Synthetix Quarterly Report — Q2 2025

SNXweave -

Quarterly Report for Synthetix, Quarter 2 of 2025: April — June.

Q2 Highlights

⭐ Spartan Council/CCs: Synthetix Relaunch, 420 Pool Adoption

The past few months have been a pivotal period for Synthetix, marked by a focus on ecosystem alignment and key shifts in the core product roadmap. From the successful expansion of the 420 Pool to the upcoming launch of a reimagined perps product on Ethereum Mainnet, the protocol leadership has outlined a comprehensive proposal to streamline product delivery and attract new users. As Synthetix sharpens its focus on Mainnet consolidation and prepares for a new era of decentralized derivatives, let’s review some of the technical highlights for the protocol in Q2.

While previous development efforts have generally been centered around scaling solutions like Base and Optimism, the Spartan Council has signaled that Mainnet will serve as the anchor for Synthetix’s core products moving forward. This pivot reflects a strategic desire to simplify the protocol’s footprint, reduce liquidity fragmentation across chains, and align with Ethereum’s robust security and liquidity base. With the planned development of a new perps market on Mainnet and plans to consolidate staking and governance functionality around this ecosystem, Synthetix is reasserting its commitment to building a streamlined, capital-efficient protocol that leverages Ethereum’s security, liquidity, and credibility.

Make no mistake  - this is a race. The protocol hopes to capture first mover’s advantage, and the market share that comes with it as the sole perps offering on L1. Success depends on precise timing, smooth user onboarding, reliable execution, and, most critically, a real demonstration of high-volume traders being willing to adopt and utilize the product, leaving the comfort of high performance DEXs and centralized exchanges.

Meanwhile, momentum around the 420 Pool has continued to build following its debut last quarter. With the introduction of Simple Staking, even more SNX migrated to the 420 Pool, as the streamlined interface and reduced complexity made it easier for users (even those less familiar with DeFi) to participate in staking and earn rewards without actively managing their debt. As of late June, over 170 million SNX had been migrated, accounting for roughly half of the total supply, and cementing the 420 Pool as the dominant staking mechanism within the Synthetix ecosystem. The increased participation has improved capital consolidation, enhanced system-wide debt efficiency, and allowed governance to operate with clearer insights into collateral allocation.

Challenges

The most significant development of the past few months has been the winding down of all Synthetix L2 products and subsequent refocusing around a new product being built on Ethereum Mainnet. As the protocol pivots back to L1, it faces the logistical complexity of sunsetting legacy systems, coordinating incentives across multiple chains, and keeping users informed during a period of significant transition.

Maintaining sUSD peg stability has also been a persistent challenge over the past several months. The shift to centrally managed staking was designed, in part, to shore up peg stability by enabling a unified approach to debt deployment. However, the rollout of the debt jubilee introduced excess sUSD supply, creating significant price pressure on sUSD. This imbalance was compounded by liquidity fragmentation across chains and the winding down of L2 deployments, which made it even harder to manage sUSD supply and demand effectively. As the protocol continues to grow, preserving sUSD’s reliability as a unit of account will be critical to maintaining trust and utility across its ecosystem.

Complicating matters further, the terms of the debt jubilee have shifted multiple times since its introduction. Initially framed as a clear 12-month path to full forgiveness, eligibility requirements have since changed: first requiring users to deposit 10% of their debt in sUSD, then 20%, with no guarantee that further adjustments won’t be made. While the updated model still offers significant value, effectively 80% forgiveness under the original lock-up terms, it has deviated from early expectations. These changes reflect the technical and economic realities of peg maintenance, but underscore the importance of stable, transparent, and well-communicated incentive structures.

Lastly, community participation has also continued to decline to some extent. Fewer candidates have stepped forward for council elections, SIP presentations have slowed, and community updates have been reduced to monthly calls. This decline in activity stands in stark contrast to the once-vibrant governance ecosystem that Synthetix helped pioneer. Reinvigorating contributor interest and reestablishing predictable, accessible channels for engagement will be essential to reactivating the DAO and ensuring meaningful community involvement as the protocol enters its next phase.

Protocol Stats

Overview of Synthetix Q2 Stats: April 2025 — June 2025.

Spartan Council

Q2 2025 Spartan Councilors: Benjamin Celermajer (Fenway), Brent Maxwell, Cavalier, coKaiynne, Jordan Momtazi, Kain Warwick, MasterMojo

Now that we’ve discussed highlights and challenges Q2, let’s get into a more in-depth review of the major accomplishments from the protocol and Spartan Council.

