Synthetix Quarterly Report — Q2 2024

Quarterly Report for Synthetix, Quarter 2 of 2024: April — June.

👉Q2 Highlights

⭐ Spartan Council/CCs: V3 Scaling & Arbitrum Deployment⭐ Ambassador Council: OP Grants

The previous few months have been a interval of dynamic development and strategic enlargement for Synthetix, underscored by the profitable launch of Synthetix V3 on Base and Arbitrum, and a collection of thrilling new market listings and incentive applications. As we navigate these adjustments, let’s take a second to evaluate among the key highlights and challenges confronted by the Synthetix Protocol in Q2.

One of many largest milestones that the Core Contributors (CCs) have been monitoring because the V3 launch on Base was the scaling of the Perps product to $100 million in each day quantity and $20 million+ in LP collateral. These milestones aimed to check two base instances — would customers be curious about buying and selling on-chain Perps wherever the strongest product existed with the bottom charges AND would LPs be curious about offering collateral apart from SNX (for a price).

Though buying and selling volumes haven’t fairly hit the $100 million goal (although often topping $50 million in a single day) it has been made clear that there’s an urge for food for LP alternatives. The LP milestone was reached only a month after the cap was raised from $10 million, peaking round $25 million. A lot of the efforts now have been centered on directing merchants in direction of the product that integrators have been incentivized to spearhead by way of the V3 price sharing mannequin.

One other pivotal second for the protocol this quarter was the deployment to Arbitrum, an Ethereum Layer 2 scaling answer. This strategic transfer aimed to reinforce transaction effectivity, cut back prices, and enhance consumer expertise for the Synthetix ecosystem. By leveraging Arbitrum’s rollup know-how, Synthetix will have the ability to proceed providing considerably lowered gasoline charges and transaction prices, enabling extra seamless and cost-effective buying and selling for customers on one more chain within the second remoted deployment of the yr.

This deployment reinforces Synthetix’s dedication to staying on the forefront of DeFi and showcases the protocol’s newfound agility in V3 to observe robust consumer bases and spin up best-in-class Perps markets the place demand is strongest.

The deployment will even function assist for yield-generating collateral, permitting LPs to gather rewards whereas sustaining publicity to a secondary yield supply. There was fairly a little bit of enthusiasm surrounding this deployment and, as with the Base deployment, charges shall be shared with Synthetix stakers by way of a buyback and burn mechanism.

Synthetix was awarded a grant on the finish of June from the Arbitrum Lengthy Time period Incentive Program (LTIP) and the plan to make use of these funds to draw liquidity suppliers was authorised by Arbitrum and started in the course of June. This program to date has attracted practically $25 million in LP collateral!

Along with their function in securing the LTIP grant from Arbitrum, the Ambassadors have been instrumental in securing three extra OP grants for ecosystem companions in Q2. The primary was the Polynomial Optimistic Indexer grant, which goals to develop a sturdy indexing answer for the Optimism blockchain, bettering knowledge accessibility and lowering latency for customers. The second was the Superchain Buying and selling Instruments grant which seeks to reinforce the buying and selling infrastructure on the Optimism community, offering superior instruments and options to optimize buying and selling methods and execution. Lastly, the Strands Optimism Integration Acceleration grant focuses on accelerating the combination of Strands’ monetary know-how options with the Optimism ecosystem, selling innovation and broader adoption of decentralized finance purposes on the platform.

Lastly for the highlights, we’d additionally like to provide a shoutout to Synthetix designer Steve for all the graphics you see on this weblog publish!🙏

👉Challenges

After an explosive first quarter for Perps V2, which noticed over $10 billion in buying and selling quantity, exercise appears to have cooled a bit in Q2 with solely about $6 billion in quantity recorded via the tip of June throughout Optimism and Base. Open curiosity on Base peaked at round $8 million in June — only a small fraction of the obtainable cap house. With out extra incentives to maintain LPs , buying and selling exercise, and the rewards generated from it, might want to sufficiently entice LPs to maintain their collateral tied up in that deployment.

The decline in buying and selling exercise wasn’t restricted to Base, nevertheless, as decrease volatility and onchain perps buying and selling quantity seemed to be a broad development all through the house. Final quarter, we reported the protocol had crossed the $50 billion milestone in cumulative quantity largely as a result of robust efficiency of Perps V2 on Optimism. The second quarter noticed volumes drop greater than 50% on Optimism to $4.5 billion.

Regardless of these challenges, the protocol stays dedicated to innovation and development. A SIP lately made it via governance to ship on the protocol’s promise to construct a best-in-class orderbook Perps DEX which can entice a bigger consumer base trying to commerce on-chain Perps on the lowest price.

