In 2018 Synthetix delivered an exceptional amount of work, and in the process created a platform for significant adoption in 2019. So before reviewing the 2019 Road Map, it’s worth recapping what was delivered last year:
- Token issuance (March 2018)
- ETH-backed stablecoin eUSD (April 2018)
- First ecommerce site powered by a stablecoin (April 2018)
- Network Analytics Dashboard (May 2018)
- nUSD (June 2018)
- Mobile app for iOS (August 2018)
- Swappr Dapp (August 2018)
- Mintr Dapp (October 2018)
- Synthetix Rebrand (November 2018)
- Open minting (December 2018)
- Six additional synthetic assets (Synths) (December 2018)
- Synthetix.Exchange (December 2018)
We gained valuable insights into the market last year as we built and deployed all of these components, this has provided us a much better understanding of how to create utility and adoption in 2019.
Based on what we learned last year we have numerous improvements planned, with an increased focus on Synthetix.Exchange. For better or worse, the main use case for crypto is still trading. So, this year we plan to deliver even more trading options as part of the DeFi movement. The benefit of this is that we will produce significantly more fees through trading than we have through transfers, allowing us to bootstrap the network and the synthetic multicurrency stablecoins.
Below is a list of upgrades planned for 2019. Detailed information on each is included further in the document.
- Synthetix.Exchange upgrades
- Monetary policy
- Ether collateral
- Blueshyft sAUD onramp
- Transfer fee removal
- Decentralised Oracle
- Decentralised governance
We are planning to introduce numerous additional assets, positions and functionality, including:
- Short/long positions
- Leveraged trading
- Equities & indices
- Options & futures
- Borrowing sUSD with ETH and DAI
- Triggered orders
There are a number of derivatives trading platforms for crypto assets currently, but they are all limited by counterparty liquidity. This means they can really only list the top twenty cryptoassets. Synthetix.Exchange does not have these limitations due to the shared collateral pool model. This means listing a wider range of cryptoassets is far easier. Much in the way Binance was able to capture market share by listing far more assets than other competing exchanges, Synthetix.Exchange will be able to list a wider variety of assets and positions than traditional exchanges. This will help to drive awareness and adoption. The Synthetix.Exchange will use a self balancing feature similar to Uniswap, where the total open interest of any position and therefore the risk to SNX holders is capped. The system will also encourage traders to balance the risk in the system by paying a percentage of the fees to traders who rebalance a position, though this feature will not be in the initial release.
There is a very long feature roadmap planned, where the exchange will eventually support leveraged trading, triggered orders, options and futures. One of the most exciting features though, is sUSD borrowing, traders will be able to deposit ETH or DAI into the exchange and borrow sUSD to trade on Synthetix.Exchange, this will significantly streamline the process of trading on the platform and will provide liquidity into and out of the exchange.
Synthetix has one of the highest output engineering teams in crypto, so everyone is very excited to continue extending the functionality of Synthetix.exchange throughout 2019 and beyond.
One impediment to growth in 2018 was that the fee yield did not yet create a strong incentive for SNX holders to participate in issuance. In order to increase the incentive to issue we are making a change to the monetary policy of the network.
The total SNX supply will be increased from 100m to 250m over the next five years. The schedule for this will be published in a separate post with more details on this change. These new tokens will be distributed using the same logic as the fee pool distribution. So SNX holders who issue will now be paid in SNX tokens as long they maintain their collateralization ratio within the network. This means issuers will be rewarded with both fees and SNX. In order to ensure this increased supply does not have a negative impact on issuance, SNX earned through staking will not be transferable within the first year of issuance. Like the fee pool, SNX earned through staking will be claimable each week for up to six weeks.
Another change we are implementing to increase the supply of Synths is to allow SNX holders to increase their collateral with Ether. SNX holders will be able to stake up to 200% of their SNX position in Ether. So for example, someone who has staked $10k of SNX will be able to stake an additional $20k of Ether. This will allow us to theoretically increase the total supply of Synths by 3x, it will also provide additional confidence in the backing of each Synth. Locked SNX/ETH holders will receive Synth fees in the same way as locked SNX holders, proportionally against the value of their locked collateral.
Blueshyft sAUD Integration
Liquidity is critical for all crypto platforms, which is why we will be rolling out an integration with blueshyft to allow users in Australia to directly purchase and redeem sAUD. Blueshyft is a payment network that allows customers to use cash to pay for digital goods and services. This will make it extremely easy to get into and out of Synthetix.Exchange and other platforms that integrate sAUD and other Synths.
Transfer Fee Removal
The original sUSD model was a single currency stablecoin supported by fees, this required that transfers of the ERC20 token had a built in fee capture mechanism. This non-standard transfer mechanism has introduced significant friction when attempting to integrate sUSD into other decentralised platforms. While it is not in principle an impediment, practical it results in a lack of interoperability. In order to encourage adoption of individual Synths we are making a change to the fee mechanism, so that transfers of each ERC20 Synth will be free, but exchanges between different Synths will continue to attract a fee. This exchange fee in combination with the fees generated by synthetic positions should more than compensate SNX holders for the removal of transfer fees.
One of the most critical elements in the system is the oracle, since in order for the system to scale and provide confidence to users we must remove the centralisation in this aspect of the system. We are planning to partner with a decentralised oracle platform to build an oracle that anyone can run. This will be another aspect of the system that will encourage participation. By decentralising this part of the system we remove significant risk and introduce an additional vector for users to participate in the system, even if they are not traders.
Moving to a decentralised governance model has been part of the roadmap since the project was founded in 2017, but this process has been on hold until the majority of the engineering work was completed. We believe that by mid 2019 we will be in a position to start the process of decentralising the governance of the network. We will have more details of how this will be implemented and the timeline as we complete the rest of the roadmap.
Synthetix is one of the most promising projects within the Ethereum ecosystem, but there are numerous improvements that will drive increased adoption in 2019. The changes above, plus some improvements to the user experience, will ensure Synthetix is one of the most successful DeFi projects over the coming years.