February 8, 2022
The following post contains a recap of news, projects, and important updates from the Spartan Council and Core Contributors, as well as the Grants Council and Ambassador Council from last week.
Spartan Council and SIP updates
Present at the February 1, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, BigPenny, bojan, jj, Kain, KALEB, redmarglar, TerraBellus
Core Contributors: Bex, Cavalier, Rafa
Alsephina has gone out! 🎉 This release included three SIPs:
- SIP-184: Dynamic Exchange Fees — Adds a dynamic fee, in addition to base exchange fees, that responds to and neutralizes oracle frontrunning opportunities.
- SIP-193: Refactor SystemSettings into Library to reduce contract size — Refactors and deploys a new library for SystemSettings to reduce contract size.
- SIP-196: Remove Centralized Oracle — Removes all centralized oracle code from Synthetix contracts and testing.
SCCP-163 to update Optimism Chainlink oracles to off chain reporting (OCR) was possibly going to be on Alsephina, but will now be going out on a different release. All new assets rely on off chain reporting, as opposed to the older assets which are currently still using the legacy flux aggregator feeds. One of these new assets will be the SOL synth, proposed in SIP-199, which was also originally scheduled to go out on Alsephina. However given that the SOL price feed isn’t ready yet, it will go out in a different release along with SCCP-163.
In case you missed it, there was an impromptu presentation on Friday of SIP-209 to update the current exchanger for backwards compatibility. The Exchanger.feeRateForExchange function signature change (as a result of the Alsephina release) caused a broken integration with Lyra, so they quickly called for the implementation of this SIP to re-include the older function signature in order to remedy this situation. This SIP was implemented on its own release yesterday (Mirzam) after receiving all 8 votes in its favor.
There were also three other SIP presentations last week:
SIP-202: Target Staking Ratio
- This was presented again, by Kain, with some additional details that were clarified since the last presentation. This SIP introduces a target staking ratio that is incentivized through inflation. It will track the staking ratio within the network and modify the inflation rate weekly to ensure that this target ratio is achieved. Basically, it allows the target ratio to be adjusted
- Staking ratio = % of SNX collateral staked / total SNX collateral
- This SIP sets the target staking ratio at 85%, and will adjust the inflation weekly up or down depending on whether the staking ratio is below or above 85%.
- There was a concern about the potential for snapshotting at higher inflation rates. SCCP-164, however, introduces a 7 day burn lock which should kill snapshotting because it would cost snapshotters the next set of rewards.
SIP-198: Atomic Exchange at Pure Chainlink Price
- Presented by Kaleb, this SIP will update the existing atomic exchange functionality to allow trading at the pure Chainlink price (for certain synths) and remove the restriction on the source or destination currencies being sUSD.
- Kaleb detailed two important limitations on atomic exchanges: 1) In order to add a synth, there needs to be an equivalent Uniswap pool, and 2) The ones that are available have poor liquidity, making the pricing unreliable.
- This means it is impossible to configure some forex synths due to the lack of an equivalent dex token that has deep persistent liquidity.
- This SIP therefore proposes that certain synths be traded exclusively at the Chainlink price.
SIP-205: Add Five Synths on Optimism with shorting
- Presented by Afif, this SIP will add Avalanche, Aave, Uniswap, Polygon, and Euro as new synths on Optimism.
- He explained that liquidity has been thoroughly examined to ensure that these five synths are suitable as new additions.
- The vote for this SIP is open.
And speaking of SIP presentations, Futures was supposed to be presented today, but is being postponed to later in the week (due to a scheduling conflict). This has been a long time coming, so be sure to tune in. Since SIP-184 has gone out on Alsephina, it can now be incorporated into Futures. This was the last piece that the auditors were waiting for, so everything is finally coming together to hopefully have Futures ready for ETHDenver.
In addition to Futures, there are also several other important SIPs coming our way. SIP-148 to upgrade the liquidation mechanism is being worked on by Core Contributor Mark. As a reminder, this SIP proposes a modification to the existing liquidation mechanism, with the purpose of reducing the likelihood of cascading liquidations that might lead to the destabilization of the protocol. The Debt Pool Synthesis, as well as Debt Shares, are also both being worked on diligently. Debt Shares is a dependency for both the upgraded liquidation mechanism and the debt pool synthesis, so it is a top priority for the Core Contributors this week. After all of these SIPs go out, the team can start focusing on Synth Teleporters and the Debt Migration.
So here’s a quick high-level overview of everything we just went over, as far as SIPs and releases go:
- Alsephina is designed to combat frontrunning and make trading more appealing while reducing risk for SNX stakers.
- Futures is designed to add more base volume for the protocol and push the use case for decentralized derivatives.
- Off chain reporting is about better alignment with our partners, particularly with Chainlink and Lyra.
- Debt Shares and the Debt Pool Synthesis are about modernizing our system so we can power movement between different layers.
- Liquidations and target staking ratio are about keeping the protocol healthy.
- Atomic FX and volume are for improving the tradability of synths.
Core Contributor Cavalier has been doing a great job distilling down the purpose of each SIP to help align the products and roadmap.
Lastly, in case you missed it, Synthetix announced a new round of incentives for WETH/SNX on Optimistic Ethereum, partnering with Gelato to leverage G-UNI pools that enable rewards for liquidity providers. For another two weeks, 50,000 SNX is being distributed to WETH/SNX liquidity providers. At the time of writing this, the APY is at 43%. Be sure to check out the blog post here for a tutorial that explains how to use G-UNI and stake your LP tokens for rewards!
Present at the February 3, 2022 Grants Council meeting:
Grants Team: beachmom, cyberduck, joey, Mike
In Grants Council updates, there are four major projects in focus right now for the Grants team:
1. Stats page
- The Grants Council has been working with Core Contributor db on a Grafana dashboard, which is expected to be announced as usable very soon. This initial release will be a simplified version based on the 8 data points selected from the community survey. The next step will be a Grants-led/community-built dashboard.
- As the newest addition to the list of Grants, the Hackathon is a very exciting event to look forward to. The Council is in conversation with an Indian University to sponsor and participate in this hackathon.
3. NFT project
- As we all know, the Council has been working with Universe.xyz to put together an exclusively Synthetix NFT drop. Nothing to leak here at the moment, but Soonthetix😉
4. Tools Site
- Your voices have been heard! The top-voted name for the tools site was…*drumroll please*…Tools! Frontend has been delivered on this site, and the Grants team is just testing it now.
Present at the February 1, 2022 Ambassador Council meeting:
Ambassadors: GUNBOATs, Matt, MiLLiE
In Ambassador Council news, the Ambassadors hosted a City Hall with Nuke Vaults last week where we got to talk to Calavera, Linus, and Trinty. Calavera is on the Aelin Council and has been involved with Synthetix for a while. He is an advisor to the project, and is a lead developer of Nuke Vaults. Linus, who is also a lead Nuke Vaults developer, is building the app and helping write the smart contracts. Trinty has been developing since the early 2000s and loves tech and coding in general.
Nuke Vaults started as a yield aggregator, farming yield and governance tokens. It was originally just for personal and friends/family use, but evolved into an idea that could be shared with other DeFi users. Calavera explained how they realized that networks other than L1 ETH were cheaper and didn’t really have any yield aggregators. As they were trying to find their niche, they noticed that the current yield aggregators had so many options, but it was difficult to identify ones that were secure and stable. This led them to refocus their efforts on stablecoin yield only.
Matt asked our guests if they could elaborate a little more on how the vaults work. They explained that the vaults have been live since December on Avalanche, Arbitrum, and Polygon. Basically you just deposit stablecoins that are then deposited into a farm protocol (AAVE and CURVE being the most common ones).
As far as fees go, they decided they wanted to be different from protocols that charge upwards of 20% in performance fees. Most of the fees generated for Nuke Vaults actually go back to the users themselves. There are two types of fees:
1. Withdrawal fee
- This is a mechanism to prevent people from manipulating the vault yields
- 0.5% fee is charged at withdrawal and is reinvested back into the vault
- In a 10% yield, you only lose money with this fee if you stay less than a month
2. Performance fee
- Currently 10% and is deposited into a multisig
- They would like these fees to be distributed to the community
They are currently in the process of launching a token, with the purpose of sharing the revenue of the project. Stakers will gain protocol fees from different vaults. Seeing as how it’s still relatively early on L2, it’s the perfect place for them to start building a community. Check out the recording of the call here to hear more about Nuke Vaults and their vision for the future of the protocol!
Be sure to also tune in this Thursday at 10pm UTC for the next Spartan City Hall with Quixotic!
SIP/SCCP status tracker:
SIP-184: Dynamic Exchange Fees, Status: implemented
SIP-193: Refactor the SystemSettings into library to reduce contract size, Status: implemented
SIP-196: Remove Centralized Oracle, Status: implemented
SCCP-163: Update Optimism Chainlink Oracles to OCR, Status: approved
SIP-199: Add SOL Synth on Optimism, Status: approved
SIP-209: Update Exchanger for backwards compatibility, Status: implemented
SIP-202: Target Staking Ratio, Status: draft
SIP-198: Atomic Exchange at Pure Chainlink Price, Status: draft
SIP-205: Add Five Synths on Optimism with shorting, Status: approved
SCCP-164: Extend burn lock to 7 days, Status: approved
SIP-80: Synthetic Futures, Status: SC review pending
SIP-148: Upgrade Liquidation Mechanism V2, Status: vote pending
SIP-165: Debt Pool Synthesis, Status: approved
SIP-185: Debt Shares, Status: in process of implementation