SNXweave Weekly Recap 77

SNXweave -

February 22, 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 15, 2023 Spartan Council Weekly Project Sync:
Spartan Council: Cavalier, dsacks, Jackson, KALEB, SeliniCapital (representing Jordi), TerraBellus, William87
Core Contributors: Afif, Ana, Darius, David, db, joey, jz, meb, Matt, Mike, Nikita, noah, Rafa, sunny

First up, the Schedar release went out last week, which implemented SIP-255. Now, users will no longer claim their pro-rata distribution of trading fees. Instead, fees will be burned to decrease debt for stakers. But don’t worry, inflationary rewards will still be claimed weekly — when claiming, stakers will be shown the number of SNX and sUSD debt burned.

In V3 updates, the Council discussed the migration plan. The current plan is to stand up V3 then begin plugging in markets from V2. Liquidity providers will be able to transition to V3 and continue to back everything that currently exists in V2 in a single transaction. The first phase of audit feedback has been received, processed, and returned to them for review of the fixes. The other audit company will have a formal report ready by next week, but most of the feedback is processed already.

This should allow V3 to be deployed to Optimism and Mainnet this week without any markets plugged in (first major milestone!). From there, the broader rollout plan will have to go through some additional governance steps. Some CCs will be traveling for ETHDenver this week and this goal is to have V3 deployed before then.

Terra then asked what still needs to be done to unwind the DAI wrapper, and it was answered that once V3 spot markets are live with liquidity, the sUSD created from that could be used to unwind the DAI wrapper. The delivery for this is still on track for April/May.

For Perps V2, there are still some final changes being made, but they are mostly just “internal, quality of life” upgrades. The team is also starting to discuss what types of additional features might be available in Perps V3. Terra questioned whether it would be possible to release new markets more gradually and target marketing towards specific communities as those offerings go live.

Kaleb suggested that the assets could be deployed as they are ready and paused until the marketing catches up. Mike is also working on this with other front ends to make sure all of the incentives appropriately align for the releases. This also ties into SIP-2003 for Peprs V2 trading incentives, which was voted “yes” symbolically by the SC but is still up to the TC to implement.

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

SIP-296: Otex/Cowswap Cross Asset Swaps

  • This SIP proposes adding the Otex cowswap solver contracts to the Direct Integration Manager
  • CowSwap works by connecting users and solvers (where users submit orders and solvers seek out bids for that trade at the best possible rate)
  • This creates competition among solvers to deliver the best possible price to users
  • Otex is one of those solvers, and are currently one of the biggest solvers on CowSwap, and they plan to use Synthetix to fill some of these trades
  • One of the key advantages of integrating with CowSwap is the way their service works, there is a 1 block delay on price fills which reduces the possibility of latency attacks
  • Terra asked if Otex has a history of executing large transactions, and Kaleb said we can probably expect larger trades (over $2 million) to be routed through this mechanism because the gas is too high for it to make financial sense on smaller trades
  • Synthetix’s competitive advantage would be on larger transactions
  • This SIP has been implemented after 7 votes in favor

SIP-308: Market-provided Collateral (V3)

  • This SIP proposes adding functionality that allows markets to increase their credit in the system by depositing collateral directly in the protocol — so essentially wrappers in V3
  • For increased scalability, markets should be able issue debt in exchange for collateral 1:1 under specific circumstances
  • This can also be used for multi-collateral margined Perps
  • Even though V3 may eventually allow permissionless pool creation (pending governance), this functionality would only be allowed within governance approved pools and only to support liquidity for the stablecoin
  • Kaleb asked how the leverage factors into the use of wrappers, and Afif explained that markets will be designed to only take on a small amount of exposure in either direction, similar to Perps V2 markets
  • This SIP was approved with 6 votes in favor

SIP-309: Market-locked Collateral (V3)

  • This SIP, presented by Noah, proposes adding functionality that allows markets to prevent withdrawal of delegated collateral
  • This functionality allows a market to specify an amount of dollar-denominated credit under which pools are unable to remove the collateral/liquidity they are providing to it
  • This would introduce a base level of liquidity for markets that could not be removed (to prevent them from going insolvent)
  • This is just a possible feature that can be used and the default value will be zero
  • This SIP has been approved with 7 votes in favor

SIP-310: Feature Flags (V3)

  • This SIP proposes allowing specific functions to be restricted with a “feature flag” where only SCCP-specified addresses are able to call them
  • This is pretty similar to SIP-316, except instead of controls for turning things off, it’s about turning things on over time
  • This is a generalized interface for attaching new markets, creating pools, etc.
  • Initially, only the SC will be able to use these features
  • This SIP was approved with 6 votes in favor and 1 against

Grants Council

Present at the February 16, 2023 Grants Council meeting:
Grants Team: Alexander, Ana, CT, JVK, synthquest

In Grants Council updates, there is a new bot coming your way! This will be an information bot with info regarding funding rates and more. Alexander is in the process of contacting a dev, and the team is thinking about a possible collaboration with Kwenta/Decentrex, etc. with any available chat feeds on their UI. More to come here.

The Council also discussed the NFT project, here are their updates: Ana is working on the structure for the naming conventions for traits, the dev provided a spreadsheet with lots of fields/names to fix, and the finalization of the lore with the new author is in progress.

They are also working on a community governance repository, which will have 3 stages:

1. Writing up a doc

2. Wiki/Web 2 the doc

3. Integrate into formal governance process

JVK will be leading the charge for the first stage right now, and is writing up a budget for this week’s meeting.

Lastly, the team is still working on getting the Dune stats into graphical format, and is reviewing areas of Synthetix to improve ease of new DAO members to better get involved.

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SIP/SCCP status tracker:

SIP-255: Burn fees instead of distributing them, Status: implemented

SIP-2003: Perps V2 Trading Incentives, Status: approved

SIP-296: Otex/Cowswap Cross Asset Swaps, Status: implemented

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

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

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

SIP-316: Core System Precautionary Security Features, Status: approved