SNXweave Weekly Recap 55
September 7, 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 September 1, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, Ale, Burt, Danijel, Kain, ksett, TerraBellus
Core Contributors: Cavalier, Darius, Jordan, KALEB, noah, Rafa, Steve, sunny
At the moment, the V2X priorities are the same as last week (atomic swaps, debt migration, V3 and perps V2), but there are a couple of updates on some of the other V2X SIPs. SIP-252 to allow SNX escrow entries to be liquidated has completed its audit and will go out on the next release, and SIPs 267 and 268 for the direct/curve integrations should be in audit this week.
In V3 updates, the auditors have begun reviewing SIP-301! After this, they plan to review 302–305 together since they describe individual pieces of the staking process. We should see a presentation scheduled for SIP-302, V3 Pools, in the next few days now that the draft implementation is complete. Danijel asked what the rollout plan is for V3 and if there is a pre-condition for releases, now that there are SIPs in audit. Noah explained that SIPs 300–307 will need to go out all at once, but SIP-301 is isolated and doesn’t really interact with the specifics of the Synthetix product so the auditors were comfortable taking a look at it at this point.
There was also a discussion regarding Perps V2, which the team is hoping to release the scope for soon. They are currently balancing resources across V3 and Perps V2, keeping in mind that Perps V2 will need to be implemented within V3. The improvements for Perps V2 that have been discussed so far are related to fees and the funding rate — Afif will be putting out an initial SIP for this in the next few days.
The new design and UI components for Staking V2 are also in progress, and many stakers have already noticed some bug improvements. The whole update should be complete over the next couple of weeks.
During the Spartan Council call there was also a guest presentation by the Gauntlet team. They presented SCCP-225, which proposes raising the target c-ratio to 450%. They explained that forcing users to have safer staking positions lowers the risk of insolvency, and that these recommendations are being made given the risk associated with merge uncertainty. However, there was some resistance from the Council to increase the c-ratio, so this SCCP was rejected.
Kaleb later led an Atomic Swaps discussion, noting that volume started strong on atomic swaps with the 1inch and curve integrations but in the last month some users figured out how to frontrun the price feed. The solution is to continue to tweak the parameters to weed out frontrunners and prioritize the Curve direct integration.
Kaleb then presented SIP-272, which proposes incorporating dynamic fees into the atomic swap methodology. The dynamic fee model can be calibrated to fit the slippage function of any designated order book, so higher fees would be imposed, resulting in more compensation to SNX stakers when they take larger positions. This SIP is meant to serve as an alternative to slippage, which is the safety mechanism AMMs use to protect liquidity pools.
Present at the September 1, 2022 Grants Council meeting:
Grants Team: ALEXANDER, CT, cyberduck, JVK, Mike
In Grants Council updates, JVK was approached by an Italian professor who is trying to organize an academic DeFi event in Italy. He is requesting grant funding to cover some of the costs, so JVK will be getting on a call with him to discuss the details. The Council thinks this may be a good way to get some promotion in an academic setting.
Next, the team is still working on the details of the funding request for the dHEDGE Perps Integration. They were also discussing the details of this proposal, saying it might be just the type of project to use some of the OP allocation for, since the OP was originally allocated to fund protocol integrations.
As for the Discord tipping initiative, the Council wants to build on this program and allocate some funding to the comms/marketing group (Mike and Matt) to tip for helpful activity as well. Up until now, all Discord tips have come from the Grants Council, so the team thinks this additional allocation would help increase contribution, especially within the 300 group.
Present at the August 31, 2022 Ambassador Council meeting:
Ambassadors: mastermojo, Matt, MiLLiE
In Ambassador Council updates, Jade joined the meeting last week to review some of the progress for the website and it is looking great! Things are really coming together. The Ambassadors are also re-starting the process to get the proposal in for an extra seat or two on the Council, noting that the governance landscape has changed significantly since the original SIP that mandated 3 Ambassador seats.
The team also hosted, once again, not one but TWO Spartan Spaces last week — the first one with Polynomial and the second one with Socket/Bungie. So let’s review them!
During the first call we got to hear from Gautham, who is the founder of Polynomial and does product lead, and Abhishek, who is a frontend dev. For those who aren’t familiar, Polynomial builds automated strategies combining options and futures. The protocol started in a hackathon, with the goal to build something that made options markets efficient. They started with an aggregator strategy but realized there weren’t many on chain options markets.
The guests discussed some of the changes from V1 to V2 post Avalon, including:
- Support of instant deposits and withdrawals vs. round system
- Capability to sell multiple strikes which allows for more diversified risk
- Increase in capital efficiency and yield
Gautham and Abhishek also talked about the use cases for the vaults, noting that there are different strategies that are most appropriate given different market conditions. There are currently 4 vault offerings, and each one is marked to indicate which market it will perform best in. For example, it might say “This strategy is good for Bull Market, Moderately Bearish. Not ideal for Extremely Bearish Market.”
When asked how the performance of these vaults is, they said 3 of the 4 have a capacity of 500,000 sUSD — which is determined by liquidity on Lyra. Gamma vault is new, with a 50,000 capacity, but there is a lot of excitement in the community for this one.
Lastly for Polynomial, the guests discussed their roadmap for the near future. Right now, they said their team is focused on increasing TVL and making UX better. However, they’re also exploring cross-chain swaps. Currently, users must be on Optimism in order to use Polynomial, but the team would ideally want users to be able to deposit funds from different L1s or L2s straight into a vault.
Next up is the Spartan Space with Socket/Bungee. During this call, we got to hear from Rishabh, who is one of the co-founders of Socket and handles the business side of the operation. He is also very passionate about startups and launching products from scratch.
As a brief overview, Bungee has been live for 8 months and is an application on top of Socket that allows users to swap assets between chains. Socket is the liquidity layer and bridge aggregator technology that enables Bungee transfers. And Polynomial is planning to integrate Socket to allow for 1-click, chain agnostic deposits.
Their current integrations include Optimism, Arbitrum, Polygon, Hop, Celer, and Across. They are also integrated with 1inch for swaps, and many are being executed using atomic swaps (which generates fees for Synthetix). Socket is currently on 9 chains, with plans to expand further.
Rishabh also discussed some of the protocol’s features that are being worked on right now, including:
- Currently have a private testnet for a message-passing data layer
- On the liquidity layer, the team is focused on expanding to more chains
- Socket scan: a public port for the whole bridging community to be able to match source and destination transaction hashes
- Route splitting: splitting transactions across different paths to arrive at the same destination more efficiently
- They also applied for an Optimism grant; funds will be used to incentivize Optimism liquidity and fund grants to expand on use cases
Lastly, when discussing risk when interacting with Socket, Rishabh noted that there is a Socket-level risk and a risk of all the bridges being aggregated. However, on the Socket side, they take security very seriously:
- Contracts are very light — they never actually hold any funds
- There are no proxies in the contracts, so they cannot be edited
- Audits and peer reviews are very important to Socket
- There is also a public bridge framework to objectively assess the security of the bridges in the system in a transparent way
- There will be an option soon to sort bridge path by security score as well
All in all, these were a couple of great calls jam-packed with information. So don’t forget to catch the recordings if you missed them!
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SIP/SCCP status tracker:
SIP-252: Liquidation of SNX Escrow, Status: approved
SIP-267: Direct Integration, Status: approved
SIP-268: Curve Integration, Status: approved
SIP-301: Accounts (V3), Status: approved
SIP-302: Pools (V3), Status: draft
SCCP-225: Raising the target c-ratio to 450%, Status: rejected
SIP-272: Atomic Swaps — Dynamic Fees, Status: draft