SNXweave Weekly Recap
August 10, 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 August 4, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Afif, Ale, Burt, Danijel, ksett, SynthaMan, TerraBellus
First off, SNXweave is celebrating 1 year of bringing you news and updates from Synthetix! We’d like to take this opportunity thank the Grants Council for their continued support, and of course our amazing community. Cheers!🍻
Now onto our regular news…Synthetix had some pretty exciting announcements and updates last week. First up, the Tiaki release has gone out! This release implemented SIP-258, which improves the pricing of Atomic Swaps by incorporating directionality of the trade into the uniswap pricing methodology. This change will allow Synthetix to lower fees to the point where it retains a competitive advantage over other amm exchanges. Further, this change allows the protocol to offer competitive pricing for longer periods.
Next up, Synthetix is working with Socket Tech/Bungee to allow users to quickly bridge assets to and from Optimistic Ethereum. This integration with Socket not only allows easy bridging of sUSD to and from Optimism, it also allows Synthetix to onboard users more efficiently across all of DeFi. Be sure to check out the blog post that Matt shared last week with a tutorial and FAQs.
In Spartan Council updates, now that the Atomic Swaps SIP has been implemented, Debt Migration is top priority for what’s remaining in V2X. Of these remaining SIPs, the following are currently in audit and will likely be released in this order:
- SIP-230: Universal Circuit Breaker
- SIP-257: Debt-ratio futures market
- SIP-252: Liquidation of SNX Escrow
As for V2 of staking, the Core Contributors (CCs) have been working on this staking dApp improvement. It’s not a complete overhaul, but it is a significant improvement and should be implemented over the next couple of weeks. It will look better and be overall easier to understand for newer stakers, so keep an eye out for more leaks to come!
On the governance side of things, Ale said the team is polishing the UI for V3GM and currently freezing most functions. The one improvement that is going to be made is the ability to vote in a single transaction. All other work will be paused to continue work on the rest of V3. The next phase of V3GM work was to deploy a governance module that gives the Council full control of the protocol via NFT ownership. The general consensus was that there were more pressing matters to address.
And speaking of V3, there was a very brief update at last week’s Spartan Council call. Right now, the smart contracts are being worked on, and the draft implementation of SIP-305 is the top priority. This SIP is for V3’s staking incentives, proposing that stakers receive eSNX tokens by providing collateral to the system. The eSNX can then be burned, which will convert it into staked SNX, with a vesting period chosed by the user. The presentation for this SIP is likely a couple of weeks away.
And speaking of SIP presentations, there were a few last week so let’s briefly review them:
SIP-307: Router Proxy Architecture (V3)
- Ale presented this SIP, explaining that it proposes the base architecture for the Synthetix V3 system, as well as all V3-related systems, such as governance instances (spartan-council, etc). This new architecture minimizes complexity during releases, provides a novel way of overcoming the EVM’s smart contract size limits, and makes system upgrades very explicit to the community.
- The biggest change is moving from call proxies to delegate call proxies, which reduces the complexity of the implementation by 10x
- Misuse of this type of proxies can cause storage collisions, hence the proposed architecture which prevents these collisions
- The main feature of this proposal is that the architecture maintains the efficiency of the diamond proxy while also being highly gas efficient
- Kaleb asked what the protocol risk would be if there was a collision, and Ale said it would require an emergency release to reconstruct the storage space
- Danijel also expressed his concern saying “Part of the reason V2X is obsolete is because we used a custom solution rather than a proven solution with regular updates, and this seems like another custom solution.” Ale responded to this saying this is so useful that it may become a standard. The CCs even proposed it to the OpenZeppelin team and they were very impressed, but they’re not able to make it a priority right now.
- This is something that’s necessary for complex systems like Synthetix, and a lot of effort has been put into making the tooling generic enough that other protocols could use the same coding logic very easily
SIP-256: Delta neutral ETH > sUSD issuer
- Presented by Afif, this SIP proposes deployment of a contract that accepts ETH and mints an equivalent amount of sUSD. To offset short ETH exposure taken on by the debt pool in the course of this exchange, the proposed contract will also open an equivalent short ETH perp position to be borne by SNX stakers.
- Afif said this requires a decently liquid, on-chain perpetual futures market, which Synthetix has
- Perp contracts don’t currently support ETH collateral margin, so this is an opportunity to drive more use of the perp market
- Millie asked how far this is expected to scale, and Afif said possibly up to $50 million
SIP-267: Direct Integration
- Lastly, Kaleb presented this SIP to implement a direct integration contract that allows integrators to tap into Synthetix’s exchange functionalities with customized parameters
- There are a number of benefits for Synthetix to have a direct integration path with partners
- Providing these special DirectIntegration routes into Synthetix’s exchange functionalities isolates the trade flow to a certain extent and allows the protocol to offer more competitive offerings via lower fees
- Kaleb said it allows contracts to interact with our exchange function in a controlled setting
- Currently, partner protocols have to interact within the same fee structure as normal traders
- Dynamic fees and other protections are in place to protect against bad actors
- This SIP effectively creates a whitelist for known integrators (adding to the list requires a full SIP)
Present at the August 4, 2022 Grants Council meeting:
Grants Team: ALEXANDER, CT, cyberduck, JVK, Mike
In Grants Council updates, the team is hoping to build out some standardized guidelines for future integrations. Duck brought up the fact that the Grants Council mandate does not include protocols that already have funding, so they want to formalize an exception for protocols that are integrating (with a fixed cap). Duck suggested that a minimum expected volume be set as a criterion, adding that there is already a financial incentive to integrate via the volume source fee. The team will be gathering information from protocols requesting funding to determine how the funds will be used.
As for the Wrapper UI, Joey has reviewed the code and selected which of the two will be the final. Mike suggested standardizing the wallet integration to match the staking dApp, CT and Duck will be connecting with Kaleb for a final review before it is deployed, and JVK has put together some draft FAQs for the wrapper. All in all, this should be live fairly soon!
Present at the August 3, 2022 Ambassador Council meeting:
Ambassadors: mastermojo, Matt, MiLLiE
In Ambassador Council updates, the team had another Spartan Space last week, this time with PoolTogether, the crypto savings protocol most known for its prize-based savings. We got to hear from Leighton, who is the co-founder of PoolTogether and has been in DeFi full-time for 3 years.
PoolTogether is a protocol for prize savings that allows users to pool their deposits in order to generate conservative yield, which is then pooled and redistributed as prizes. This rewards mechanism gives users exposure to tremendous upside without risking principal. There are daily and weekly prizes, and this is actually not exclusive to DeFi, it’s a financial primitive that’s being used all around the world. Leighton emphasized that the whole structure has a very simple value proposition, and is a really great way to get people involved in DeFi.
The core principles of PoolTogether include:
- No loss of principal
- Full liquidity (can withdraw at any time)
- Aggregation of interest (via prizes)
The protocol has also become a lot more composable since launch, and now has the ability to support any asset or yield service.
Recently, PoolTogether was awarded an Optimism grant to promote its use on Optimism. So anyone who has funds deposited now gets the daily reward, weekly reward, AND some OP for the next 3 weeks. Incentives have helped to grow unique depositors to 6000 on Optimism with $23 million total value locked.
As far as governance goes, the protocol’s governance was designed to encourage participation. Anyone holding 10k pool tokens (0.01% of supply) can vote on governance proposals. And in addition to buying in, there are ways to earn pool tokens for community participation. So go check out their Discord to learn more!
Leighton also discussed their roadmap for the coming months, focusing on the two different sides of things. On the protocol side, they would like to increase the number of assets supported while still maintaining all the features (instant liquidity, no principal loss, prizes). He said the challenge here is going to be building out that scale while maintaining decentralization. Then on the company side, the PoolTogether team wants to make it easier for other companies to integrate with their protocol.
Lastly, we’ll end this summary with a cool feature that PoolTogether offers: allowing users to delegate deposits. In doing this, the delegate wallet earns all of the rewards for the deposits. This is a great way to onboard friends and family because you can delegate deposits to their wallet and the rewards would become seed deposit funding. Pretty cool!
All in all, it was a great call with PoolTogether. Don’t forget to catch the recording if you missed it!
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SIP/SCCP status tracker:
SIP-258: Trade Directionality In Pricing of Atomic Swaps, Status: implemented
SIP-230: Universal Circuit Breaker, Status: approved
SIP-257: Debt-ratio futures market, Status: approved
SIP-252: Liquidation of SNX Escrow, Status: approved
SIP-305: Staking Incentives (V3), Status: draft
SIP-307: Router Proxy Architecture (V3), Status: draft
SIP-256: Delta neutral ETH > sUSD issuer, Status: draft
SIP-267: Direct Integration, Status: draft