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The Caph Release - SIP 2004/2005

The Caph Release - SIP 2004/2005

Today, April 5th, the Caph release will begin. There will be no downtime during the release. The release includes two SIPs aimed at improving the integration experience for Synthetix Perps frontends and trading experience for end users and incorporating slippage guards on liquidation transactions.

  • SIP-2004: Better DelayedOrder Integration/Trading Experience.

This SIP addresses several feedback points and suggestions from integrators, making it easier for future integration and usage. The proposed changes include introducing new functions for closing delayed orders, allowing non-liquidatable positions to be reduced/closed, removing the commitment fee required at order submission, making liquidationBufferRatio market-specific, and updating the price protection design.

  • SIP-2005: Incorporating slippage guards on liquidation transactions.

This SIP proposes a new perps liquidation mechanism that consists of flagging and liquidation (spontaneous and forced). Flagging is triggered when an account is eligible for liquidation, and liquidation occurs based on specific conditions. This mechanism aims to prevent opportunistic ordering of transactions surrounding liquidations.

  1. Flagging: An account is eligible for flagging as per the _canLiquidate function. Keepers can trigger a flag, resulting in the position being staged for liquidation. At this point, the account cannot interact with its position until liquidation is finalized, and any pending exchange order is removed.
  2. Spontaneous Liquidation: Flagged accounts can be spontaneously liquidated if the price impact of the liquidation is below a maxLiquidationDelta and the prevailing premium or discount of the market is below maxPD. Upon successful liquidation, the keeper triggering the transaction receives a configurable sUSD reward, the position is closed, and the user can interact with the market by depositing sUSD and opening a new position.
  3. Forced Liquidation: The protocol can endorse certain addresses, allowing them to force a liquidation on flagged accounts, bypassing both the maxLiquidationDelta and maxPD checks. Endorsed keepers would incorporate off-chain logic to prevent execution of liquidations for market skew outliers. This allows for MEV-resistant liquidations while purely on-chain logic is developed further. It is important to mention that most liquidated accounts are expected to be liquidated spontaneously, but for expedient rollout and initial safety precaution, liquidator endorsement would be used.

Please read more about the SIP 2005 liquidation mechanism design here.

Do you have any questions?

If you have any comments or questions regarding the Caph release, please join the discussion on Discord. This release is named Caph, like all releases, after a star, listed in order of visual magnitude (source).