Firstly of the quarter, the Treasury council introduced a plan to allocate funding to construct out a Perps market on Solana. This triggered a governance debate that has surfaced a number of instances within the present governance framework of Synthetix. The Treasury Council took this motion unilaterally and there have been just a few members of the Spartan Council who voiced some concern, on condition that the Spartan Council is tasked with creating and executing the strategic route of the protocol.

The Treasury Council, nevertheless, has all the time had the discretionary authority to behave within the protocol’s finest curiosity as they see match and are elected in a non-quadratic, straight token majority vote to take action. Kain has been a staunch defender of sustaining a physique with this stage of freedom to behave on behalf of the token holders swiftly when such motion is important. Nonetheless, some on the Spartan Council felt that the Spartan Council ought to be consulted on such plans.

Staying on the subject of governance, a a lot smaller problem arose in direction of the tip of the quarter when a SIP was proposed that may remove the necessity for presentation when including new Perps markets. Even with full assist of the council, the query arose as as to whether the SIP ought to be labeled as meta-governance or not.

It was later agreed upon that the SIP was in truth meta-governance, however Burt flagged that there didn’t appear to be a particular set of tips for making such determinations and supplied to jot down a SIP clarifying the principles.

And the way can we overlook about SNAX chain. Whereas nonetheless not absolutely fleshed out, there are some locally who consider an SNX Appchain would possibly have the ability to function a central governance hub for the protocol. The thought appears promising, however the council was cut up down the center with some councilors highlighting that the know-how remains to be in its infancy and the protocol has been burned earlier than being the primary movers. We will definitely be monitoring the progress of this dialogue within the coming months.

👉Protocol Stats

Overview of Synthetix Q2 Stats: April 2024 — June 2024.

👉Spartan Council

Q2 2024 Spartan Councilors: Afif, Cavalier, Cyberduck, Jackson, Millie, ml_sudo, Snaxfrens, and Snxmaximalists

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

In April, the Council took the primary steps in direction of deprecating non-sUSD spot synths with SIP-369. The spot synths generated much more danger publicity for the debt pool than delta impartial Perps markets with out producing sufficient price income to justify that danger. The deprecation of those synths will finally pave the way in which for SNX L1 migration that may assist a brand new Perps market on Ethereum mainnet. All holders of those synths got ample alternative to redeem them at favorable charges and the trade of those synths has been absolutely deprecated at this level. Customers have been directed to contact the Treasury Council to retrieve beforehand unclaimed funds.

The council additionally authorised SIP-376 which added Ethena’s sUSDe as a supported collateral kind on Arbitrum to scale the deployment sooner and 16 new markets to V2 and V3 together with for the primary time: an SNX Perp on Base! This was beforehand thought-about to be troublesome to assist in V2 because the debt pool was comprised of solely SNX collateral.

In Might, the Spartan Council continued its efforts to reinforce the protocol’s performance. As a primary, we noticed assist added for the yield-generating aUSDC for use as LP collateral on Perps V3. As Perps V3 was nearing the tip of its early dwell testing part, SIP-378 pushed via a number of integrator enchancment requests, together with eradicating acceptable value checks on order dedication and permitting 0 price perp buying and selling.

May additionally noticed huge buying and selling incentives added to Perps V3, rebating as much as 90% of consumer buying and selling charges for 10 weeks and the approval of multi-collateral margin. Multi-collateral margin was a function that was speculated to be obtainable on the launch of Perps V3 however bumped into some implementation challenges. Quite than delaying the launch, the Spartan Council opted to make Synthetix Perps buying and selling on Base obtainable as quickly as doable and delay the much-anticipated multi-collateral margin function.

In June, a brand new framework for automating Perps listings was authorised unanimously by the Spartan Council. SIP-387 highlighted that the method is all however automated anyway with no significant objections being surfaced in any of the displays so as to add these new markets. Many of the danger evaluation occurs within the parameter setting SCCP anyway, which already requires no presentation. It turned clear that there could also be some worth in with the ability to get common new tokens available on the market sooner than is feasible within the present presentation course of, given the council meets solely as soon as every week to listen to these displays.

Synthetix V3 was additionally deployed to Arbitrum in June and SIP-389 was authorised, greenlighting assist for much more yield producing collateral choices to assist enhance liquidity shortly.

To spherical out the quarter, the council heard and authorised a proposal so as to add a brand new grocery store/pool on V3, coined Degenthetix, to function a sandbox for experimentation with Perps buying and selling for longtail property.

👉Ambassador Council

Q2 2024 Ambassador Councilors: Dsacks, GUNBOATs, mastermojo, Matt, and Westie

The Synthetix Ambassadors have closed out one other quarter of selling the pursuits of the protocol via governance participation, varied DAO collaborations, and neighborhood assist. As seen within the graphic beneath, the ever-growing Synthetix ecosystem creates an online of DeFi companions all through which the Ambassadors have stayed energetic.

