The Tiaki Release - Improved Atomic Swaps
The Tiaki is currently ongoing and will be done within the next few hours; the following SIPs will be implemented:
- SIP-258: Trade Directionality In Pricing of Atomic Swaps: Improves pricing of Atomic Swaps by integrating directionality into trading
What are Atomic Swaps? (aka: Cross Asset Swaps)
Atomic Swaps are a new exchange function allowing users to atomically exchange assets with a reasonable fee by pricing synth exchanges via a combination of Chainlink and DEX oracles (Uniswap V3) This helps to enable seamless trading between synthetic assets like sETH, sUSD, sBTC, etc. A unique property of this is that for large trade sizes, it dramatically reduces the overall cost for traders due to slippage.
Why are Atomic Swaps Important?
Synthetix's trading volume has vastly increased in recent weeks due to 1inch integrating with Atomic Swaps. 1inch traders gain access to another path of liquidity, with low slippage and fees, and SNX stakers receive trading fees from up to hundreds of millions in trading volume per day.
These contracts are processing hundreds of millions in daily volume while also generating up to $1M in daily fees for SNX stakers and Curve LPs.
What is SIP-258 changing?
Currently, the function used to compute an atomic price for
sBTCis the worse between
chainlinkprice and the
The intention of the atomic swaps is to offer the worse fill between all 3 price combinations; this protects stakers from frontrunning while still providing a valuable liquidity source for aggregators to tap into. This change would allow the protocol to lower fees to the point where we retain a competitive advantage over other amm exchanges.
Further, this change incorporates the directionality of the trade into the execution and allows Synthetix to offer competitive pricing for longer periods.
This release is called Tiaki, which like all releases, is named after a star (in order of visual magnitude). If you've got any comments or questions about the release, please join the conversation in Discord.