Big news kicked off the quarter: Synthetix Accounts went live! This new smart wallet was tailor-made for on-chain perps traders. It brought gasless, 1-click trading to over 100 markets, while simplifying onboarding with an email, Google account, or passkey logins — no seed phrases needed.

Synthetix Accounts featured:

  • Self-custody with exportable keys
  • Fast margin deposits (USDC, ETH, cbBTC, cbETH)
  • Instant access to trading without wallet popups or multi-step signing
  • Multi-device support for flexible trading

Synthetix Exchange was quietly cooking, and the result was a UX leap forward that made DeFi trading feel like Web2.

Following that major usability win, Synthetix then turned its attention to staking, and two big updates dropped. sUSD staking went live in the 420 Pool, and eligible stakers (those also staking SNX) began earning a share of 5M SNX in rewards over 12 months, or 13,698 SNX daily. Deposits were locked for 1 year, with rewards set to vest over 3 months post-campaign.

Next, SNX staking was also radically simplified. Launched on Ethereum Mainnet, SNX holders are now able to stake directly into the 420 Pool with no debt, no C-ratios, and no liquidations. Withdrawals require a 7-day cooldown, and rewards are set to vest at campaign end in May 2026.

Both pools were made available at 420.synthetix.io. Early participation was strong, and over half the SNX supply ended up staked! With this new model in place, however, it was time to phase out the old one. Legacy SNX staking positions were deprecated, per SCCP-403, so:

  • If a user’s C-ratio was under 160%, their position was liquidated and unrecoverable.
  • If it was 160% or above, they could recover via the Synthetix Discord ticket system.

This move enabled the protocol to streamline toward automated vaults, V4, and a better UX for stakers.

But upgrading staking wasn’t enough, because the protocol also had to deal with the consequences of the debt jubilee. Following the SIP-420 debt jubilee and delegated staking upgrade, sUSD experienced heavy sell pressure, falling to ~$0.70.

In order to restore the peg, SNX debt holders were required to stake 20% of their original debt as sUSD in the 420 Pool. This strategy (alongside Treasury buybacks, Curve incentives, and Infinex campaigns) has helped repeg sUSD a bit, but reaching $1.00 has remained a bit tricky, hence the increase to 20%.

The effort to restore the peg is still a priority for Synthetix, in order to put the protocol in a better position to pursue yield generation via the 420 Pool and a new Synthetix Perps product on Mainnet.

Despite peg issues, protocol governance carried on and governance elections wrapped up with the following Spartans taking elected seats on the new council:

  • Advisory Seats: Kain, Jordan, MasterMojo
  • Treasury Seat: cokaiynne

As governance stabilized, community engagement ramped up a bit as Spartan Spaces were more officially rebooted. Some highlights featured Pirate Chain, a privacy-first L1, discussing privacy and censorship resistance in DeFi, and Panoptic, a DeFi-native options trading using Uniswap V3.

But behind the scenes, bigger strategic decisions were on the table. SIP-415, the proposal to acquire Derive (formerly Lyra), was presented and then withdrawn after community feedback. While the move could’ve fast-tracked the V4 timeline and added an off-chain matching engine for L1 perps, concerns about valuation and token dilution led to its cancellation. The proposal offered a $27M valuation that would have been settled via a 29.3M new SNX mint, but community consensus remained a core pillar for Synthetix as voices were heard in opposition.

Shortly after this, however, the vision for V4 on Mainnet took center stage as Synthetix announced a soon-to-be native perps exchange on Ethereum Mainnet, complete with:

  • Off-chain matching engine
  • Batch on-chain settlement
  • Points program to incentivize usage

Phase 0 kicked off with sUSD/sUSDe early deposit vaults, where traders, stakers, and referrers began earning points. The program will also be evolving over time, with more opportunities to earn points and join competitions with juicy prizes in SNX, stablecoins, and more.

But, this isn’t just another “version” update  -  Synthetix Mainnet will mark a full pivot. L1 is the future.🚀 To complete the shift, the protocol began retiring its L2 deployments.

Synthetix began sunsetting all L2s except Optimism (for now):

  • Arbitrum: Fully deprecated; vaults liquidated. Debt repayment and collateral claims were handled via Discord.
  • Base:
  • June 30: Perps entered close-only mode; leverage tokens became redeem-only
  • July 7: Full deprecation completed; LP vaults liquidated

Synthetix is coming back home to Mainnet, and Spartans are making the move. Soonthetix! 🔜

Best Memes from Q2

Lastly, because we can’t close out the quarter without a little humor, here were some of the best memes from the Synthetix community.