Synthetix Quarterly Report — Q3 2024

Quarterly Report for Synthetix, Quarter 3 of 2024: July — September.

👉Q3 Highlights

⭐ Spartan Council/CCs: V3 Migration, SNAX Chain, & Referendum⭐ Ambassador Council: Ecosystem Grants

Over the previous few months, the Synthetix Protocol has undergone vital developments and confronted a spread of challenges because it continues to develop and evolve. On this report, we are going to discover a number of the key highlights, such because the profitable migration to V3, new market launches, and governance updates. We’ll additionally dive into the challenges which have surfaced, notably round liquidity, integration delays, and governance complexities. Let’s take a better take a look at each the achievements and obstacles throughout this transformative interval.

The migration to Synthetix V3 has been a serious focus over the previous few months, representing a crucial shift in how the protocol operates. This transition required an unimaginable quantity of technical execution, and the primary section started with the migration of the Synthetix Treasury. This migration required robust coordination between Core Contributors, auditors, and the Spartan Council, permitting migration to lastly open to all stakers in the direction of the top of the quarter. Put up migration, the Treasury is now backing debt on V2X and V3 concurrently, which paves the best way for the launch of the much-anticipated L1 Perp providing.

L1 Perps lastly made it to testnet this previous quarter and is anticipated to be reside on mainnet by the center of October. Although the progress was slower than initially anticipated, the product will add extra avenues for buying and selling on-chain Perps and can deepen the buying and selling exercise supported by SNX collateral. One of many key challenges was making ready the front-end interfaces and coordinating with integrators, like Kwenta, to assist Perps buying and selling and Vault performance.

One other vital milestone this quarter was the introduction of SNAX Chain, which was designed to function the first hub for Synthetix V3 governance. Constructed on the OP Stack, SNAX Chain allows cross-chain messaging and decentralized governance, permitting voting to happen seamlessly throughout varied networks. The event of SNAX Chain was pushed by the necessity to deal with limitations within the present governance system, notably with election mechanics that have been restricted to Optimism Mainnet. This has been essential for bettering election programs and aligning governance with the wants of the protocol. SNAX Chain formally hit mainnet simply in time to host this previous epoch’s elections in September.

Maybe probably the most vital growth of the quarter got here simply days after the brand new Spartan Council was elected when Fenway, a long-time Synthetix group member and newly elected Councilor, proposed a referendum mechanism in SIP-408. The proposal represents a big shift in the direction of a extra direct type of governance on delicate strategic points inside the protocol. This mechanism permits for particular modifications or upgrades to be put to a token holder vote, moderately than being solely selected by the Spartan Council.

Below the proposal, a quorum of 75 million SNX can be required for a vote to be legitimate, with 67% of voters wanted to approve the proposal for it to move. Shortly after the proposal handed in a unanimous meta-governance vote, a referendum was proposed, and subsequently handed, to utterly reshape the governance panorama of the protocol. The transition is at present in progress however in brief, the Ambassador and Treasury Councils shall be deprecated and a brand new Spartan Council shall be created. This new Council shall be comprised of 4 elected members who will then appoint 3 Core Contributors to make sure imaginative and prescient continuity. Take a look at our weblog submit right here, the place we reviewed the total referendum in depth.

👉Challenges

This previous quarter was definitely not with out challenges and, to some extent, these challenges are what motivated the governance overhaul. In SR-2, the Synthetix Reboot referendum, Fenway highlighted a number of points of the protocol that gave the impression to be hindering development, together with delays and lack of accountability or route.

This has been most obvious within the constantly delayed launch of the L1 Perp product. In 2023, Ethena approached Synthetix with a request to create a bespoke Perps product on L1. Beforehand, the protocol steered away from providing L1 Perps, as a result of excessive gasoline charges on Ethereum. Ethena, nevertheless, was in search of extra alternatives to assist the yield on their stablecoin and was largely involved with deep perps liquidity in addition to deep liquidity on staked ETH. This was anticipated to be prepared originally of this yr however a number of conditions, together with V3 migration and frontend integration, precipitated vital delay.

These delays additionally highlighted some accountability considerations inside the protocol. Whereas the chase for ever extra decentralization has supplied some flexibility to the protocol, fragmented decision-making buildings have led to misaligned priorities and inefficient workflows. This was placed on full show with the failure to ship multi-collateral Perps to Arbitrum within the agreed upon timeframe. This pressured the protocol to return half of the initially awarded 2 million ARB grant to deploy Perps V3 to Arbitrum, which might have been used to incentivize buying and selling exercise as soon as the product launched with multi-collateral margin on the finish of July.

One of many options proposed in the direction of the top of final yr to alleviate a few of these points was a printed roadmap that may function a north star for the group and stakeholders to carry Core Contributors and elected councilors accountable to a plan. The protocol struggled to ship on this promise for a 2024 roadmap and it was one other obtrusive concern highlighted in SR-2.

Apart from the extra operational considerations, curiosity in Synthetix Perps appears to have light within the final three months, even because the Arbitrum deployment went reside and the protocol positioned itself for the brand new L1 Perp. Whereas a part of this can be on account of broader market headwinds, TVL on Arbitrum and Base have additionally dropped to only over $10 million from a excessive of round $45 million. Mixed each day buying and selling quantity throughout the deployments has been underneath $10 million for the reason that buying and selling incentive packages dried up. The Arbitrum and Base deployments symbolize two of 5 experiments Kain proposed on the finish of final yr to evaluate curiosity in buying and selling Synthetix Perps and delegating non-SNX collateral to again that buying and selling exercise on networks apart from Optimism. Whereas there was some early curiosity within the Base deployment, momentum appeared to sluggish as soon as financial incentives ramped down.

👉Protocol Stats

Overview of Synthetix Q3 Stats: July 2024 — September 2024.

👉Spartan Council

Q3 2024 Spartan Councilors: Cavalier, Cyberduck, Fifa, Jackson, Millie, ml_sudo, Snaxfrens, and Snxmaximalists

Challenges apart, the Spartan Council nonetheless contributed to a number of Synthetix milestones this previous quarter, so let’s take a minute to evaluate all the pieces that the council was capable of obtain within the final 3 months.

In July, Synthetix introduced that it was shifting ahead with a governance proposal to introduce a brand new pool on Base — Degenthetix. This initiative launched a specialised market with a separate debt pool for long-tail belongings, providing a sandbox setting for merchants to experiment with Perps buying and selling of extra unstable listings. This revolutionary transfer highlights Synthetix’s dedication to increasing its buying and selling capabilities and catering to extra area of interest markets. The Spartan Council additionally gave the inexperienced mild to deliver Chainlink Oracles again into the combination. Perps V3 was designed to be oracle agnostic and, although Chainlink Information Streams are costlier, SIP-398 permits them for use on the discretion of integrators.

The largest achievement of the quarter was lastly getting the V3 migration over the road. Whereas V3 has been deployed on different networks for many of the yr, lastly delivering the SNX migration entrance finish will permit stakers, who have been beforehand solely backing V2X Perps, emigrate their debt positions to V3 the place they may have the ability to collateralize buying and selling exercise on Ethereum Mainnet and Optimism (and share within the charges for doing so). The council additionally determined to solidify the payment sharing mannequin that was agreed upon for the Base deployment throughout all chains that Synthetix is deployed on in SIP-385.

After some preliminary forwards and backwards in the course of the first presentation to launch SNAX Chain, the elections have been performed this previous epoch for the primary time on the now central governance hub for the protocol. A few of the preliminary objections have been largely directed in the direction of the extra complicated implementations initially recommended — resembling deploying Perps to SNAX Chain. The council did find yourself agreeing that centralizing the election infrastructure might show useful for the protocol.

And eventually, although it was a brand new council, SIP-408 to introduce the referendum mechanism was handed unanimously on the finish of the quarter. This modification hopefully marks a step in the direction of extra community-driven governance, empowering SNX holders to have a better affect within the strategic route of the protocol and encourage broad participation.

👉Ambassador Council

Q3 2024 Ambassador Councilors: Dsacks, GUNBOATs, MasterMojo, Matt, Westie

Whereas the lately handed referendum will deprecate the function of the Ambassador Council, the Ambassadors nonetheless had a productive quarter selling the pursuits of the protocol by way of governance participation, varied DAO collaborations, and group assist. So let’s evaluate what the Council achieved in Q3:

✅ Retroactive Funding

In July, the Council assisted ecosystem companions in making use of for Optimism’s Retroactive Funding Spherical 4 and, because of this, a number of tasks have been awarded OP for retroactive funding! The Optimism Collective allotted 10M $OP to reward Superchain builders on this spherical, and a complete of 573,000 $OP was distributed to the next tasks that obtained help from the Ambassadors:

Synthetix — 256k $OPKwenta — 167k $OPThales — 54.8k $OPdHEDGE/Toros — 10.4k $OPPolynomial — 13.9k $OPTLX — 8.2k $OPCopin — 4.9k $OPKeng Lernitas — 11.79k $OPPyth Community — 1.09k $OP

Matt, MasterMojo, and Westie are Optimism Badgeholders, they usually reviewed and took part in Spherical 4 of Optimism Retroactive Funding. Spherical 5 is at present happening now.

✅ OP Grants

Spherical 6 of Optimism Grants is at present ongoing and can final till the top of November — the listing of Mission Requests (Grants) might be discovered right here. The Ambassadors contributed to a couple OP Grants this quarter, together with:

Creating Optimism Mission Requests:TLX — 50,000 $OPTLX is a leveraged tokens protocol that permits customers to mint and redeem leveraged tokens for over 50 belongings with as much as 20x leverage. This grant was utilized for to assist improve consumer interplay on TLX by distributing OP rewards to customers who purchase, maintain, and promote leveraged tokens.Strands Sponsored Audit — 73,000 $OPStrands Finance, nonetheless in alpha, is a world Fintech conglomerate that makes use of good contracts and transactional gateways to develop conventional and decentralized institutional instruments.This audit unlocks vital alternatives for Strands, and can encourage extra customers and builders to have interaction with Strands, contributing to a safer and extra revolutionary DeFi setting on Optimism.

✅ Governance

1. Basic Governance

The Ambassadors at all times need to be certain that they’re staying clear with their voting. As at all times, their exercise might be adopted by way of their wallets on Snapshot and Tally.

Voting Exercise might be tracked utilizing these hyperlinks:

2. Optimism Governance Discussion board Exercise:

The Ambassadors OP Voting Energy noticed an general improve this previous quarter:

The AC additionally remained a serious voice in Optimism Governance general, and their respective OP Governance Discussion board Actions might be discovered utilizing these hyperlinks:

3. X/Twitter Engagement

The Council additionally posts fast governance updates on X, and posted one this quarter in August. Of their governance replace the Ambassadors introduced, amongst different issues, that they ran within the Kwenta elections and have been voted in by the group to be on the Kwenta Council.

4. Accomplice Assist

Present Companions

This quarter, the Ambassadors continued to test in on companions and work with them on any suggestions, assist requests, DeFi grant help/steering, and so forth.

5. Spartan Areas

Whereas not technically a Spartan House, Matt joined a name hosted by CyberDEX, which is a decentralized perpetual swaps buying and selling platform performing on Optimism and powered by Synthetix.

What’s subsequent for the Ambassadors?

As beforehand talked about, SR-2 will deprecate the Ambassador Council. Nevertheless, it was broadly agreed upon in the course of the City Corridor that the function of the Ambassadors is extraordinarily very important. Going ahead, these roles will doubtless be employed, full-time Core Contributor positions. Keep tuned for extra updates from SNXweave as this develops.