Synthetix Quarterly Report — Q4 2023

SNXweave -

Quarterly Report for Synthetix, Quarter 4 of 2023: October — December.

👉Q4 Highlights

⭐ Spartan Council/CCs: Andromeda Release & Tokenomics
⭐ Grants Council: Watcher Page Improvements
⭐ Ambassador Council: OP Grants & Retroactive Public Goods Funding support

We have a lot of big news to review for the final quarter of 2023 and as always, let’s start with the highlights!

The biggest achievement by far this quarter was the planning and execution of the Andromeda Release on Base. In October, Kain released a blog post detailing a series of experiments that the protocol should implement in order to test product demand and market fit. He named the first of these experiments “Andromeda.” With the new flexibility of V3, Andromeda would be a siloed deployment on a brand-new OP stack L2 — Base! This deployment would only support Perps markets and would be collateralized by USDC with the capability for supporting ETH Liquidity Provisioning (LPing) as well. The idea was to create a sandbox to evaluate demand for different collateral types, sensitivity to fee sharing and other incentives, and most of all, demand for perps trading on Base.

There was broad support for this plan from the Spartan Council, and in the process of getting this released, fee sharing proposals with both SNX holders and Integrators were approved for Andromeda. The contracts were deployed to Base mainnet at the beginning of December following a remarkably successful testnet competition earlier in the Fall. Trading and LPing will be open soon with conservative OI caps following the Perps V2 release strategy. Perps V2 went on to facilitate $43 billion in trading volume after its slow start, so we will be closely monitoring Perps V3 on Base and eventually other chains!

Speaking of V3, the Grants Council spent a lot of time this past quarter preparing the Watcher page for V3. About a year ago, they realized that there was a gap in protocol data and they set out to solve that problem. After several iterations, the Watcher Page was eventually born. Publicly available protocol stats are a crucial part of how the protocol markets its success and attracts investors. Since V3 uses a new set of contracts, as it is intended that V2 and V3 run alongside each other for some time, the Grants team oversaw the backend development required to incorporate V3 data in the same place that the community has come to know as the hub for protocol data.

The Ambassadors also had an outstanding quarter helping to secure OP grants for a few protocols in the Synthetix ecosystem including Kwenta, Lyra, and Cannon. OP grants help protocols incentivize activity that drives users to Optimism. The AC also played an instrumental role in getting over 750,000 OP allocated to various ecosystem partners for Retroactive Public Goods Funding (RPGF) in Optimism’s RPGF Round 3.

👉Challenges

Though some headway was made on tokenomics this quarter, there is still no final direction for the value proposition of SNX going forward. As mentioned in the highlights, USDC collateral was finally added as an option, but it was done so in a siloed deployment to avoid competition with SNX staking. The biggest idea that has been floated so far to resolve this is turning off inflation. For those not willing to stake, an inflationary token presents an investment hurdle. Some investors will avoid the project all together, fearing their position will be diluted over time faster than the project adds value. This is as much a technical reality as it is an optics problem for the protocol — once you have been labeled hyperinflationary, it is difficult to shake that tag. Kain, once again, proposed turning off inflation for good this quarter, but it required some iterating to get it over the line and some coordination with some of the other tokenomics SIPs. Specifically, the Buyback and Burn SIP.

As the Andromeda release began to take shape, there were questions about how that trading activity would accrue value to SNX stakers. After all, it was to be a completely siloed deployment with USDC-only LPs. Some members of the Spartan Council voiced support for using some of the new features in V3, such as the rewards manager, to bring those fees directly back to SNX stakers on another chain. The problem is, at this point, it’s still not clear that there will be demand for this product on Base, which is part of the reason why the experiments are being conducted. A more elegant SNX Buyback and Burn mechanism was suggested to bring value to stakers in a more roundabout way. Instead of transferring those fees back to Optimism, SNX will be transferrable to a contract Base that will purchase that SNX with a portion of the fee revenues collected from traders. Since this would directly impact the inflation SIP, there was some coordination required to get both over the line and the Buyback and Burn SIP just barely made it with 5 votes in favor.

