SNXweave Weekly Recap

October 26, 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.

Present at the October 20, 2022 Spartan Council Weekly Project Sync:
Spartan Council: Adam, Afif, Burt, Danny (dsacks), Ethernaut, ksett, nana, TerraBellus
Core Contributors: Cavalier, KALEB, noah

The Aspidiske Release has finally gone out! This release only included one SIP, but it was an important one: Liquidation of SNX Escrow. This means SNX entries are now able to be liquidated in case of forced liquidation. Allowing escrow entries to be liquidated helps to restore the network c-ratio, as the debt shifts to other stakers who acquire the escrowed entries at a discount. Liquidating those far under the liquidation ratio allows the protocol to be more resilient and better capitalized in the long run.

The rest of the V2 priorities remain the same, and the Direct Integration SIP is expected to go out next. The team said it should be sufficient to meet its objective without any additional SIPs for specific integrations.

As for V3…it’s been deployed on testnet! And the CCs are seeking feedback from the community on it, so be sure to check out the Synthetix V3 Discord channel for more info and questions. The team is also currently putting together the pieces to get synth teleporters on V3 testnet as well. They are just waiting on a couple things from Chainlink, as this has been made possible by the CCIP deployment to testnet.

Implementation for SIPs 280 and 281 for Perps V2 are both in audit now, and the team is just waiting on a preliminary green light for these since they are dependencies for the rest of the implementation. And internal release of Staking V2 is also expected to happen this week, after which a public release will shortly follow.

There was also a SIP presentation after the weekly sync last week, so let’s briefly review it:

SIP-285: Pyth Network Oracles for Synthetix Perps

  • Presented by Marc and Tomás from Pyth, this SIP proposes the integration of Pyth Network oracles with Synthetix Perps V2 contracts
  • There is a desire in the Synthetix community to have oracles with off-chain prices, but with on-chain validity/recency verification
  • Pyth Network is well-positioned to fulfill this need and help Synthetix Perps support high performance UX and more competitive pricing
  • The oracle’s price feeds are designed to be fast, accurate and reliable — they update multiple times per second
  • Each price update is a robust aggregate of multiple data providers’ reported prices
  • Pyth Network runs on its own appchain called Pythnet, and delivers prices to other blockchains via the Wormhole interoperability protocol
  • Tomás provided a more detailed technical breakdown during the call
  • There were several questions after the presentation
  • Terra: How do you verify your data providers are providing accurate data?

— Data providers must stake tokens and are at risk of getting slashed once the token is launched

— Prior to this enforcement mechanism, there was an incident in the early days of the protocol due to a bug affecting the aggregation algorithm

— Changes have been made since then to prevent the same exploit

  • Adam: It looks like most of your price sources are centralized exchanges. Are you consuming prices from on-chain sources for smaller tokens?

— Only Serum from Solana

— The goal will be to onboard DEX data on whatever chain we are deployed on

— At launch, 100 price feeds will be supported

  • Adam: Is the price aggregation happening on-chain or off-chain?

— All on-chain

— This is a fully transparent process that can be viewed on the explorer and Pyth website

— Everything is open source so it can be independently run through audit

  • Kaleb: How are protocols using your price feeds?

— Reading of price off-chain and pushing on-chain

  • Terra: Addressing potentially non-technical users, how would you sell the advantages of integrating Pyth?

— Better UX (faster trade execution and lower spreads)

  • Ksett: In the SIP, you specify an average deviation and 95% confidence interval. What was the highest deviation during the 24-hour period?

— Under 5 basis points

Present at the October 13, 2022 Grants Council meeting:
Grants Team: ALEXANDER, CT, cyberduck, JVK, Max

In Grants Council updates, there were some issues identified with the SIP submission site, so the dev is working on fixing them now. New scope can be added to the site after these issues are fixed, so the Council is collecting quotes from a few developers for this additional scope.

Next, Junwei has finished the borrow tab and integrated the smart contracts for the Loans UI, and he is beginning work on the “Positions” page this week. He has even offered some UI improvement suggestions, as being a user gives him unique insight and the ability to efficiently incorporate feedback from the team. The UI should hopefully be live in the next couple of weeks.

As for the stats page, the plan is to create a Dune dashboard with all of the accurate data. The current website will display the data from Dune, but there won’t be a Grafana dashboard. The dev will be providing an update on this in the next few days.

Lastly, the team is still working out the details and eligibility criteria of the NFT mint whitelist. A gnosis safe also needs to be set up for the revenue from that comes in the initiative. The Council is also discussing the possibility of setting aside a few mints (3 per class) to be awarded later as part of incentive programs.

Present at the October 12, 2022 Ambassador Council meeting:
Ambassadors: GUNNBOATs, Kevin, mastermojo, Matt, MiLLiE

In Ambassador Council updates, the team hosted another Spartan Space last week, but this one was a little different. Instead of hosting a protocol as their guest, the Ambassadors hosted Core Contributor Afif to talk about Perps V2! Afif has been a CC at Synthetix for about 1.5 years, and has served on the Spartan Council for about a year. He has a quantitative background with a PhD in Biomedical Sciences. Big brain.

Afif gave the audience a brief overview of Perps, explaining how the term “perpetual futures” was popularized by crypto, but similar products have existed in traditional finance for 20 years.

The Ambassadors asked what some of the current constraints are in the beta implementation of perps. Afif said the most important consideration in perps protocol design is how to effectively structure risk management. All of the perps V2 designs are based on lessons learned and data from V1. For example, one of the biggest limitations in perps V1 was oracle frontrunning and the need to adjust fees to disincentivize bad activity. Another change for perps V2 is ditching the concept of infinite liquidity — it works for very small markets, but only until a certain point.

The ultimate goals of perps V2 are minimizing risk and eliminating frontrunning. Afif explained that these goals are being achieved using novel funding rate and with premium/discount mechanisms: high frequency risk management, which creates an immediate opportunity for arbitragers to balance risk for LPs (as well as funding rate mechanics to incentivize a balanced market). The more you minimize risk, the more you can scale LP, the most capital efficient the perps are to LP for, the more liquid it is for users, etc.

All in all, it was a super informative call with Afif so don’t forget to catch the recording and hear more about Perps V2 and topics like scaling with hybrid oracles, what the off-chain system will look like for the upcoming implementation, and some audience questions.

SIP-252: Liquidation of SNX Escrow, Status: implemented

SIP-267: Direct Integration, Status: approved

SIP-280: PerpsV2 (Perps Upgradability), Status: draft

SIP-281: PerpsV2 (Trading fixes & improvements), Status: draft

SIP-285: Pyth Network Oracles for Synthetix Perps, Status: draft

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