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SNXweave Weekly Recap 76

SNXweave Weekly Recap 76

February 15, 2023

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 February 8, 2023 Spartan Council Weekly Project Sync:
Spartan Council: Adam, Cavalier, dsacks, Jackson, KALEB, SeliniCapital (representing Jordi), TerraBellus, William87
Core Contributors: Afif, Ana, Bex, Darius, David, db, joey, jz, meb, Mike, Nikita, noah, Peiman, Rafa, sunny

As a quick V3 update, the CCs are hoping to get governance approval for SIPs 308, 309, and 310 before launching V3 to mainnet. The team is considering a soft mainnet launch for testing that won’t be plugged into the legacy markets until the SIP votes are in. There won’t be a reason to incentivize liquidity until the spot market is deployed, which should be in audit soon. Outside of that, the CCs are continuing to work through all of the audit feedback as it rolls in.

And in case you missed it, all of the new Perps markets are live! These 22 new markets were approved by SIP-295 and SIP-2000, and had configurable values set by SCCP-277. The CCs are now working on the next release, which should be in the next few weeks.

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

SIP-306: V3 Migration

  • This SIP, presented by Noah, proposes a migration plan for V3 where collateral will be migrated to V3 and account tokens will be minted to existing stakers’ addresses (who will continue to back all debt issued by V2X)
  • Check out this useful diagram that Noah shared to help visualize this process
  • The primary goal of this plan is to minimize friction for stakers and to avoid disrupting the current usage of synths, while allowing the system to benefit from the upgrade to V3
  • This SIP was just presented as a refresher for the new council, but otherwise had no material updates since the last time it was presented
  • The initial migration plan is intended to be a soft launch and remove as much risk as possible
  • There were also a few questions at the end of this presentation:

How will escrow entries be accounted for in V3?

  • Every entry as it exists in V2X will have a corresponding entry with the same unlock date in V3
  • Migrating escrow entries, however, will be a very gas-intensive process, according to db
  • Users will not be force-migrated until the liquidity is absolutely necessary for V3 to function

Is account merging possible?

  • Accounts are represented by NFTs in V3 and a wallet can own multiple NFTs
  • But as of right now, those NFTs cannot be combined to a single account

How will the transition be incentivized?

  • This is not currently specified in this migration SIP, but incentive will grow as V3 markets begin to outperform V2X
  • Another possibility is to shift some of the inflation rewards to V3

SIP-307: Router Proxy Architecture (V3)

  • Noah also presented this SIP, which proposes the base architecture for the 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
  • Noah explained that this is essentially a diamond proxy
  • One of the main differences is that V2X uses call and this new proposed architecture for V3 uses delegatecall
  • Delegatecall has some risks associated with it, such as storage collisions, which can be mitigated with proper tooling
  • Kaleb asked how we make sure these upgrades don’t break contracts. Db said unfortunately, solidity doesn’t provide any of the necessary tools to prevent storage collision but the CCs have tooling dedicated to solving this problem, which prevents storage collisions from happening
  • Voting is open for this

SIP-316: Core System Precautionary Security Features

  • The objective of this SIP is to protect the protocol from loss by adding an “interaction timeout” to Accounts, which prevents withdrawals
  • This will be done with an SCCP-configurable parameter, withdrawTimeout, which will be added to the system to configure the wait time between account interaction and first-allowed withdrawal
  • Db explained that this essentially puts an extra check on the most sensitive operation of the system (withdrawal)
  • Additionally, it adds checks that allow disabling of most system functions in emergency situations, similar to SystemStatus in V2X (it will allow the “system owner” to shutdown protocol functionality in case of emergency)
  • Adam asked if the withdrawal timeout will create friction for possible integrators. Db said yes, it could create friction but this isn’t anything new. This has to do with the system collateral (i.e. staking) and the CCs are not aware of that being a target for integrators. Even so, there are options for overcoming this challenge, but the main objective of this SIP is securing the system
  • He reminded the Council that this is an SCCP-configurable parameter. This means at any point (with SC consensus) the timeout can be changed to zero, effectively turning it off
  • Terra asked who the “owner” being specified in the SIP is, and if the intention of the proposal was to give the pDAO any more privileges than they currently have. Db said the plan in V3 is to eventually do away with the pDAO and give ownership completely to the Spartan Council, and he clarified that the objective of this SIP is not to give the pDAO any more rights than they currently have in V2X. He has made changes to the SIP to reflect this clarification.
  • The vote is open

