Synthetix Quarterly Report — Q1 2024

Quarterly Report for Synthetix, Quarter 1 of 2024: January — March.

👉Q1 Highlights

⭐ Spartan Council/CCs: Andromeda Scaling & L1 Perps⭐ Grants Council: sUSD Bridge UI⭐ Ambassador Council: OP Grants

The primary quarter of 2024 was a interval of intense development and improvement for Synthetix, marked by important technical developments and a bolstered dedication to community-driven governance. Let’s take a minute to evaluate a few of the highlights and challenges from the final three months.

The Andromeda invite-only Alpha went dwell proper in the beginning of the 12 months. You’ll bear in mind, again in 2023, Kain proposed a sequence of experiments to check the viability of the flagship Synthetix product outdoors of the rapid neighborhood. Out of an abundance of warning, the deployment remained comparatively constrained for a lot of the quarter with very restricted LP and OI caps, nevertheless it was unleashed proper on the finish of March and has since seen almost $500 million in quantity. In simply 5 days, the goal milestone of $10 million in LP collateral was reached.

The subsequent main milestone is $100 million in every day quantity. At the moment, the 7-day common every day quantity hovers between $10–20 million. This couldn’t have come at a greater time, because the scaling of Perps V3 has coincided with a renewed curiosity in Base. Since its launch in 2023, TVL on Base has hovered between $300–500 million. Through the month of March that determine doubled, and transaction quantity has elevated considerably as properly.

In one other main occasion this quarter, Perps quantity on Optimism surpassed $50 billion! It is a monumental milestone that underscores the protocol’s strong development during the last couple of years. This achievement not solely highlights Synthetix’s robust market presence, however is a testomony to the demand for decentralized perps markets. The protocol continues to reveal a robust dedication to offering a scalable and environment friendly buying and selling expertise to customers and we are able to’t wait to see what V3 brings!

This quarter, a V3 use case for SNX LPs was additionally added in a strategic partnership with Ethena. Ethena is the creator of the yield bearing, decentralized stablecoin USDe. On the finish of final 12 months, they approached Synthetix requesting an L1 Perp to execute a portion of their yield technology technique (capturing the funding price on spinoff positions). Synthetix agreed to be the infrastructure supplier on this initiative and the product is predicted to go dwell subsequent month.

The Ambassadors efficiently secured two Optimism Grants this previous quarter. One grant targeted on enhancing sUSD liquidity, a strategic initiative aimed toward bolstering the steadiness and value of the Perps V2 buying and selling stablecoin. The second grant offers funding to create a best-in-class orderbook Perps DEX — an innovation that continues to revolutionize the DeFi buying and selling expertise. These grants not solely reveal the Ambassadors’ efficient illustration and advocacy for the protocol, but additionally spotlight Synthetix’s dedication to steady evolution and continuously increasing choices that can serve to attract new customers to the protocol sooner or later.

👉Challenges

The largest problem this previous quarter, and one that could be sticky the remainder of the 12 months, is the difficulty of the legacy debt pool skew. It has been a long-standing subject that tends to get exacerbated throughout bull runs as customers pile into one aspect of a specific commerce. Earlier than the protocol launched delta impartial Perps markets, the most well-liked product was spot synth publicity to cryptocurrency property — most notably, sBTC and sETH. A lot of the opposite spot choices have been unwound, however the unbalanced positions that customers soak up these spot markets require the next c-ratio for LPs and require stakers to take a extra lively position in hedging.

A number of options have been proposed to deal with this subject and a few of them started to take form this quarter. The problem charge price on loans was raised from 0% to 40%, ETH Wrapper parameters had been up to date, and legacy V2 loans had been ultimately deprecated to use some reverse stress to the market dynamics that generate the skew. The last word aim is to unwind the spot choices completely, as they generate danger for the protocol with virtually no charges.

One other problem this quarter got here simply after the brand new 12 months when there was suspicious buying and selling exercise on a number of centralized exchanges. These exchanges, together with Synthetix, depend on wholesome arbitrage exercise to assist market making. Because of the uncommon buying and selling exercise, a lot of arbitragers stopped collaborating in particular markets. Fortunately, and this was deliberate as a danger administration measure, the open curiosity for these markets was fairly small. It did, nevertheless, immediate the addition of a brand new danger administration module that will grant the proprietor emergency authority to scale back OI caps to zero for a predetermined listing of property. This proprietor will ultimately be the chance committee, however till the committee is fashioned, the Spartan Council would appoint an interim danger council to serve on this capability underneath their path.

The protocol noticed a little bit of a meta-governance shakeup this quarter as properly. After 4 years serving Synthetix, the present Grants Council would be the remaining one. The choice to sundown the Grants Council is available in gentle of the evolving wants of the protocol and a noticeable decline in quantity and high quality of inbound grant requests. The introduction of a single, technical lead will serve to streamline resolution making and make sure that the trajectory of the grants course of extra carefully aligns with the long-term, strategic targets of the protocol. The place will serve on the pleasure of the Spartan Council and may be voted in or terminated at any time with a easy majority.

👉Protocol Stats

Overview of Synthetix Q1 Stats: January 2024 — March 2024.

👉Spartan Council

Q1 2024 Spartan Councilors: Adam, Bilby, Cyberduck, Jackson, Kain, Millie, ml_sudo, and Snax Frens

Together with their contribution to the achievement of main Synthetix milestones this epoch, let’s take a minute to evaluate the whole lot else that the Spartan Council was in a position to obtain in simply the final 3 months.

Getting Andromeda over the road was the BIG achievement of This fall of final 12 months, however that’s the place all of the work actually started in direction of the trouble of scaling the deployment. In January, we noticed Andromeda formally launch with a restricted alpha launch to permit for additional, dwell testing. SNX buyback and burn was additionally launched and the Base SNX bridge was launched, permitting SNX to be transferred from L1 to Base to be purchased and burned. As a reminder, this answer was initially chosen by the Spartan Council as probably the most elegant, least overhead answer for sharing charges with SNX LPs whereas permitting for USDC LPing on Base. The Council wrapped up the month with the Markeb launch, which launched JTO and ORDI markets on Perps V2.

In February, Pyth Retrospective awards had been introduced, reflecting a dedication to neighborhood stakeholder worth. There have been additionally some modifications made to mortgage parameters, which included will increase within the issuance charge and the rate of interest. The aim right here was to encourage mortgage compensation and additional strengthen the sUSD $1 peg, which is important for the wholesome operate of Perps V2.

In March, Synthetix introduced one other growth of Perps choices including STRK, CVX, PENDLE, and JUP which went out on the Markab launch. Moreover, and in partnership with Synthetix, Kwenta launched the primary V3 integration beta constructed on the brand new Synthetix V3 structure. This integration introduces new options reminiscent of native cross-margin and higher pricing mechanisms which search to enhance consumer expertise.

👉Grants Council

Q1 2024 Grants Councilors: ALEXANDER, Egor, Mike, MoneyManDoug, synthquest

Watcher Web page

Everyone knows the Grants Council has been behind a lot of the success of the Watcher web page prior to now, however in latest months they’ve additionally been working to enhance and replace this web site in preparation for V3. This included a rework of the UX/UI with additions reminiscent of: totals for open positions, filter tabs for closed and liquidation positions, and historic account whole buying and selling historical past.

Bots

Along with their common Synthetix Discord bot upkeep and funds (recurring bots such because the ETH/BTC ratio and anti-scam Discord bots), the Council additionally labored on an Arbitrage bot and Discord bots for V3. These V3 bots embody ones for quantity, burn (which changed the inflation bot and was up to date in February to incorporate all-time SNX burns , along with weekly), and shortly charges and OI bots.

For the ARB bot initiative, the GC funded an growth on the prevailing Synthetix V3 SDK to launch the Funding Price Arbitrage Bot Template, a cutting-edge instrument tailor-made for capturing funding price arbitrage alternatives between Synthetix and different buying and selling venues. They acknowledged a rising want for arbs on V3 and had been excited to construct easy tooling that permits anybody to arrange an arbitrage bot by working just a few traces of code. This can empower customers to mechanically search, open, and shut arbitrage trades between Synthetix V3 markets and Binance.

This undertaking serves as a template to assist newer builders/merchants begin making the most of delta-neutral arbitrage alternatives between CEX/DEX perps platforms. The present model focuses on Synthetix vs Binance pairs, opening funding-accruing positions on Synthetix, and hedging on Binance.

Provided that the repo is underneath lively improvement, it is strongly recommended that you just run the bot on testnet for some time first to make sure that the configuration is right earlier than placing any capital at stake.

Additional work might be performed to showcase present and historic arbitrage returns, and this bot will dwell on the Watcher Web page. 📈Completely satisfied Arbing!📉

sUSD Bridge

This was an enormous one this quarter — the Grants Council helped deliver the sUSD Bridge to Synthetix! After a number of weeks of labor, the sUSD bridge UI (native and on the spot) went dwell in March. This now permits transfers between Ethereum Mainnet and Optimistic Ethereum at a assured 1:1 synth switch, and is accessible by way of the Synthetix Staking web site. This UI leverages a local bridge that the Grants Council created with the Socket bridge aggregator integration. To make use of this instrument, go to the Synthetix Staking UI Bridge.

Methods to switch sUSD:

1. Go to the Synthetix Staking UI Bridge web site

2. Choose both the native bridge or the moment bridge choice:

The native bridge permits for sUSD transfers between Optimism and Ethereum Mainnet with out slippage. Be aware: transfers by way of the native bridge can have a 7-day ready interval.The moment bridge, using Socket Tech, helps bridging any asset to any chain with a charge.

3. Provoke the withdrawal

4. Show the withdrawal (might have to attend a couple of minutes after initiating)

5. For native, wait 7 days

6. Declare the withdrawal

Notifi integration

In case you recall from final quarter, the Grants Council funded this initiative to deliver Notifi to the Synthetix ecosystem and assist enhance staking expertise. Varieties of alerts embody: Synthetix Bulletins, Liquidation Warning, Liquidation Affirmation, Account Snapshots, Declare Reward Reminders, Governance Updates, and C-Ratio Well being Alerts. The GC continues to fund Notifi to permit customers to achieve direct entry to real-time alerts on Discord, Telegram, and e mail for these reminders. Click on right here to see the way to arrange Notifi if you happen to haven’t already!

Integrator Charge Report

Lastly, the GC accepted a grant from ML_sudo for an Integrator Charge Report, which is a analysis effort to find out an acceptable price of charge sharing by the protocol with integrators. Paying too little or an excessive amount of may end in incentives which might be misaligned with Synthetix stakeholders (stakers and token holders). At the moment, there isn’t a quantifiable strategy to find out a good and motivating charge break up for integrators, so there’s a want for higher info to assist the Spartan Council make this resolution for the long run (proper now a easy flat 20% charge share is in place on Andromeda/Base).

The targets, subsequently, that ML_sudo laid out for this undertaking are to achieve readability on the revenues earned by integrators and suggest extra nuanced cost buildings (e.g. tiered charges).

This report remains to be in progress, however ML_sudo has held preliminary interviews with 3 frontends already: Kwenta, Polynomial, and Cyberdex.

What’s subsequent for the Grants Council?

Beginning within the new governance epoch, the Grants Council might be reconfigured right into a single Grants Lead place to make it extra environment friendly and efficient for the present and future state of the protocol. This comes from SIP-364, which specifies that the Grants Lead might be appointed slightly than voted on by SNX debt share weighting. The SIP additionally redefines the mandate of the grants initiative to supply larger focus shifting ahead.

This new Grants Lead might be somebody with expertise as a technical undertaking supervisor, and might be appointed by the Spartan Council with a majority 5/8 vote in favor for an ongoing time period that may be terminated with the identical vote construction. They are going to coordinate with varied governance our bodies, in addition to the neighborhood, to handle and ship tasks throughout the new Grants scope.

The Grants Lead might be answerable for:

Sustaining and setting an applicable price range for ongoing and one-off projectsCoordinating and publishing a abstract of open grant requests required by the CCs, SC, TC, and/or neighborhood and defining the outputs for these requestsProposing a price range to the Treasury Council to cowl ongoing and new Grant requestsConducting due diligence on grant proposals and the work of contractorsEstablishing standards for retroactive grant funding throughout varied classes and sharing these standards usually to make sure vast visibility by potential recipientsProactively figuring out applicable alternatives that may be addressed by grantsProduct managing the scoping, improvement and supply of useful initiativesEstablishing common communication with the Spartan Council, together with briefs, memos, experiences, and voice calls

If that is one thing that you’re concerned with, and suppose you’ll make a very good candidate for, click on right here to use by the tip of the week! This place will begin with the brand new epoch, as quickly as Could 1st.

