting:
Ambassadors: mastermojo, Matt, MiLLiE

In Ambassador Council updates, the team hosted another Spartan Space last week, this time with Lyra Finance again. We got to hear from Mike, Nick, and Cody. Mike is the co-founder of Lyra, along with Nick, and has worked with Synthetix previously as a contract engineer. Nick has a background in equity options before making the jump to crypto. Cody leads growth and community initiatives at Lyra, and previously worked with a number of traditional startups.

As an overview, Lyra is an L2 native options protocol and AMM that allows users to buy and sell options where sUSD is used as collateral. Mike said the biggest reason they chose to build on Synthetix was that they could delta hedge via Synthetix to manage risk for liquidity providers (LPs). Nick added to this saying risk management is fundamental to any options design. This therefore allows for the most complete options experience on-chain.

The Ambassadors then asked what they learned from Lyra V1. On the trader side, they learned that not allowing users to partially collateralize options presented a significant UX challenge. And on the LP side, instant liquidity allows expirations to be listed as far as 3 months out on Avalon. Nick said V1 was a great product, but Avalon is just a much more complete offering.

“The lane for DeFi options is wide open and we have an opportunity to take a big share over the next few months.” -Nick

The Ambassadors also asked the guests why Lyra changed the terminology from AMM to market maker vault, and they said it was because LPs typically provide paired assets and have to manage liquidity while being exposed to price fluctuations in that pair. But at Lyra, LPs just provide stablecoins that are then traded on Synthetix to collateralize option positions.

As of now, Lyra’s Roadmap for the remainder of 2022 is looking like:

  • Big priority over the next few months is onboarding as many traders and integrators as possible
  • The more trading strategies, the better
  • BTC vault just launched
  • Broader goal is to build revenue and Lyra’s brand as a DeFi options and liquidity venue
  • Grants Council will be focused on funding projects that will build the trader base

The call also included discussion regarding the OP distribution, Lyra/dHEDGE partnership, and some fun questions about the Lyra team. So don’t forget to catch the recording if you missed it!

Podcast now also on YOUTUBE

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SIP/SCCP status tracker:

SIP-249: Create BNB-PERP, Status: implemented

SIP-257: Debt-ratio futures market, Status: implemented

SIP-262: Create Perps Market for XMR & DOGE, Status: implemented

SCCP-222 to pass and unpause BNB, DOGE, and DebtRatio, Status: vote pending

SIP-269: Create OP-PERP, Status: implemented

SIP-237: Debt Migration, Status: draft

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

SIP-307: Router Proxy Architecture (V3), Status: draft

SIP-302: Pools (V3) & SIP-303: Markets (V3), Status: draft

SIP-303: Markets (V3), Status: draft

SIP-302: Pools (V3), Status: draft

SIP-270: Add Synth EUR on Optimism, Status: rejected (vote was not necessary)

SIP-304: Liquidations (V3), Status: draft