The protocol also took a big step this quarter towards addressing the integrator fee share issue. The final split for the Base deployment is set at 20% for Integrators, 40% for SNX stakers and 40% for Base LPs. This was, however, only agreed to for Base, which is still an unknown quantity. While the integrators would have liked to see that fee share proposal extended to all deployments, the ultimate decision was to include it in the Andromeda experiment and use the data from that deployment to inform what the incentives will look like on Optimism, as well as future deployments. In addition to testing demand for Perps on Base, this will also test integrators’ ability to directly drive volume to different deployments.

👉Protocol Stats

Overview of Synthetix Q4 Stats: October 2023 — December 2023

👉Spartan Council

Q4 2023 Spartan Councilors: Adam, Burt Rock, cyberduck, Genefaesius.eth, Jackson, Kain, Millie, ml_sudo

Along with their contribution to the achievement of major Synthetix milestones this epoch, let’s take a minute to review everything else that the Spartan Council was able to achieve in just the last 3 months.

Getting Andromeda over the line was the BIG achievement of Q4. There weren’t as many approved SIPs this quarter, but the impact of the approvals in the previous three months will be felt by the Synthetix community for quite some time. The quarter began with the testnet competition, which provided valuable data to make the necessary improvements to Perps V3 before it was deployed to mainnet. Also in October, there was a minor fee distributor issue that was corrected via the Phecda Release at the end of the month.

In November, the Integrator Fee Share discussion finally came to some agreement. As mentioned earlier, the final cut for integrators will be 20% of the fees generated on Base. All of the volume directed to the Synthetix Perps contracts comes through various integrators, with the vast majority coming through Kwenta. Numerous proposals have been put forward to get a portion of the fees passed on to integrators, and it was this quarter’s Spartan Council that finally reached an agreement.

December was very busy! At the beginning of the month, all of the contracts necessary for the Andromeda release had been deployed to Base mainnet. The Council then did the work to address the remaining glaring issues that may have prevented a successful launch. The first was the LP fee share issue, which was addressed in SIP-345: SNX Buyback and Burn on Base. The second related SIP was one to end inflation in SIP-2043, and the last step was to configure the Andromeda release to enable USDC collateral in SIP-348. Also, during the month, the Council approved several SIPs that went out on the Aludra Release, adding 9 new Perps markets to Perps V2.

👉Grants Council

Q4 2023 Grants Councilors: ALEXANDER, CT, MoneyManDoug, sunny, synthquest

As we highlighted above, the Grants Council had a pretty good quarter of supporting the protocol with various projects and initiatives. So, let’s recap them!

Community Governance Guide

Starting off strong, the Grants Council worked with TerraBellus over several months to bring this informational governance guide. This guide gives an in-depth overview of Synthetix governance and its processes, including:

SIPs/SCCPs/STPs

  • How proposal ideas come about
  • Proposal drafting and submission
  • Proposal presentation
  • Voting and implementation process

Governance

  • Councils and other protocol groups
  • Council mandates
  • Epoch structure

This guide is a great place to start if you’re looking to learn more about Synthetix governance and how to get involved!

Watcher Page

The Watcher Page has been an incredibly useful tool for quite some time now, but the GC has been continuously improving it over the past quarter. Thanks to improvements led by Synthquest, the site now also includes favorites, historical account profit and loss (PnL), trade history on individual account pages, basic staking stats on individual account pages, and daily aggregated views of your favorite traders. The Watcher Page continues to be a valuable source of information, providing all of the stats related to trading data and information.

New feature: favorites
New feature: historical account PnL & trade history on individual account pages
New feature: basic staking stats on individual account pages

Bots

In addition to their regular Synthetix Discord bot maintenance and payments, the Grants Council also helped get a new bot up and running last quarter: the ETH/BTC ratio bot. This bot provides an accurate tracking of the current ETH to BTC ratio every minute via Dexscreener — shout out to EthBoi for his help with this one!