SIP-2001: Pay DAO Stipends from Inflation

  • Artsychoke presented this SIP, which proposes paying the DAOs’ monthly stipends from inflation rather than from the Treasury Council’s (TC) assets
  • Right now, council members receive a predetermined monthly stipend for their participation, which is currently paid manually by the TC
  • The motivation behind this proposal is to increase self-sufficiency for the DAOs, in terms of operating costs, and to better align stakeholders
  • Artsychoke explained that this SIP would also help set a benchmark for a terminal inflation rate to cover protocol expenses into perpetuity
  • It was decided on the call that the SIP would have to be meta-governance vote
  • However, William87 already announced that his vote would be “NO” so this SIP will not be voted on this epoch

SIP-2002: Revised Volume Source Fee Program

  • Proposed by Mike, this SIP will establish a program administered by the Treasury Council to reward Synthetix integrators who drive volume through the protocol
  • This proposes a tiered system for volume rebates paid by the TC to integrators
  • Perps is not currently included in any volume source program and this SIP intends to add that incentive via a program administered by the TC
  • Mike emphasized that this will provide a really strong resource to go out and start pitching other established protocols on getting Synthetix added to their system

SIP-2003: Perps V2 Trading Incentives

  • This last SIP, also presented by Mike, aims to distribute the remaining OP from the phase 0 Optimism grant
  • Rewards will be distributed over 17 weeks starting with 50k OP the first week, 100k the next 2 weeks and 200k every week after that until the fund is exhausted
  • The primary focus of this incentive program is perps trading, and the idea is hopefully to grow the user base while also driving volume
  • The rewards calculation will most likely be done off chain, but the technical specs of the distribution are still being hashed out
  • Kaleb brought up that the OP belongs to the TC and the burden to distribute it lies with them, so a SC vote is more of a signaling exercise than an enforceable vote

Grants Council

Present at the February 6, 2023 Grants Council meeting:
Grants Team: Ana, CT, synthquest

The team had a long conversation last week regarding the Stats page, where they discussed alternative data sources, options, front ends, expectations, and what the Grants Council should and should not take responsibility for.

On a high level, they want to take their old stats page and replace the data sources with the new Dune API, and look at setting up a new data source with a different service provider.

The Council also discussed the NFT project, and have many different tasks actioned for this week.

Ambassador Council

Present at the February 7, 2023 Ambassador Council meeting:
Ambassadors: GUNBOATs, Kevin, mastermojo, Matt, MoneyManDoug

In Ambassador updates, the team discussed future Spartan Spaces, as well as how the Threshold Protocol Spartan Space went. The recording is now up on their YouTube channel, so check it out here!

The team also discussed governance updates, including RFP Badgeholder nominations done by Matt and Mojo, with Matt nominating Synpress and Mojo nominating Cannon.

They also submitted a HOP proposal, which you can check out here.

Lastly, the team attended an Interest Protocol Call, Optimism Governance call, and submitted numerous Gearbox, Euler, Hop votes!

Podcast now also on YOUTUBE

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SIP/SCCP status tracker:

SIP-308: Market-provided Collateral (V3), Status: draft

SIP-309: Market-locked Collateral (V3), Status: draft

SIP-310: Feature Flags (V3), Status: draft

SIP-295: Adding Perps V1 perps markets to Synthetix Perps V2, Status: implemented

SIP-2000: Add ATOM, AXS, FLOW, FTM, NEAR, AUD/USD and GBP/USD to Perps V2, Status: implemented

SCCP-277: Enable Perps V2 Markets / Update Parameters, Status: implemented

SIP-306: V3 Migration, Status: vote pending

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

SIP-316: Core System Precautionary Security Features, Status: vote pending

SIP-2001: Pay DAO Stipends from Inflation, Status: draft

SIP-2002: Revised Volume Source Fee Program, Status: vote pending

SIP-2003: Perps V2 Trading Incentives, Status: vote pending