Synthetix Quarterly Report

Quarterly Report for Synthetix, Quarter 4 of 2024: October — December.

👉Q4 Highlights

⭐ Spartan Council/CCs: Referendum, Protocol Acquisitions

Synthetix has made remarkable progress over the past few months, reinforcing its position as a leader in the DeFi space. Key advancements, including the launch of multi-collateral Perps on Arbitrum, strategic acquisitions, and governance enhancements, highlight the protocol’s commitment to innovation, scalability, and delivering a superior user experience. These achievements underscore Synthetix’s adaptability and dedication to addressing the evolving needs of the market. Let’s take a closer look at some standout highlights from this transformative period.

One of the most significant developments came at the end of the previous quarter with the introduction of a referendum designed to reshape Synthetix’s governance and operational strategy. By the end of November, the newly formed council had approved two major acquisitions: Kwenta and TLX. These decisions aimed to unify the ecosystem under a single governance structure, creating a direct line of accountability between Synthetix leadership and its flagship offering — Perps. While the protocol remains committed to its original vision of delivering an open-source liquidity layer to DeFi, these acquisitions signal a strategic shift towards tighter integration and enhanced oversight of its key products.

The launch of multi-collateral Perps represents another major milestone for Synthetix, significantly expanding its trading capabilities. This feature allows traders to use a variety of assets, including WETH, tBTC, USDx, and Ethena’s USDe, as collateral, providing greater flexibility and access to leverage. To drive adoption, the rollout was accompanied by trading incentives and increased revenue-sharing opportunities for liquidity providers, resulting in a substantial increase in trading volume in December. This long-awaited feature has positioned Synthetix as a stronger competitor in the on-chain derivatives market.

Additionally, Synthetix’s inclusion in the Coinbase 50 Index and, briefly, in the Grayscale DeFi Fund underscores its growing prominence in the DeFi ecosystem. Being listed on the Coinbase 50 Index places Synthetix among the most reputable assets available on one of the world’s largest cryptocurrency exchanges, enhancing its accessibility and visibility to a global audience. Similarly, its recognition by the Grayscale DeFi Fund highlights Synthetix’s relevance and value within the industry as a top-tier project driving innovation in decentralized finance.

👉Challenges

While the past few months have been marked by significant progress for Synthetix, they have not been without obstacles. These challenges have highlighted the complexities of balancing innovation with operational execution. From governance restructuring to the technical demands of the V3 migration, as well as maintaining transparency and addressing liquidity needs, the protocol has encountered hurdles that provide valuable lessons for its future trajectory. Let’s look back at some of the key challenges from the quarter as we wrap up 2024.

Governance Growing Pains

There were two big initial promises in the Synthetix Reboot referendum that garnered overwhelming community support. The first was a promise to revitalize community engagement and bring back some of that early Synthetix spark, and the second was delivery of a Synthetix 2025 roadmap by the end of 2024. The quarter began with strong momentum, as over 100 million SNX votes ratified the new governance structure outlined in SR-2. Governance meetings and town halls initially saw robust attendance, signaling a desire to build on this momentum. However, over time the consistency of communication faltered. While significant work was happening behind the scenes, including two major acquisitions, the information pipeline from the Spartan Council to the community slowed, leaving gaps in transparency and engagement.

The Roadmap 2025 Challenge

One of the referendum’s key early deliverables, the Synthetix 2025 roadmap, is yet to be fully fleshed out. In September, before SR-2 even passed, the incoming council shared a blog post outlining strategic objectives for 2025. While the outlined objectives are ambitious, the lack of specifics has made it difficult to track progress or hold the council accountable (Aave’s recently released roadmap is a good example of what to aim for).

Funding Strategic Acquisitions

The acquisitions of Kwenta and TLX sparked debates about how to fund these transactions. Both were executed as token-for-token swaps, but questions arose about whether to use treasury SNX or mint new tokens, which would increase the total supply. Despite previous councils opting to end inflationary tokenomics in order to improve optics and attract passive investors, the current council decided to mint just over 12 million new SNX to fund these purchases, resulting in a 4% supply inflation. This decision was not taken lightly; the rationale was that the acquisitions would generate future growth by enabling Synthetix to directly manage the user experience. While the community has largely supported the strategic vision behind these moves, the reintroduction of inflation sparked some discussion about balancing short-term trade-offs with long-term gains.

By addressing these governance, transparency, and funding challenges, Synthetix has an opportunity to refine its processes and strengthen its position as a leader in decentralized finance. These lessons will be critical as the protocol navigates its next phase of growth.