👉Ambassador Council

Q1 2024 Ambassador Councilors: GUNBOATs, Kevin, mastermojo, Matt, Westie

Because the governing arm of Synthetix, the Ambassadors stay a continuing voice for the protocol. In Q1 they continued to earn governance assist and recognition all through the ecosystem and larger DeFi area. The Council had three foremost focuses throughout Q1:

DeFi Governance: Optimism Governance (which concerned Token Home and Citizen Home), in addition to different DeFi DAOs (reminiscent of Arbitrum, Gearbox, Protected, Lyra, Aave, and so on.)Integrator Help: Present & future — Guiding core contributors, integrators, and extra by way of the processes of grants, retroactive funding, and different methods to safe useful fundsMarketing Help: Spartan Areas & Integrator Spotlights by way of Twitter

A giant spotlight for the Ambassadors this Quarter was their help and assist towards ecosystem companions within the latest Optimism Grants Spherical (second spherical is presently over at finish of April 2024). Detailed breakdown is listed under the place 900,000 OP was secured for Synthetix/Ecosystem Companions.

Now let’s get right into a extra detailed listing of what else the Ambassador Council completed this previous quarter:

✅ Governance

1. Common Governance

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

Voting Exercise may be adopted utilizing these hyperlinks:

2. Optimism Governance Discussion board Exercise:

The Synthetix Ambassadors stay a significant voice in Optimism Governance, and their respective OP Governance Discussion board Actions may be discovered utilizing these hyperlinks:

3. X/Twitter Engagement

The Council has elevated their on-line engagement much more from final quarter, doubling their variety of Governance Replace posts on X.

Synthetix Ambassadors Governance Updates:

Synthetix Ambassadors Venture Highlight:

4. Accomplice Help

Present Companions

The Ambassadors have continued to examine in on companions and work with them on any suggestions, assist requests, DeFi grant help/steering, and so on.

Future Companions

The Council plans to deal with Perps V3 and Synthetix V3 within the subsequent epoch on the subject of future partnerships. They’re presently in talks with future companions to construct on prime of Synthetix Perps both as a frontend or in any other case, and they are going to be persevering with these efforts into the brand new quarter.They’re additionally monitoring modifications to retroactive public items funding (RPGF), which seems to be fruitful for Synthetix on Base & OP as onchain builders and ecosystem companions.

5. Delegation

This quarter the Ambassadors accepted AJNA delegations and used their voting energy to vote for Ajna grants!

✅ OP Grants

A very BIG WIN for the Ambassadors this quarter was the outcomes from Spherical 1 of Optimism Grants Cycle 19. The notable winners from the Synthetix Ecosystem embody:

1. Synthetix for a Mission Request for Greatest in Class Perps DEX — 400,000 OP: This grant will assist the constructing of an orderbook Perps DEX on Synthetix Perps, that includes a sophisticated orderbook, a number of order sorts (e.g., take revenue, cease loss), an open-source relayer, and the infrastructure to implement these buying and selling guidelines.

2. Thales for a Development Grant — 200,000 OP

3. Synthetix for a Development Grant — 200,000 OP: Increase sUSD liquidity and assist Perps buying and selling competitions.

4. ERC-7412 Tooling + Training for a Builders Grant — 50,000 OP

5. Synthetix IPFS Node — 50,000 OP

Along with supporting ecosystem companions within the newest spherical of Optimism Grants, the Ambassadors expect to proceed to assist most of the identical companions within the upcoming spherical as properly. This listing consists of:

Rage TradePolynomialCoPinSponglyThalesOP Indexer (from Polynomial)TorosdHedgeValioTLXStrandsAmmalgam

At the moment, OP grants can’t be used on Base, however the Council is working with delegates and the OP basis to make this potential.

✅ Spartan Areas

Spartan Areas continued to function necessary neighborhood advertising and marketing instruments this quarter, with the Ambassadors internet hosting a few different DAOs on behalf of Synthetix.

1. Polynomial (Size: 45 minutes)

2. Pyth (Size: 1 hour)

✅ Synthetix Governance Proposals

The Ambassadors solely had one Synthetix Enchancment Proposal (SIP) that they authored this quarter, nevertheless it was a shortly accepted one:

1. SIP-2054: Record PENDLE on SNX Perps V2 (creator: GUNBOATs)

What’s subsequent for the Ambassadors?

Within the subsequent quarter, the Ambassador Council might be specializing in the next:

Acquiring extra Arbitrum delegations and increasing into Arbitrum governanceOther DeFi DAOs (Lyra, Gearbox, Protected, and so on.)Integrator assist: serving to CCs and integrators with grants, retroactive funding, and so on.Persevering with advertising and marketing supportPursuing additional development methods for Perps and Synthetix V3Exploring alternatives to scale synth supplyIncreasing presence in Optimism governance (Optimism Token Home, Citizen Home, Grants, RPGF)Increasing affect in DeFi & DeFi Governance