The Ambassador Council’s three primary focuses remained throughout Q2:

DeFi Governance: Optimism Governance (which concerned Token Home and Citizen Home), in addition to different DeFi DAOs (resembling Arbitrum, Gearbox, Protected, Lyra, Aave, and many others.)Integrator assist: Present & future — Guiding core contributors, integrators, and extra via the processes of grants, retroactive funding, and different methods to safe precious fundsMarketing Assist: Spartan Areas & Twitter involvement

Now let’s get right into a extra detailed record of what the Council has achieved this quarter:

✅ OP Grants

The Ambassadors remained vigilant of their help of ecosystem companions within the Optimism Grant course of. This quarter, in addition they helped Synthetix safe a LTIP Grant on Arbitrum, on high of three Optimism Grants:

1. Artificial Arbitrum LTIP : 2 million ARB

For particulars in regards to the Arbitrum Grant Liquidity Incentive Program take a look at this weblog.

2. Polynomial Optimistic Indexer: 40K OP

The aim of this grant is to develop a sturdy indexing answer for the Optimism blockchain, which can enhance knowledge accessibility and cut back latency for customers.

3. Superchain Buying and selling Instruments (Troy): 40k OP

This proposal seeks to reinforce the buying and selling infrastructure on the Optimism community, offering superior instruments and options to optimize buying and selling methods and execution.

4. Strands Optimism Integration: 35k OP

Lastly, this grant will speed up the combination of Strands’ monetary know-how options with the Optimism ecosystem, selling innovation and broader adoption of decentralized finance purposes on the platform.

For many who utilized for Optimism Grants and didn’t make it via on this spherical, the Ambassadors need it to be recognized that the choice was purely budgetary. They’ve labored one-on-one with protocols to make sure that they’re able to go for subsequent rounds, which can begin on the finish of July. The subsequent spherical of Optimism Grants will even embrace the Superchain, which now permits grants on Base! The Council is anticipating to work with many ecosystem initiatives within the subsequent spherical to arrange them for this.

✅ Retroactive Funding

In June, the Ambassadors additionally assisted ecosystem companions in making use of for Optimism Retroactive Funding Spherical 4. Throughout this spherical, the Optimism Collective allotted 10 million $OP to reward Superchain builders, deciding to dedicate this spherical particularly to on-chain builders with a view to:

1. Incentivize contributor development and community exercise

2. Be extra inclusive in direction of longtail contributors

3. Construct upon the numerous development in developer actions since Spherical 3

The Synthetix Ambassadors labored with ecosystem companions to make sure that they understood the standards and choice course of, and consequently a number of initiatives made the Remaining Lower:

SynthetixKwentaThalesdHEDGE/TorosPolynomialTLXCopinKeng LernitasPyth Community

The funding quantity secured ought to be launched within the coming weeks.

✅ Governance

1. Normal Governance

The Ambassadors all the time wish to be certain they’re staying clear with their voting. As all the time, their exercise will be adopted via their wallets on Snapshot and Tally.

Voting Exercise will be adopted utilizing these hyperlinks:

2. Optimism Governance Discussion board Exercise:

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

3. X/Twitter Engagement

The Ambassadors additionally publish fast governance updates on X, and posted two this quarter:

Ambassador Dsacks additionally did a deep dive into TLX on X, right here, following the Council’s Spartan House with the protocol.

4. Accomplice Assist

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 many others.

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 high 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 adjustments to retroactive public items funding (RPGF), which seems to be fruitful for Synthetix on Base & OP as onchain builders and ecosystem companions

✅ Spartan Areas

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

1. Cyberdex (Size: 35 minutes)

CyberDEX is a decentralized perpetual swaps buying and selling platform performing on Optimism and powered by Synthetix.Company: Cyborg (founder), Config (entrance finish dev), NotAPriest (dev), Picante (head of development), and Mohammed (product designer)Recording right here

2. TLX (Size: 1 hour)

TLX is a brand new leverage token protocol constructed on Synthetix.Visitor: MaxRecording right here

✅ Synthetix Governance Proposals

1. SIP-382: Checklist FRIEND-PERP on Perps V3 on Base (creator: Dsacks)

2. SIP-388: Including Assist for EtherFi weETH to Arbitrum V3 LP (creator: Dsacks)

3. SIP-389: Including Assist for Yield Tokens from Aave and Lido to Arbitrum V3 LP (creator: Dsacks)

What’s subsequent for the Ambassadors?

Within the subsequent quarter, the Ambassador Council plans to deal with the next:

Acquiring extra Arbitrum delegations and increasing into Arbitrum governanceOther DeFi DAOs (Lyra, Gearbox, Protected, and many others)Integrator assist: serving to CCs and integrators with grants, retroactive funding, and many others.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