A new update for the Telegram bot was also released, with the help of Nikita. In case you haven’t used it before, the Telegram Bot is a useful tool for monitoring staking. With the new update, it has now undergone a complete overhaul of features, including:

  • A user-friendly and intuitive button menu
  • An enhanced and more flexible notification system
  • Repeatable notifications
  • Customizable auto-updating dashboard

Be sure to check these bots out, and let the GC know your thoughts and feedback in the grants-council Discord channel.

Spartan Synthverse Mint

As we all know by now, the Spartan Synthverse NFT project dropped back in July. The Grants Council worked through the first several phases of this project, and then deployed the free mint at the end of October. This is now in its second stage — the presale for over 7,000 whitelisted users, with a maximum of one NFT per transaction. There are currently fewer than 600 NFTs remaining in this mint, so check it out here while you still can if you’re a whitelisted user! The third and final stage following the presale will be a public free mint where users can buy up to 20 NFTs per transaction — each NFT is free to mint, just pay gas!

Retroactive Grants

Next up, the GC issued several Retroactive grants this past quarter, helping to improve the Synthetix ecosystem by further involving the community. Some of these grants included:

  • Gelato Automated Minting — donoso_eth, gunboats, casual degen (250 SNX each)
  • The new updated Telegram Bot — Nikita k (500 SNX)
  • For open sourcing high-level data analytics and python repos, as well as helping up with general Synthetix data — 0xEvan (750 SNX)

Notifi Integration

Lastly, the Grants Council funded and worked with Core Contributor Matt in October to bring Notifi to the Synthetix ecosystem and help improve the staking experience. Notifi is a leading provider of DeFi alerts that brings real-time notifications (hence the name) to users. With Notifi, you can receive instant alerts about your staking positions, protocol updates, and other essential reminders. These alerts can be enabled directly within the staking UI using the bell icon.

It’s super easy to set this up — just look for the notification bell on the Synthetix Staking UI once you’ve connected your wallet, and click on it to select and activate the alerts of your choice.

Types of alerts you can receive with Notifi include:

  • Synthetix Announcements: Stay updated with important updates and Alpha directly from Synthetix
  • Liquidation Warning: Get alerted when you’re flagged for liquidation
  • Liquidation Confirmation: Get alerted when your position gets liquidated
  • Account Snapshots: Get a summary of your portfolio at the end of each epoch, like you would with a bank statement
  • Claim Reward Reminders: Get reminded when to claim your reward at the end of each epoch
  • Governance Updates: Receive status updates about key governance proposals and outcomes
  • C-Ratio Health Alerts: Get alerted when your C-Ratio goes above or below the threshold you set

And all of these can be received on Discord, Telegram, and email!

What’s next for the Grants Council?

The GC has the following items on their ongoing/upcoming list:

  • Overtime Markets V3 integration
  • Debt Migration UI

These have both been in the works for a while, so we’ll keep you updated on their progress throughout the next quarter!

👉 Ambassador Council

Q4 2023 Ambassador Councilors: GUNBOATs, Kevin, mastermojo, Matt, Westie

In Quarter 4, the Ambassadors continued to promote Synthetix through their governance participation, partnerships, public goods involvement and more. The Council had three main focuses during Q4:

  • DeFi Governance: Optimism Governance (which involved Token House and Citizen House) and other DeFi DAOs (such as Arbitrum, Gearbox, Safe, Lyra, Aave, etc.)
  • Integrator support: Current and future — guiding Core Contributors, integrators, and more through the grant process and helping secure valuable funds
  • Marketing support: Spartan Spaces and Integrator Spotlights from the Ambassador twitter account

Now let’s get into a more detailed list of what the Ambassador Council accomplished this past quarter:

✅ Governance

1. General Governance

The Ambassadors make it abundantly clear that all of their voting is completely transparent. Their voting activity can be followed through their wallets on Snapshot and Tally using these links:

The Council has also been increasing their online engagement this past quarter, including introducing two new Twitter series:

2. Optimism Governance

The Synthetix Ambassadors remain a major voice in Optimism Governance, and their respective OP Governance Forum Activities can be found using these links:

It’s important to note that the Optimism Governance forum is only one area of activity. Most activity at this point for OP Grants lives on their Charmverse & Discord. Highlights for the year in this area include:

  • Kwenta and Lyra were the two most recent projects guided through the OP grants program
  • Kwenta received 200K OP (roughly ~$680,000)
  • Lyra received 200K OP (roughly ~$680,000)
  • Cannon received a 50k OP Grant
  • The Ambassadors expect to support many ecosystem partners in the upcoming round, including Polynomial, Rage Trade, Synthetix IPFS node, Synthetix, etc.
  • As of right now, OP Grants cannot be used on Base, but the Council is working with delegates/the OP foundation to move in that direction

3. Retroactive Public Goods Funding (RPFG)

As we just discussed, the Ambassadors are very involved in Optimism governance. They have also recently been more involved in OP’s RPGF Round 3, and they created a Synthetix Ecosystem Public Goods List back in November. This list outlined Synthetix Ecosystem projects that were seeking Optimism RPGF, and consolidated them for OP badgeholders. The projects on this list have put building first and have significantly contributed to the growth of the Synthetix ecosystem, as well as Optimism as a whole, by onboarding developers, projects, LPs, and traders. Suggested amounts of OP were allocated by the Ambassadors in the list based on positive impact on the Optimism ecosystem.

ALL of these projects on the list met quorum for RPGF in this round! The total pool for Round 3 was 30 million OP (which translates to around $100 million), and the Synthetix Ecosystem secured 767,165 OP in RPGF (almost $3 million), which is a HUGE win for the protocol and ecosystem! Below is the total allocation breakdown:

4. Partner Support

Current Partners

  •  The Ambassadors have been implementing a trial this past quarter where they check in on Partners and work with them on any feedback they have, any support that they request, etc.

Future Partners

  • The Council plans to focus on Perps V3 and Synthetix V3 in the next epoch when it comes to future partnerships. They are currently in talks with future partners to build on top of Synthetix Perps, either as a frontend or otherwise, and they will be continuing these efforts into the new quarter.

✅ Spartan Spaces

Spartan Spaces continued to serve as important community marketing tools this quarter, with the Ambassadors hosting other DAOs on behalf of Synthetix.

1. EigenLayer (Length: 1 hour)

2. Valio & Kwenta (Length: 45 minutes)

3. Infinex & Lit Protocol (Length: 1 hour)

4. Andromeda on Base Release with CCs (Length: 50 minutes)

✅ Synthetix Governance Proposals

Lastly, members of the Ambassador Council also proposed several SIPs in Q4, including:

1. SIP-338: Deploy SNX Token on Base via Base Bridge (author: Matt)

2. SIP-2035: List TIA on Synthetix Perps (author: GUNBOATs)

3. SIP-2037: List IMX and TRB on Synthetix Perps (author: GUNBOATs)

4. SIP-2039: List MEME on Synthetix Perps (author: GUNBOATs)

5. SIP-2040: List ANKR, FET, GRT on Synthetix Perps (author: GUNBOATs)

6. SIP-2041: List PYTH on Synthetix Perps (author: GUNBOATs)

7. SIP-2042: List BONK on Synthetix Perps (author: GUNBOATs)

8. SIP-2044: List ORDI on Synthetix Perps (author: GUNBOATs)

  • Vote still pending

9. SIP-2045: List JITO on Synthetix Perps (author: GUNBOATs)

  • Vote still pending

Shout out GUNBOATs!

What’s next for the Ambassadors?

In the next quarter, the Ambassador Council is aiming to help guide additional projects in the Synthetix ecosystem on the Optimism and Arbitrum Grant processes. In addition, they intend to continue:

  • Pursuing further growth strategies for Perps and Synthetix V3
  • Exploring opportunities to scale synth supply
  • Increasing presence in Optimism governance
  • Expanding influence in DeFi & DeFi Governance

👉Best Memes from Q4

The quarter of COURSE wasn’t without humor, so here are our favorite memes from the quarter: