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, significantly 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 significant focus over the previous few months, representing a vital 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 sturdy coordination between Core Contributors, auditors, and the Spartan Council, permitting migration to lastly open to all stakers in direction of the tip of the quarter. Publish migration, the Treasury is now backing debt on V2X and V3 concurrently, which paves the way in which 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 getting 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 permits cross-chain messaging and decentralized governance, permitting voting to happen seamlessly throughout numerous networks. The event of SNAX Chain was pushed by the necessity to handle limitations within the present governance system, significantly with election mechanics that have been restricted to Optimism Mainnet. This has been essential for enhancing election methods 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 improvement 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 major shift in direction of a extra direct type of governance on delicate strategic points throughout the protocol. This mechanism permits for particular adjustments or upgrades to be put to a token holder vote, somewhat than being completely 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 go. Shortly after the proposal handed in a unanimous meta-governance vote, a referendum was proposed, and subsequently handed, to fully reshape the governance panorama of the protocol. The transition is presently in progress however in brief, the Ambassador and Treasury Councils will likely be deprecated and a brand new Spartan Council will likely be created. This new Council will likely be comprised of 4 elected members who will then appoint 3 Core Contributors to make sure imaginative and prescient continuity. Try our weblog publish right here, the place we reviewed the total referendum in depth.
👉Challenges
This previous quarter was actually not with out challenges and, to a point, these challenges are what motivated the governance overhaul. In SR-2, the Synthetix Reboot referendum, Fenway highlighted a number of elements of the protocol that seemed to be hindering progress, together with delays and lack of accountability or route.
This has been most obvious within the persistently 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, nonetheless, was looking for 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 initially of this yr however a number of conditions, together with V3 migration and frontend integration, triggered vital delay.
These delays additionally highlighted some accountability issues throughout the protocol. Whereas the chase for ever extra decentralization has supplied some flexibility to the protocol, fragmented decision-making constructions 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 direction of the tip of final yr to alleviate a few of these points was a broadcast roadmap that will 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 difficulty highlighted in SR-2.
Except for the extra operational issues, 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 because of broader market headwinds, TVL on Arbitrum and Base have additionally dropped to simply over $10 million from a excessive of round $45 million. Mixed every day buying and selling quantity throughout the deployments has been beneath $10 million for the reason that buying and selling incentive applications dried up. The Arbitrum and Base deployments characterize 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 aside from Optimism. Whereas there was some early curiosity within the Base deployment, momentum appeared to gradual 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 assessment all the pieces that the council was capable of obtain within the final 3 months.
In July, Synthetix introduced that it was transferring 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 atmosphere for merchants to experiment with Perps buying and selling of extra risky listings. This modern 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 gentle to convey Chainlink Oracles again into the combo. 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 most important achievement of the quarter was lastly getting the V3 migration over the road. Whereas V3 has been deployed on different networks for a lot 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’ll be capable 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 backwards and forwards in the course of the first presentation to launch SNAX Chain, the elections have been carried out this previous epoch for the primary time on the now central governance hub for the protocol. Among the preliminary objections have been largely directed in direction of the extra complicated implementations initially prompt — comparable to deploying Perps to SNAX Chain. The council did find yourself agreeing that centralizing the election infrastructure could show useful for the protocol.
And at last, 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 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 just 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 means of governance participation, numerous DAO collaborations, and group assist. So let’s assessment what the Council completed in Q3:
✅ Retroactive Funding
In July, the Council assisted ecosystem companions in making use of for Optimism’s Retroactive Funding Spherical 4 and, in consequence, 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, and so they reviewed and took part in Spherical 4 of Optimism Retroactive Funding. Spherical 5 is presently happening now.
✅ OP Grants
Spherical 6 of Optimism Grants is presently ongoing and can final till the tip of November — the listing of Mission Requests (Grants) may 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 person 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 worldwide Fintech conglomerate that makes use of sensible 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 modern DeFi atmosphere on Optimism.
✅ Governance
1. Normal Governance
The Ambassadors all the time wish to be sure that they’re staying clear with their voting. As all the time, their exercise may be adopted by means of their wallets on Snapshot and Tally.
Voting Exercise may be tracked utilizing these hyperlinks:
2. Optimism Governance Discussion board Exercise:
The Ambassadors OP Voting Energy noticed an total improve this previous quarter:
The AC additionally remained a significant voice in Optimism Governance total, and their respective OP Governance Discussion board Actions may 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. Companion Help
Present Companions
This quarter, the Ambassadors continued to test in on companions and work with them on any suggestions, assist requests, DeFi grant help/steerage, 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. Nonetheless, it was broadly agreed upon in the course of the City Corridor that the function of the Ambassadors is extraordinarily important. Going ahead, these roles will doubtless be employed, full-time Core Contributor positions. Keep tuned for extra updates from SNXweave as this develops.
👉Greatest Memes from Q3
The quarter after all wasn’t with out humor, so listed below are our favourite memes:
