November 6, 2024
The following post contains a recap of news, projects, and important updates from the Spartan Council and Core Contributors from last week.
👉TLDR
- Last week Fenway presented SIP-411, to acquire Kwenta and relaunch Synthetix Exchange.
- Fenway believes that bringing the exchange back under the Synthetix umbrella brings the protocol closer to the end user of the product: traders.
- SIP-411 also creates opportunities for better branding, less dependencies on external providers, and a better product.
- A few other options were considered before deciding on this acquisition proposal. (see below for details)
- The proposed funding method is to mint a little over 9 million new SNX tokens to cover the cost.
- This proposal would NOT mean the end of third-party integrators.
- Community members had some questions during the presentation. (see below for details)
- In order to pass, this will need to be approved by both the Spartan Council and Kwenta Council, so stay tuned as the proposal progresses.
- Multi-collateral perps is live on Kwenta, featuring tBTC as the wrapped-Bitcoin collateral asset of choice. (see below to read why Synthetix chose Threshold Network’s tBTC)
Spartan Council and SIP updates
Present at the October 30, 2024 Spartan Council Weekly Project Sync:
Spartan Council: Cavalier, cokaiynne, Fenway, Spartan Glory
Core Contributors: Ana, Marcus, meb, robin, Samuel, Tim, troy
The new Spartan Council had their first public meeting last week, where they started off strong with a new proposal to further shake things up. Fenway presented SIP-411, to acquire Kwenta and relaunch Synthetix Exchange. The current proposal is for a 1 KWENTA to 17 SNX exchange rate via a token transaction, which values Kwenta at about $13 million. Should this pass, there will be an initial 3-month lock followed by a 9-month linear vesting period.
One of the main objectives of SR-2 was to reassess decisions that have been made in the past, one of which being the decision to separate the frontend from the backend. Bringing the exchange back under the Synthetix umbrella brings the protocol closer to the end user of the product: traders. It also alleviates some of the pain points that the protocol has encountered recently and creates a lot of opportunities, such as:
- Better branding: A Synthetix product being associated with the Synthetix name.
- Less dependencies on external providers: Once a product is ready to ship, it will already include frontend support, which will eliminate the delivery choke point of getting integrators onboard.
- Better product: Owning and operating the frontend will create the conditions for a much better product experience.
Fenway explained that a few options were considered before deciding on this acquisition proposal:
1. The first option was to build a frontend internally. However, the cons of this outweighed the pros, as the cost of incentivizing users to switch over to the new platform would be high and the time to ship a product would be too far in the future.
2. The second option was to acquire a frontend, specifically Kwenta, which is the one option that was decided on of course. The pros of this were abundant since Kwenta used to be part of Synthetix, has very strong ties with the project, and users are already familiar with the trading experience. The biggest con for this option is that it’s expensive to acquire a frontend.
3. The third and last option that was floated was to hire an independent team. But this essentially had the same issues as the integrator model, and external teams are also likely to have different strategic objectives.
Fenway went on to explain how this acquisition would be funded. The proposed method would be to mint a little over 9 million new SNX tokens to cover the cost. The decision to fund this purchase via token inflation was not taken lightly, but Fenway believes the purchase will generate more value for the protocol than the $13 million price tag and will therefore be a good use of the funds. Plus, the Treasury is not currently in a position to fund the acquisition while maintaining the runway needed to fund operations.
It’s also important to note that this proposal would NOT mean the end of third-party integrators — the protocol will remain committed to building an open-source liquidity layer and will continue to incentivize the development of competitive products using that resource.
A community member named 50 had some questions during the call and was brought up on stage to join the discussion. He first requested a document that explains how the purchase terms were determined, so Fenway has agreed to produce a document with that information.
He then asked why liquid KWENTA is being traded for locked SNX, and it was answered that KWENTA doesn’t trade in high enough daily volumes to support larger trades, as it is sometimes recording slippage of 25% for orders worth $50k while SNX slippage is around 2% on $250k orders. Fenway added that the lock will also serve as an opportunity for Synthetix to demonstrate to the Kwenta community over the first 3 months why they should stay invested in the protocol.
Lastly, this acquisition was offered to Kwenta rather than other exchanges because of the history between the partners, so Fenway believes that this merging of communities will help generate additional value for tokenholders and create a cohesive, unified, and passionate army of Spartans. In order to pass, this will need to be approved by both the Spartan Council and Kwenta Council (KIP-138), so stay tuned as the proposal progresses.
In other news, multi-collateral perps is live on Kwenta, featuring tBTC as the wrapped-Bitcoin collateral asset of choice. Synthetix chose Threshold Network’s tBTC because it’s built for DeFi and is trusted by the community, boasting 82 integrations across 6 chains, 1.6K+ holders, and $293M+ in supply. Threshold’s tBTC also promises:
- Permissionless minting and redemptions
- 24/7 on-chain auditable reserves
- Decentralized custody and bridging
- 1:1 backing with BTC
Threshold is also an active team across many ecosystems, and has expanded decentralized bridged BTC opportunities such as stBTC, thUSD, SATs, Mezo, etc. So head over to Kwenta to trade over 80 new Perps markets and 4 new collateral options, featuring tBTC, ETH, USDe, and USDx!
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SIP/SCCP status tracker:
SIP-411: Acquire Kwenta and Relaunch Synthetix Exchange, Status: draft
KIP-138: Synthetix Acquisition Proposal
