SNXweave Weekly Recap 81

SNXweave -

March 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 March 15, 2023 Spartan Council Weekly Project Sync:
Spartan Council: Cavalier, dsacks, KALEB, SeliniCapital (representing Jordi), TerraBellus, William87
Core Contributors: Afif, Ana, Bex, Darius, db, joey, meb, Mike, noah, Rafa, sunny

As of now, the main priority for V3 is still getting the spot market implementation through audit, which should be by April. Noah said the ideal situation over the next couple of months would be 80% of the resources being devoted to working on markets and tying off spot markets and perps.

But if you’re interested in a high-level summary of V3 so far, we’ve got you covered:

  • Core system is up
  • There is currently no utility for the core system, but if there is interest in the community in starting to build out dashboards and UI tooling, the system is ready for that
  • Next major milestone is getting the legacy market through audit and deployed to V3

In Perps V2 news, Perps had $800 million in volume and generated $700,000 in fees as of last week, and even more since then! Here's a recent screenshot:

Some risk parameter adjustments are being discussed for after the next update, with the goal of making the markets even lower risk which is better for stakers.

  • Maker fees are potentially going to be reduced
  • Funding velocity may be tuned to be a bit more responsive, which would improve arbitrage efficiency
  • Leverage could also be changed

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

SIP-318: Market-specific Minimum Liquidity Ratio

  • This SIP proposes allowing custom minimum liquidity ratios to be set for specific markets via SCCP
  • The core system has a concept of a “minimum liquidity ratio” which determines a maximum amount of credit capacity and is essentially a risk parameter
  • In order to prepare V3 for permissionless market implementations, it may be useful for that risk parameter to be individually configurable by the SC
  • The default global setting would be higher and this upgrade would allow the SC to reduce that requirement depending on the risk of the market
  • CCs are currently putting together a diagram describing this functionality to help users and the community better visualize how this will impact permissionless markets in V3

SIP-319: Core System Fee Capture Mechanisms

  • This SIP proposes adding functionality for governance to set custom fee capture strategies when stablecoins are minted, burned, deposited, and withdrawn
  • The intent of this proposal is to provide governance with maximum flexibility in controlling fees where they may be levied by the core protocol
  • This SIP would add SCCP configurable parameters allowing fee collection on mint, burn, deposit, and withdraw functions

Both SIPs 318 and 319 are core system upgrades that will pave the way for more permissionless markets.

SIP-317: Spot Markets (V3)

  • This SIP proposes a spot market implementation for V3
  • Afif explained that this will allow the creation of synthetic assets by specifying a price feed and other configurable settings
  • There are 2 types of orders: Atomic orders and Asynchronous orders

1. Atomic orders

  • Similar to how atomic swaps work now, and allow users to exchange stablecoins for synths in a single transaction
  • Oracle manager can be configured to whatever feed with its own set of fee parameters

2. Asynchronous orders

  • These orders involve two transactions: a commitment and a settlement
  • This reduces composability, but allows for front-running mitigation such that lower fees can be offered to traders
  • Asynchronous orders may be cancelled after the settlement window has passed, users can set a “minimum amount received” to protect against slippage, and a default fixed fee can be set for this type of order, as well as custom rates for specific addresses
  • Each market that allows asynchronous orders can configure their settlement strategies from the 2 types of settlement strategies: On-chain (which uses the price provided by the oracle manager upon settlement) and Pyth (which uses Pyth-verifiable price data related to the settlement time)

Afif then discussed market use cases:

  • One of the big lessons learned in V2X is it’s very hard to scale spot synths efficiently
  • This is initially why wrappers were introduced but wrappers create their own set of risks and a lot more volatility for stakers

1. This implementation would allow for a delta neutral spot market (essentially the spot market analog of perps V2)

  • Every transaction would generate a skew fee to incentivize arbitrage of the skew back to neutral
  • This can be applied to any wrappable ERC-20 token/market
  • Since sUSD would be fungible across all of these markets and indirectly backed by the wrapped collateral, it would be able to provide deep spot liquidity on chain

2. Non-delta neutral/permissionless spot market implementations are also supported

  • Similar mechanics to lending markets like Compound and Aave
  • This would apply to permissionless markets where the collateral is an asset that is likely to be held rather than traded
  • Idea for these markets would be to define a target utilization and create incentives/penalties for being outside of that range

Grants Council

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

The Grants team worked on several of their ongoing projects last week, including:

1. Multisig/payments

2. Arb bots:

  • Aiming to avoid duplicate work with Kwenta Grants Council
  • Final goal of agnostic frontend referral

3. Flipside data update:

  • Reviewed L1, waiting on L2

4. Stats page update:

  • Need to give dev rundown (missing TVL, source of other, etc.)

5. Community Governance Guide progress update

6. NFT Project:

  • Going over list from dev of all details, hairstyles, etc.
  • Dealing with duplication issues and missing naming issues
  • Lore update, GC will VOTE on their selection of writers from the bios
  • Lots of detail work in the weeds. Big lift from Aana with CT support on this

7. List of Perps V2 Front Ends

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SIP/SCCP status tracker:

SIP-318: Market-specific Minimum Liquidity Ratio, Status: draft

SIP-319: Core System Fee Capture Mechanisms, Status: draft

SIP-317: Spot Markets (V3), Status: draft