👉Protocol Stats

Overview of Synthetix Q4 Stats: October 2024 — December 2024.

👉Spartan Council

Q4 2024 Spartan Councilors: Benjamin Celermajer (Fenway), Cavalier, coKaiynne, Jordan Momtazi, Kain Warwick, SpartanGlory

Despite a few challenges, the Spartan Council was still chipping away at their new vision for Synthetix during Q4. So let’s review everything they were able to accomplish over the course of the quarter.

In October, the referendum to change the Synthetix DAO structure and operations was implemented with the new Council members taking their seats. One of the biggest changes that SR-2 brought was the consolidation of the 3 Councils (Spartan, Treasury, and Ambassador) into 1 Spartan Council made up of 7 seats with equal voting power — 4 elected and 3 hired Core Contributors (CCs). 3 of the 4 elected Council members were made into Advisory Seats, filled by Kain Warwick, Jordan Momtazi, and SpartanGlory. And the last elected member was coKaiynne, who fills the Treasury Seat. The remaining CC seats were filled by Fenway (Strategy) and Cavalier (Operations), with the Technical CC seat still TBD.

SR-2 boasted future changes such as:

Core working groups
SNX token redesign
Operationalized SNAX Chain
Renewed work on Synth Teleporters
Increased focus on business development and marketing
Perps V3 feature expansion & V2X deprecation
V3 Perp multichain proliferation

The implementation plan for the referendum began to take place over the course of Q4, with improvements designed to make SNX leaner, more aligned, more focused and consistent in both the short and the long term.

Later in the month, a proposal was published for Synthetix to acquire Kwenta, our leading DEX by volume. The motive behind the acquisition was to improve Synthetix branding and market positioning, align strategic motivations, and merge the communities. This ultimately passed after being voted on by both protocols, and was put into effect in November.

The implementation of the Kwenta acquisition later led to the frontend site being rebranded to the Synthetix Exchange. The site was relaunched with a killer UI, deep liquidity, low fees, and a fresh look, solidifying it as the flagship frontend for decentralized Perps. Gasless 1-click trading was also brought to Base, removing the requirement of signing multiple transactions.

Next, a meme competition was announced in late November where anyone could create a meme related to Synthetix and be entered to win 100 million $PEPE for 1st place or 50 million $PEPE for 2nd place. CryptoNaz came in first with their War Dogs format meme, and jojaysu placed second with their Fudder Fridge meme. Hakari, Ethboi and ilbarri were also awarded 100 SNX each from the Guardians for their entries. This competition brought a lot of interest back to the Synthetix Discord!

Shortly after the meme comp, another acquisition proposal was submitted to the Spartan Council for consideration. It was proposed that Synthetix acquire TLX, a leveraged token protocol powered exclusively by the Synthetix V2X Perps platform on Optimism, and launch “Synthetix Vaults” as the newest product line. This proposal was later approved in December in an exciting first step towards producing native vaults that leverage the composability of Synthetix and give users frictionless access to high-quality structured products.

As the last month of the quarter rolled in, Synthetix was just ramping up with several more exciting ventures. Decembrrrr Base LP incentives was announced to start the month off strong — this was a four-week program to boost liquidity during the busy perps trading season. LPs were able to unwrap new SNX and USDC rewards each week while earning boosted trading fees. In addition to the incentive program, Synthetix also introduced two key changes to improve the LP experience and increase the attractiveness of passive stablecoins entering the Synthetix ecosystem:

More Fees: The revenue share from V3 trading increased to 60%, up from the previous 40%. This represented a 50% increase, ensuring liquidity providers were being better rewarded.
Juicier Yields: Synthetix also added stataUSDC as an eligible asset for liquidity provision. StataUSDC is a static, non-rebasing version of Aave’s aUSDC token.

Next, Mobile Synthetix Perps was announced thanks to Mass, one of the protocol’s newest integrators. Mass is the all-in-one DeFi app for iOS & Android, designed to simplify decentralized trading and asset management, making Synthetix Perps V3 more accessible than ever. And it was also announced that the community should be on the lookout for a trading competition coming in January with 25,000 SNX & 25,000 OP in prizes.

Lastly, to end the quarter with a bang, the Synthetix Website got a fresh new look and an expanded product lineup! Everything you need is now in one place — Synthetix Exchange, liquidity opportunities, token leveraging, governance, stats, and more. This cleaner, more intuitive interface brings all the Synthetix products and sites together into one cohesive page.

👉Best Memes from Q4

With the meme competition this quarter, there was some extra humor in the Synthetix Discord, so here are our favorite memes: