Both the Spartan Council and the Kwenta Council have been presented with a proposal for Synthetix to acquire Kwenta in a token<>token transaction. The terms of the transaction are:
- 1 $KWENTA <> 17 $SNX (~$13.2m valuation)
- $SNX received from acquired token conversions are subject to a 3 month lock and 9 month linear vest following the lock period.
This proposed strategic acquisition marks a significant milestone in Synthetix’s commitment to expand its capabilities, generate value for SNX token holders and become the premier decentralized derivatives protocol.
Kwenta was spun out of Synthetix in 2020, with the specific intention of developing a high-quality and market leading decentralized front end for derivatives trading. Four years on and Kwenta has delivered on this mission, as evidenced by their continued performance as the primary source of volume for Synthetix, generating over $60 billion in total perpetual contract volume.
However, as time went on, varying additional demands that arose from Kwenta needing to manage its own decentralized protocol resulted in elements of operational friction that would be resolved as a result of this acquisition.
SIP-411 and KIP-138 present an opportunity for Synthetix and Kwenta to once again come together and align vision, strategy and roadmaps with the unified purpose of delivering the best decentralized derivative trading venue to the market.
Some of the reasons for proposing to bring Synthetix and Kwenta together again include:
- Improve Synthetix branding and market positioning – Synthetix will once again be front and center, as Kwenta would rebrand to Synthetix Exchange (or something like this–TBA). Owning and operating a front end once again ensures control over the customer experience and provides an opportunity to increase brand awareness and trust within the broader crypto community.
- Aligning strategic motivations – Re-focusing Synthetix’s front end to solely offer Synthetix liquidity and aligning vision, strategic priorities and roadmaps will assist in shipping products faster and delivering the best experience to our community of traders and integrators.
- Merging of communities – Kwenta has a passionate community. Bringing Synthetix and Kwenta communities together and creating a cohesive, unified, passionate army of Spartans.
The acquisition of Kwenta hopes to create additional value for SNX holders through:
- Removing KWENTA from circulation – Removing fragmentation from having two assets, SNX and KWENTA, and having the community focused on one asset.
- Growth – The addition of a front end to the Synthetix product stack can result in additional avenues to grow the brand and our product offering. A front end allows Synthetix to add new features, control the customer experience and design strategies to drive adoption.
- Awareness/Branding – Market awareness and public recognition of Synthetix will improve significantly as customers will land on a Synthetix branded front end. In crypto where awareness is so important this can drive value.
- Efficiency – Operational efficiencies are expected from the merger of both Synthetix and Kwenta capabilities.
Approval is required by both the Spartan Council (SIP-411) and the Kwenta Council (KIP-138) in order for the transaction to take place.
Should the transaction be approved, to fund the acquisition, Synthetix will mint up to 9,050,375 new SNX tokens. This token mint represents an inflation of 2.8% to the total token supply over the following year.
Fenway (Ben), the primary proposer, is excited to present this opportunity to the Spartan Council, the Kwenta Council and both communities over the coming days.
