The Spartan Research Collective is expanding its coverage of DeFi performance and developments, with a special focus on Perps and Option DEX’s. We’re already seeing ATH’s in onchain derivatives volume and we expect this trend to continue throughout the year. Lets dive in.   

DEFI Perpetuals

On-chain derivatives volume continues to maintain its record breaking volume in 2024

Aggregate Open Interest reveals that on-chain traders take size on Kwenta, GMX, Hyperliquid

Aggregate Liquidations on August 5th reveal most liquidation volume occurred on Vertex, GMX, and Kwenta

Volume Comparison excluding DYDX and Hyperliquid

Top On-Chain Perp Protocols this week by volume: 

Optimism: Kwenta (Synthetix Perps), TLX (Synthetix Perps), Polynomial Protocol (Synthetix Perps)

Base: Kwenta (Synthetix Perps), JOJO, SynFutures

Arbitrum: GMX, Vertex Edge, Orderly Network

DEFI Options

On-chain Options volume continues to maintain high volume in 2024 

Lyra, Thales, and Aevo are the clear leaders in the DEFI Options space by Volume

Checkout this community member tweet on why they think Lyra is the clear winner:

https://twitter.com/TheiaResearch/status/1749386581134520375

Updates

Checkout the latest updates from some on-chain Perps and Option protocols

https://twitter.com/massdotmoney/status/1823736507565531313

https://twitter.com/synthetix_io/status/1819472406437859519

https://twitter.com/FlywheelDeFi/status/1821648590961291297

 https://twitter.com/mastermojo83/status/1821157233469636970

 https://twitter.com/cc_yborg/status/1822193544972399059

 https://twitter.com/vertex_protocol/status/1823755342284775676

 https://twitter.com/HyperliquidX/status/1821558804552818721

 https://twitter.com/lyrafinance/status/1823691688084381809

https://twitter.com/lyrashortput/status/1812549251634708704

Market Overview

Below is the weekly and 30d performance of the top crypto assets. 

Macro recap

• Many themes exist for the market panic witnessed on Friday August 2nd.

• Middle Eastern tensions

• BoJ raises overnight rates from 0.10% → 0.25%

• Friday’s NFP report was below expectations

• Fed FOMC continued to lean Hawkish

• US elections feel chaotic

Crypto: 

Analyzing the term structure reveals that forward volatility is distinctly accounting for an election-related kink. This suggests that the BTC volatility market is at least acknowledging the US election as a potential catalyst for market movements.

Paradigm Top Option Trades this Week:

DISCLAIMER: The information provided in this research is for educational purposes only and is not investment or financial advice. Please do your own research before making any investment decisions. None of the information in this report constitutes, or should be relied on as a suggestion, offer, or other solicitation to engage in, or refrain from engaging, in any purchase, sale, or any other investment-related activity. Cryptocurrency investments are volatile and high risk in nature. Don't invest more than what you can afford to lose.

Highlights

✨This Month's Highlights

• Synthetix Perps V3 Growth: Surpassed $3 billion in volume on Base, generating over $1 million in fees, with strong daily trading volumes throughout July.

• Quarterly Report Highlights: V3 launched on Base and Arbitrum, with aims for $100 million daily volume; key achievements include new collateral types and automated Perps listings.

• Synthetix V3 Migration: Transition to V3 on Ethereum Mainnet has begun, introducing significant changes in liquidation processes.

• Boosting Institutional Activity: New initiatives are in place to attract institutional funds, focusing on trader incentives and custody solutions.

Performance Overview

Synthetix Perps V3 is seeing growth across V3 on base, recently surpassing $3 billion in cumulative volume on the Base and generating over $1 million in fees. Throughout July, trading volumes have remained robust, with most days seeing over $20 million on Base and over $30 million on Optimism. This consistent activity highlights the strong adoption and liquidity on the platform, driven by its efficient trading features and the ongoing momentum in the decentralized finance (DeFi) sector.

🐋 On-Chain Analysis - Follow The Whales

In the recent cryptocurrency market, Bitcoin (BTC) has experienced some significant volatility and has dipped to $60,000. Ethereum (ETH) has also been volatile, currently priced above $2,600. The open interest for both BTC and ETH remains strong, exceeding $6 million.

Currently, the market shows a slight skew with short open interest being higher for both Bitcoin (BTC) and Ethereum (ETH). This suggests a bearish sentiment among traders, anticipating potential price declines. However, this setup could lead to a short squeeze if prices unexpectedly rise, increasing market volatility. Monitoring related metrics and market news is crucial for making informed trading decisions.

The quarterly report is out! Check it out here Synthetix Quarterly Report Q2 2024

Check out our quick summary below 👇

V3 Scaling & Arbitrum Deployment:

• V3 launched on Base and Arbitrum, aiming for $100 million daily volume and $20 million+ in LP collateral.

• Arbitrum LTIP program attracted nearly $25 million in LP collateral.

Key Achievements:

• Deprecation of non-sUSD spot synths (SIP-369).

• Added new collateral types and markets (SIP-376, SIP-378).

• Automated Perps listings framework (SIP-387).

Challenges:

• Trading volume decreased to $6 billion from $10 billion in Q1.

• Governance debates on Treasury Council's actions and SIP classifications.

Ambassador Council:

• Secured multiple OP grants and facilitated ecosystem partner support.

• Active in governance, integrator support, and marketing initiatives.

Synthetix V3 Migration: Key Updates

The Treasury Council has started the transition to Synthetix V3, as outlined in SIP 304. This phase introduces significant changes to the ecosystem, especially in liquidation processes. Staker migration to V3 on the Ethereum Mainnet (L1) is expected to open soon.

Immediate changes for L1 stakers include the introduction of immediate liquidations. Now, liquidations occur instantly at a 120% liquidation ratio, removing the previous 8-hour delay. When a staker is liquidated, their debt and SNX are transferred to V3, managed by the Treasury Council. Liquidated SNX will be distributed directly to stakers, bypassing escrow.

Ongoing Interactions Between V2X and V3:

• V2X debt increases will impact the V3 legacy market.

• Cross-chain synthesis between Ethereum and Optimism will remain active.

Upcoming Phase 2 Changes:

• Suspension of minting, staking, and issuing sUSD on Ethereum L1.

• Suspension of self-liquidation and account merging on Ethereum L1.

• Implementation of an sUSD to V3 sUSD bridge.

• Suspension of the debt bridge between L1 and L2.

For SNX stakers, note that while SNX can still be moved to L2, any associated debt must be repaid first. No immediate action is required from stakers. Detailed migration instructions will be provided before Phase 2, and users will have the option to migrate once a user interface (UI) is released. Users will not be force migrated, ensuring they can choose when to transition.

Boosting Institutional Fund Activity on Synthetix

Synthetix has initiated a business development (BD) working group under STP-5 to increase activity by institutional funds. Here are the key takeaways from Phase 1 of the project.

Research Phase The project began by identifying obstacles preventing professional funds from trading at scale on Synthetix. Interviews and pitches to funds and market makers led to several initiatives:

• STP-10: Introduced $SNX incentives for traders exceeding $100mn/month in volume, though this target has not yet been reached.

• STP-16: Engaged Wintermute to integrate with V3 and report on its strengths and weaknesses.

• Custody Needs: Identified the need for integration with Fireblocks and Safe to meet institutional security standards.

Key Findings Institutional funds face a steep learning curve due to differences from traditional platforms. Onboarding documents and outreach strategies should be tailored to different fund profiles. Traders are often agnostic about which EVM-compatible chain they trade on but require specific incentive structures. A daily trading volume of $100mn is ideal for meaningful profit opportunities.

Improving the Onboarding Process A pitch deck, financial models, and an FAQ document were created to streamline onboarding. A CRM platform was also implemented to track and follow up with potential counterparties more efficiently.

Challenges and Contributions The project faced challenges such as promoting V3 before it was fully ready and obtaining clear feedback from funds. Key contributors included Troy (CC), Kaleb (CC), Burt (SC and Kwenta), Cav (CCC), and Rafa (ex-CC).

Phase 1 laid the groundwork for more effective institutional engagement, aiming to boost their activity in the Synthetix ecosystem.

Pyth Governance Distribution Phase 2 Now Live!

We are thrilled to announce that Phase 2 of the Pyth Governance Distribution is now live. Eligible Synthetix users can claim their PYTH tokens through Streamflow. To qualify, users must have held and staked PYTH tokens from the previous distribution before July 19th, 2024. Unclaimed tokens will be returned to the Synthetix Treasury Council after 28 days.

This phase strengthens participation in Pyth governance and reinforces the Synthetix-Pyth relationship.

We are also excited about an upcoming collaboration on Arbitrum, offering additional incentives for Pyth stakers using Synthetix Perps, including extra fee rebates and cross-ecosystem benefits.

Check your eligibility, claim your tokens, and engage in Pyth governance. Stay tuned for more details on the Synthetix-Pyth collaboration on Arbitrum.

Upcoming Collaboration: Synthetix and Pyth on Arbitrum

We're excited to announce an upcoming collaboration between Synthetix and Pyth designed to reward Pyth stakers and promote the cross-pollination of users on the Arbitrum network. This initiative aims to create additional value for both Synthetix and Pyth community members in addition to Arbitrum LTIP rewards.

Enhanced Rewards for Pyth Stakers

As part of this collaboration, we're planning to introduce additional incentives for Pyth stakers who engage with Synthetix Perps on Arbitrum:

1. Additional Fee Rebates: Pyth stakers trading on Synthetix Perps will be eligible for extra fee rebates, on top of the existing ARB LTIP fee rebates.

2. Cross-Ecosystem Benefits: This initiative is designed to encourage Pyth users to explore and engage with the Synthetix ecosystem on Arbitrum, fostering greater integration between our communities.

The details of this program are still being finalized. We're working diligently to create a rewards structure that provides significant value to participants while ensuring sustainability and alignment with both protocols' objectives.

🔎 Synthetix Governance:

Synthetix Improvement Proposals (SIPs) describe standards for the Synthetix platform, including core protocol specifications, client APIs, and contract standards.It is hard to play catch up with all the latest SIPs, checkout the latest ones:

SIP-383: Multi-Collateral Margin Support — Perps V3 Status: Approved

SIP-393: Launch Degenthetix on Base Status: Approved

SIP-398: Chainlink Data Streams For Synthetix V3 on Arbitrum Status: Draft

SIP-2057: Dynamic Gas Fee Module — Fjord, Status: draft

SIP-397: Transaction Costs based Rewards — Perps V3 — Fjord, Status: draft

🤝 Community Tweets:

https://x.com/kaiynne/status/1819163319238037916

https://x.com/TLX_FI/status/1818274912282517520

https://x.com/MattLosquadro/status/1817959334019743758

https://x.com/MacroMate8/status/1814313392619810946

https://x.com/mastermojo83/status/1815736341562376275

Ecosystem Update:

Infinex | Kwenta | Lyra | Thales | Pyth | CyberDex | Overtime | TLX | Toros

✨This Month's Highlights

• Synthetix Perps V3 Achievements: Reached a cumulative volume of $2.4 billion and generated over $750,000 in fees, with an average volume of $36 million over the past 30 days and $40 million over the last 7 days.

• Program Details: A 12-week program distributing 2,000,000 $ARB, with rewards for LP incentives, trading fee rebates, and stablecoin liquidity. Participation includes depositing USDC, ETH, ARB, and Ethena USDe on Synthetix Liquidity, providing liquidity to USDx/USDC pools on Ramses DEX, and earning trading fee rebates.

• Recent SIPs: Key proposals include SIP-396 (listing new perps), SIP-395 (P2P Settlement Strategy), SIP-394 (delegate governance power from collateral tokens), and SIP-393 (launch Degenthetix on Base).

• Synthetix Quarterly Report: The Quarterly Report for Synthetix, Quarter 2 of 2024: April — June is now out!

Performance Overview

Synthetix has achieved significant milestones with its Perps V3 platform, reaching a cumulative volume of $2.4 billion and generating over $750,000 in cumulative fees. V3 has maintained strong performance, with an average daily volume of $36 million over the past 30 days and $40 million over the last 7 days.

🐋 On-Chain Analysis - Follow The Whales

In the recent cryptocurrency market, Bitcoin (BTC) has experienced some significant volatility and has reached $55k but in recent days has touched $66,000 again. Ethereum (ETH) has also been volatile, currently priced around $3,500.

In terms of market positioning, the open interest for Bitcoin (BTC) seems fairly balanced with approximately 50% each way in open interest for longs and shorts. A similar story is shown with the ETH charts. With the recent ETF announcement volatility should be expected. ⚠️

To learn more Synthetix stats and follow what the whales are doing, check out the Synthetix stats page.

In recent market news, the German government has sold all their Bitcoin holdings, leaving their wallet empty. This might also shed light on the recent BTC price fluctuations. The combination of this development and the upcoming MT GOX payouts has fueled speculation about Bitcoin's future price movements.

Synthetix Launches Arbitrum Liquidity Incentive Program with 2M ARB Rewards

Synthetix is expanding its Arbitrum deployment with a new 12-week Liquidity Incentive Program (LTIP), approved by Arbitrum governance, distributing 2 million $ARB to attract liquidity providers, stablecoin liquidity, and Perps trading activity until September 3rd.

Program Highlights:

• Total Rewards: 2,000,000 $ARB

• Distribution Breakdown:

  • 1,000,000 ARB for LP incentives

  • 900,000 ARB for trading fee rebates (up to 75% of trading fees)

  • 100,000 ARB for stablecoin liquidity

Weekly Distribution Schedule:

• LP incentives and stablecoin liquidity rewards start from June 18.

• Trading fee rebates begin from July 26.

Participation Details:

• LP Incentives: Deposit USDC, ETH, ARB, and Ethena USDe (coming soon) on Synthetix Liquidity.

• Stablecoin Liquidity: Provide liquidity to USDx/USDC pools on Ramses DEX.

Trading Perps: Earn trading fee rebates when Perps trading goes live, with additional staking rewards from a Synthetix and Pyth campaign.

Synthetix Quarterly Report — Q2 2024

The past few months have been a period of dynamic growth and strategic expansion for Synthetix, underscored by the successful launch of Synthetix V3 on Base and Arbitrum, and a series of exciting new market listings and incentive programs. As we navigate these changes, let’s take a moment to review some of the key highlights and challenges faced by the Synthetix Protocol in Q2.

👉Q2 Highlights

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

Checkout the full Quarterly Report here: https://blog.synthetix.io/synthetix-quarterly-report-q2-2024/

🔎 Synthetix Governance:

Synthetix Improvement Proposals (SIPs) describe standards for the Synthetix platform, including core protocol specifications, client APIs, and contract standards.It is hard to play catch up with all the latest SIPs, checkout the latest ones:

SIP-396: List ONDO, PEOPLE, IO, ENS, ZK, AR, ZRO, and AEVO perps

SIP-395: P2P Settlement Strategy

SIP-394: Delegate governance power from collateral token deposited in Synthetix

SIP-393: Launch Degenthetix on Base, Status: draft

SIP-392: Support Ethena USDe as LP Collateral, Status: draft

SIP-391: Liquidations on Synthetix using Pyth’s Express Relay, Status: draft

SIP-390: Minimum Credit Patch — Perps V3, Status: approved

SIP-389: Adding Support for Yield Tokens from Aave and Lido to Arbitrum V3 LP, Status: approved

SIP-388: Adding Support for EtherFi weETH to Arbitrum V3 LP, Status: approved

SIP-387: Create a new perps market listing framework for automated listing across all networks, Status: vote pending

SIP-386: Bring perps V3 markets to parity with perps V2, Status: draft

SIP-385: Arbitrum perps V3 fee model, Status: draft

SIP-383: Multi-Collateral Margin Support — Perps V3, Status: approved

SIP-367: Synthetix V3 Deployment to Arbitrum, Status: approved

SIP-366: Asynchronous Delegation, Status: approved

SIP-360: Synthetix V3 Cross-Chain Elections System, Status: approved

SIP-341: Add Configurer Address, Status: approved

SIP-306: V3 Migration, Status: approved

🤝 Community Tweets:

https://x.com/llamaonthebrink/status/1808207163690459266 

https://x.com/mastermojo83/status/1808125182067806338

https://x.com/RamsesExchange/status/1805631956354580842

https://x.com/_Synthquest/status/1805291929472557333

https://x.com/devfolio/status/1802736784302030979

https://x.com/gekko_eth/status/1814856032352366636

Ecosystem Update:

Kwenta | Polynomial | Rage Trade | Lyra | Thales | Pyth | TLX | Toros | Cyberdex

✨This Month's Highlights

Let’s dig in 👇

• Choppy Market Conditions: Bitcoin (BTC) is currently above $69,000, and Ethereum (ETH) is above $3,600, reflecting a choppy market with no significant trends.

• Synthetix Perps Performance: Synthetix Perps achieved a total trading volume of $1.44 billion last month, with an average daily volume of $205.9 million, solidifying its leading position in on-chain perpetual trading.

• Pyth Governance Distribution: Eligible Synthetix users can now claim Pyth tokens to support early governance stages, enhancing the Synthetix-Pyth partnership.

• 500k SNX Fee Rebates: Synthetix announces a new SNX incentive program starting May 22, 2023, offering up to 500,000 SNX in fee rebates to boost perps trading on Base.

Performance Overview

📊 Synthetix Perps Data

- Total Volume: $429M (OP: $295M, Base: $134M)

- Avg Daily Vol: $61.3M (OP: $42.1M, Base: $19.1M)

- Lifetime Vol: $58.44B (OP: $56.65B, Base: $1.79B)

- Lifetime Fees: $43.11M (OP: $42.52M, Base: $591K)

In the last month, Synthetix Perps has continued to demonstrate robust performance with a significant uptick in trading volume, solidifying its position as a leading on-chain perpetual trading provider. Over the past 30 days, the platform has handled a total trading volume of $429M, comprising $295M from options (OP) and $134M from base trading. The average daily volume has reached an impressive $61.3M, with options contributing $42.1M and base trading adding another $19.1M.

Moreover, Synthetix Perps has achieved a lifetime trading volume of $58.44B, with options trading accounting for $56.65B and base trading $1.79B. The platform has also accrued substantial fees amounting to $43.11M over its lifetime, including $42.52M from options and $591K from base trading.

🐋 On-Chain Analysis - Follow The Whales

In the recent cryptocurrency market, Bitcoin (BTC) has remained above $69,000. Ethereum (ETH) has also remained stable, currently priced above $3,600. The open interest for both BTC and ETH remains robust, exceeding $40 billion, a significant increase from the prior month of almost 100%.

Notably, the largest open position at the moment is an Ethereum position valued at $10.9 million. The funding rate currently isn't necessarily skewed, suggesting a balanced sentiment in the market. However, despite these movements, the market has been choppy with not much happening in terms of significant trends or events.

With the wider stock market being volatile, theres a lot of potential for the upcoming months to experience some volatility in the crypto market 👀

Pyth Governance Distribution Now Live for Eligible Synthetix Users

We're thrilled to launch the Pyth Governance Distribution! Eligible members can now claim their Pyth tokens to support Pyth’s early governance stages and strengthen the Synthetix-Pyth partnership.

Eligibility for Pyth Token Claim

You may qualify if you’ve engaged in the past year by:

• Participating in governance channels like #governance and #spartan-council on Discord.

• Voting on Synthetix Improvement or Configuration Change Proposals.

• Serving on any Synthetix DAO.

• Authoring governance proposals.

• Staking SNX & engaging in Synthetix governance elections.

How to Claim

To claim your tokens:

1. Visit https://app.streamflow.finance/airdrop with your registered Solana wallet.

2. Sign in and verify your wallet.

3. Navigate to the airdrops page to see the Pyth Governance Distribution airdrop.

4. Claim your tokens.

With your new tokens, join Pyth’s journey in decentralized governance:

• Check out the Pyth Staking and Voting Guides.

• Join the conversation on Pyth Discord.

Onchain Summer with Base: Powered by Synthetix

This summer, Synthetix is excited to sponsor the finance and trading tracks at the Base Onchain Summer Buildathon. With the successful deployment of Synthetix V3 on Base, we're eager to see new innovations in user experience and financial mechanisms from the Base builders.

Why Participate with Synthetix?

• Comprehensive Tools: Extensive documentation and support through the Cannon deployment tool.

• Access to Funding: Opportunities to apply for ongoing project funding through the Synthetix Ecosystem Fund.

• Exclusive Invites: Participants receive invites to the Synthetix party at ETH CC in Brussels.

Get Started:

Jump into building with Synthetix by visiting our developer docs at Synthetix V3 Developer Docs.

Project Ideas:

• Integrate with perpetual futures markets.

• Develop new derivative or finance apps utilizing Synthetix liquidity.

• Create personal or business finance applications integrated with Synthetix V3.

500k SNX Fee Rebates for Trading Perps V3 on Base

Synthetix is thrilled to announce a new SNX incentive program starting May 22, 2023, aimed at boosting perps trading on Base. This initiative will provide fee rebates to attract new traders and increase trading volume.

Program Overview:

• SNX Allocation: Up to 500,000 SNX is reserved for fee rebates.

• Rebate Details: Traders can receive a 90% rebate on fees, capped at 50k SNX per week, distributed on a first-come, first-served basis.

• Duration: The program kicks off on May 22 and is slated to run for a minimum of 10 weeks, with extensions possible if the allocated SNX is not fully utilized.

Objectives & Governance:

The goal is to onboard new traders, generate more fees, and attract new liquidity, enhancing Synthetix Perps as a leading DEX on Base. The Treasury Council retains the right to adjust or suspend rebates to ensure the platform's integrity and to prevent practices like wash trading.

Impact & Distribution:

Building on the success of previous incentives, this program is expected to significantly enhance trading activity. Rewards are calculated weekly based on trading activity from Tuesday to Tuesday, with distributions following shortly after each period ends.

Transitioning to Synthetix V3: Scaling sUSD & Migrating SNX

Synthetix is embarking on a crucial phase with the rollout of V3, introducing a revamped foundation and architecture that enhances the scalability and decentralization of its stablecoin, sUSD.

Key Updates in V3:

• Shift from Inflationary to Real Yield: Synthetix V3 is moving away from minting SNX for incentives and now focuses on generating real yield from trading fees for liquidity providers and implementing a buyback-and-burn mechanism for SNX.

• Expanded sUSD Collateralization: V3 broadens sUSD backing to include SNX, ETH, USDC, and other approved tokens, increasing stability and scalability.

Simplified Participation: V3’s design simplifies engaging with Perps & Spot Markets, making it easier for users to participate.

Migration Plan:

• Increased Liquidity Incentives: Boosts for liquidity on Velodrome and Curve to support smooth migration.

• Phased Migration: Begins with Ethereum Mainnet in June, followed by Optimism.

• SNX and sUSD Migration: Seamless transition of SNX and migration to a new sUSD token, ensuring continuity and robustness.

This upgrade aims to strengthen Synthetix as a leading platform in decentralized derivatives and stablecoins, focusing on long-term sustainability and growth.

🔎 Synthetix Governance:

Synthetix Improvement Proposals (SIPs) describe standards for the Synthetix platform, including core protocol specifications, client APIs, and contract standards.It is hard to play catch up with all the latest SIPs, checkout the latest ones:

SIP-384: Synthetix OP SNX Appchain - Status: Approved

SIP-383: Multi-Collateral Margin Support — Perps V3 - Status: Vote Pending

SIP-382: List FRIEND-PERP on Perps V3 on Base - Status: Draft

SIP-381: Pool Owner Rewards Distribution Control - Status: Approved

SIP-378: Perps V3 — Integrator Requests & Improvements - Status: Approved

SIP-377: Add aUSDc (stataUSDc) as a new collateral type to Synthetix V3 on Base - Status: Approved

SIP-360: Synthetix V3 Cross-chain Elections System - Status: Approved

SIP-306: V3 Migration - Status: Approved

SCCP-327: Enable Perps V3 Markets / Update Parameters - Status: Vote Pending

🤝Community Tweets:

Kwenta | Polynomial | Rage Trade | Lyra | Thales | Toros | Pyth

✨This Month's Highlights

• Synthetix Perps Strong Performance: With a total volume reaching $1.2 Billion this month, Synthetix Perps are not slowing down!

• Ethereum's Market: Watch for significant movements as the largest Ethereum short position stands at $2.49 million with an entry at $1,700.

• Synthetix V3 Launch on Base: Synthetix V3 is now live, offering enhanced opportunities for liquidity providers and traders on the Base platform.

• Expansion of Perpetual Futures Markets: Introduction of 30 new perpetual futures markets on Base, including innovative assets like Bittensor (TAO) and Chainlink (LINK).

• Incentive Programs Rollout: New USDC and SNX incentive programs aimed to boost liquidity and market engagement on Synthetix V3.

Let’s dig in 👇

Performance Overview

Synthetix Perps Data (May 13th - May 20th)

- Total Volume: $923.2M (OP: $636M, Base: $287.2M)

- Avg Daily Vol: $131.9M (OP: $90.9M, Base: $41.0M)

- Lifetime Vol: $56.0B (OP: $54.7B, Base: $1.23B)

- Lifetime Fees: $42.0M (OP: $41.6M, Base: $419.1K)

In the past month, Synthetix Perps has shown strong performance, with a high trading volume Synthetix Perps remain as one of the most popular on chain Perp providers.Over the last 30 days, Synthetix Perps has seen a total trading volume of $1.2 billion. The platform also collected $906,000 in fees from around 30,000 trades completed by approximately 5,600 traders. This activity highlights the platform's strong performance and the trust it has earned from its users.

🐋 On-Chain Analysis - Follow The Whales

In the recent cryptocurrency market, Bitcoin (BTC) exhibited extreme volatility, reaching a peak of $72,000 before experiencing a significant decline to $57,000. The current open interest for both BTC and Ethereum (ETH) exceeds $22 billion, highlighting significant engagement from traders. 

Notably, the largest open position is an Ethereum short valued at $2.49 million, with an entry price at $1,700. This position might pose considerable risks for the trader, especially if the market rebounds or does not move in the anticipated direction. As ETH is currently priced far outside of the entry price at $3,100, it is interesting what their next move will be. 

Furthermore, the introduction of new markets in April has generated numerous intriguing trading opportunities, particularly with Synthetix perpetual contracts. These developments provide traders with various avenues to explore, ranging from potential high-risk and high-reward positions to more conservative strategies. Let's keep an eye on this position in the next edition and see what happens 👀.

Synthetic V3 is live on Base

Synthetix V3 has officially launched on Base, presenting users with opportunities to become liquidity providers, earn trading fees, and benefit from USDC/SNX LP incentives. By supplying USDC collateral to the Spartan Council Pool, participants can receive a portion of Perps trading fees and qualify for additional incentives from the Synthetix Treasury Council.

As liquidity on Synthetix V3 grows, it will support increased open interest and the introduction of new markets, enriching the ecosystem. To begin as an LP and explore incentive programs, users can follow the instructions provided in the "Providing Liquidity" and "Earning SNX & USDC LP Incentives" sections below.

Innovations introduced in Perps V3 include native cross-margining, configurable liquidations, improved settlements, and NFT-controlled accounts, enhancing both liquidity provider and trader experiences. Further developments and improvements are anticipated as Synthetix refines its V3 contracts and expands on Base, with ongoing adjustments to governance parameters and fee distribution.

USDC & SNX LP Incentives on Base

Synthetix is introducing incentive programs for USDC and SNX on Base to enhance liquidity provider collateral, which is essential for the expansion of Synthetix V3 and Perps V3.

Additionally, SNX incentives detailed in STP-14 will distribute 225,000 SNX over 10 weeks to incentivize USDC deposits on Base Andromeda. These rewards will attract USDC deposits to the Spartan Council Pool, with proportional allocation over the ten-week period, including a one-time distribution and weekly distributions.

To participate, users can follow the V3 Base LP Guide and deposit USDC collateral. Increased USDC collateral will enable Synthetix to support more perps markets and open interest, subject to governance approval. Currently, users can only deposit USDC to earn fees without minting stablecoins, with a 24-hour withdrawal lock-in period.

Synthetix Perps Launches 30 New Perpetual Futures Markets on Base

Synthetix is excited to announce the launch of new perpetual futures markets on Base, expanding its offerings to include assets such as Bittensor (TAO) and Chainlink (LINK). Approved in SIP-370, SIP-372, SIP-375, SIP-379, and SIP-380, these markets come with parameters set by SCCP-327, ensuring a diverse trading experience. Accessible exclusively via Synthetix Perps on Base, traders can leverage platforms like Kwenta to engage with these markets, opening up new avenues for investment and speculation.

Synthetix Perps relies on liquidity providers to support perps liquidity. By providing liquidity to the new Spartan Council Pool, LPs can earn a portion of the trading fees generated by the protocol. Additionally, Synthetix currently offers liquidity incentives in the form of SNX/USDC rewards for LPs in addition to the regular perps trading fees.

More liquidity in these markets will enable higher open interest, increased trading volumes, and the potential for additional markets to be launched on Synthetix Perps.

🔎 Synthetix Governance:

Synthetix Improvement Proposals (SIPs) describe standards for the Synthetix platform, including core protocol specifications, client APIs, and contract standards.It is hard to play catch up with all the latest SIPs, checkout the latest ones:

1. SCCP-327: Enable Perps V3 Markets / Update Parameters, Status: vote pending

2. SIP-377: Add aUSDc (stataUSDc) as a new collateral type to Synthetix V3 on Base, Status: approved

3. SIP-378: Perps V3 — Integrator Requests & Improvements, Status: approved

4. SIP-306: V3 Migration, Status: approved

5. SIP-376: List 11 markets from Perps V2 on Perps V3 on Base, Status: approved

6. SIP-373: Preemptive Approval for Listing ENA Token on Perps V3 on Base, Status: approved

7. SIP-374: Preemptive Approval for Listing DEGEN Token on Perps V3 on Base, Status: approved

8. SIP-375: List BOME-PERP and ETHFI-PERP on Perps V3 on Base, Status: approved

9. SIP-364: Reconfigure Grants Council, Status: implemented

10. SIP-367: Synthetix V3 Deployment to Arbitrum, Status: approved

11. SIP-360: Synthetix V3 Cross-chain Elections System, Status: approved

12. SIP-341: Add Configurer Address, Status: approved

13. SIP-371: Add sUSDe LP collateral support to Synthetix V3 on Arbitrum, Status: draft

14. SIP-369: Remove Maximum Rewards Distributors Limit, Status: approved

15. SIP-2059: Legacy Spot Synth Migration, Status: approved

16. SCCP-2093: Update of sETH Exchange Fees, Status: vote pending

17. SCCP-2094: Increase wETH Wrapper maxTokenAmount, Status: vote pending

18. SCCP-2095: Deprecate V2 Legacy Loans/Wrappers, Status: vote pending

🤝Community Tweets:

https://x.com/mastermojo83/status/1786074022209343590

https://x.com/KemarTiti/status/1784926113753604143

https://x.com/0x_____________/status/1781448347066261611

https://x.com/synthetix_io/status/1781035396568436798

https://x.com/adamscochran/status/1779957661280117112

On-Chain Analysis - Follow The Whales

If you're new to Onchain Trading, you have the option to track your preferred wallet and observe their market trading strategies. The Synthetix Perps "Watcher" website serves as an excellent resource for traders on their journey. You can check it out here: watcher.synthetix.io/positions.

This month, the most significant positions held on Synthetix Perps have mainly been in BTC and ETH. In the last 30 days, In just the past week, BTC's value has surged by almost 20%. Currently, the funding rate for BTC stands at 106%. Remarkably, BTC has reached the $60,000 mark!

DEFI Corner

In this section we will briefly discuss DEFI Options and Perpetuals in the on-chain space.  

DEFI Perpetuals:

This month's update covers Synthetix's trading volume reaching $919.8 million, reflecting active participation in the market. Key highlights include Bitcoin's surge to a new all-time high of $73.7k and Ethereum's positive performance. We also spotlight a significant $6.7 million SOL-PERP long position, showcasing Solana's traction among traders. With Synthetix's user base expanding to over 800,000, the platform continues to attract a broad and active community, indicating a strong and dynamic future in decentralized finance.

Let’s dig in 👇

Performance Overview

Synthetix Perps Data Report:

- Total Volume: $919.8M (OP: $845M, Base: $74.8M)

- Avg Daily Vol: $131.4M (OP: $120.7M, Base: $10.7M)

- Lifetime Vol: $52.1B (OP: $52.0B, Base: $132.4M)

- Lifetime Fees: $39.6M (OP: $39.6M, Base: $59.3K)

In the past month, Synthetix Perps has shown strong performance in the derivatives market, with a high trading volume that shows a lot of liquidity and trust from its users. The platform has kept up a steady flow of daily trades, supporting its growth. This month's numbers match up with Synthetix Perps' history of having a huge total volume and collecting a lot of fees, proving that users are staying engaged and the market is active.

On-Chain Analysis - Follow The Whales

Bitcoin just hit a new all-time high at $73.7k, showing the market's strong momentum and investor excitement. Alongside Bitcoin, Ethereum has been on an upward trend too, highlighting its solid performance. In the world of Synthetix Perps trading, a standout move has been a huge long position on SOL-PERP, valued at 6.7 million, putting a spotlight on Solana's potential within the trading community.

The ETH-PERP market has been especially active, with the 24-hour trading volume hitting 10.8 million. This indicates a high level of trader interest and activity in Ethereum on the Synthetix platform. Additionally, there's a significant amount of open interest in ETH-PERP, totaling over 41 million, which shows traders are really getting into Ethereum's market moves and are expecting moves soon 👀

The Synthetix trading platform itself is growing rapidly, now home to over 800,000 traders. This increase in the user base is a clear sign of Synthetix's appeal, its effectiveness as a trading platform, and the trust it has garnered within the crypto trading community. Watching the big trades and trends on platforms like Synthetix can give us valuable insights into what the more experienced traders are doing and the overall market mood.

Pyth Governance Distribution Explained

Pyth Network and Synthetix are teaming up to give some perks to those who've been active in Synthetix's governance over the last year. They're rolling out a plan that lets these folks get involved in what's called the Pyth Governance Distribution. This is a follow-up to an earlier announcement, and now they're giving more details on how it all works.

Who Gets to Participate

If you've been pretty involved with Synthetix by posting in their governance chats, voting on proposals, being part of their DAO, coming up with governance ideas, or voting in their elections, you might be eligible. They're going to check who's eligible in the second phase of this plan.

How to Claim Your Share

To get your part of the distribution, there's a simple process you need to follow on the Synthetix Discord server. You'll use a bot to say you meet the criteria and provide your Solana (SOL) wallet address. Make sure you do this within four weeks to keep your spot in line.

When You'll Get Your Distribution

After everyone eligible has given their SOL wallet address within the four-week period, the team will finalize the list and start sending out the distribution. If you're late or not eligible, you won't get any part of the distribution.

Why This Matters

This whole thing is about making sure those who've helped shape Synthetix get to have a say in Pyth Network too. It's about making sure the community stays active and involved in decisions. Pyth Network is just getting started with its own version of community decision-making, and they want Synthetix's experienced folks to help lead the way.

Synthetix Adds New Perps Markets for Trading

Synthetix has rolled out four new markets for those interested in leverage trading. These include options for Starknet (STRK), Convex Finance (CVX), Pendle (PENDLE), and Jupiter (JUP). This expansion was made official through several Synthetix Improvement Proposals (SIPs) and a Synthetix Configuration Change Proposal (SCCP).

Starknet is Back in Action!

An important update for traders: Starknet (STRK) trading was put on hold but as of March 6th, it's back online and ready for action.

Trading Details

For those looking to trade these perps, you'll find them on platforms that use SNX liquidity and support perps trading. Just to note, Synthetix itself doesn't provide a trading interface but relies on external platforms like Kwenta and Polynomial for that.

About the New Markets

Adding these new options means traders have more assets to pick from when trading on leverage. The prices for these futures are set by an off-chain oracle from the Pyth Network. For specifics on fees and settings, which could change, check out SCCP-2082 or get in touch with the platforms hosting these trades.

How Markets Get Listed

The process for adding new perps markets involves assessing market demand, liquidity, and how much prices swing. It requires a nod from Synthetix Governance through SIPs and SCCPs to set up the market's details. Data from Pyth and Chainlink plays a crucial role in deciding which assets make the cut.

Synthetix Governance

Synthetix Improvement Proposals (SIPs) describe standards for the Synthetix platform, including core protocol specifications, client APIs, and contract standards.It is hard to play catch up with all the latest SIPs, checkout the latest ones:

1. SIP-354: Perps V3 Asymmetric Funding, Status: Approved

2. SIP-362: Transaction Costs based Rewards — Perps V3 — Ecotone, Status: Vote Pending

3. SIP-2057: List STX on Synthetix Perps, Status: Vote Pending

4. SIP-365: Remove Core Fee Switch, Status: Approved

5. SIP-366: Asynchronous Delegation, Status: Approved

6. SIP-360: Synthetix V3 Cross-chain Elections System, Status: Approved

7. SIP-341: Add Configurer Address, Status: Draft

8. SIP-361: Perps V3 — Integrator & CC Requests, Status: Approved

9. SIP-364: Reconfigure Grants Council, Status: Draft

10. SIP-353: Improve Protocol Coordination, Status: Draft

11. SIP-367: Synthetix V3 Deployment to Arbitrum, Status: Draft

12. SIP-2059: Legacy Spot Synth Migration, Status: Draft

13. SIP-363: List SNX, SOL, and WIF on Perps V3 on Base, Status: Draft

14. SIP-368: Preemptive Approval for Listing W Token on Perps V3 on Base, Status: Draft

15. SIP-2058: List Axelar Token (AXL) on Synthetix Perps, Status: Draft

Ecosystem Update

Kwenta | Polynomial | Rage Trade | Lyra | Thales | Toros | Pyth

Background Info on TLX

• Max, who manages comms for TLX, discusses the team of seven’s extensive background in academia and DeFi. This includes PhDs in computer science with a focus on Ethereum security, and Daniel, co-founder of TLX, was also a founder of stablecoin project Gyroscope. 

• Started TLX 8 months ago, prior was working in making DeFi collateral more efficient, then with the advent of DeFi perps decided leverage tokens were a perfect opportunity

Leverage Token Deep Dive

• Max explains that leverage tokens are not a new concept, but have been around for a long time in traditional markets, and TLX is looking to fill a gap by providing a go-to place for trading them.

• In short, leverage tokens are an automated way to go long or short a specific asset, where the position continuously rebalances as the price moves.

• While other platforms like FTX used a fix time interval as the primary variable for rebalancing, TLX uses a target range of leverage. Once it goes outside of that range the protocol will add or reduce leverage to get it back in range

• Max explains the difference between leveraged tokens and perps, highlighting the benefits of leveraged tokens, such as maintaining leverage as positions appreciate.

• Overall: In a trending market, leverage tokens can provide higher exposure to price movements, either for or against the trend. In a stalled price action or flat and volatile market, leverage tokens can lead to volatility decay and reduce exposure over time.

• Max also discusses using leverage tokens for liquidity provision and delta neutral strategies using TLX that go beyond just users longing and shorting an asset.

• Assets will start with 2x leverage and potentially go up to 10 or 20x for different assets, and they will slowly roll out the assets and leverage offered, 

TLX Governance Structure, Liquidation Points, Rewards Program

• Taking inspiration from Synthetix, TLX uses multiple councils that oversee project decisions. Primary council (Tabby Council), Ecosystem Council, and Intern Council

• Max believes that voting on delegates rather than parameters will increase participation in crypto governance.

• Westie also suggests the governance structure is the best option for representing the community's views, as it solves for voter apathy and requires individuals to spend most of their time and expertise in the field, rather than being extremely knowledgeable about the protocol.

• The Intern Council is a new idea that allows community members to participate in a more unorthodox way, such as posting memes or educational content, to foster community building and create a fun and enjoyable environment.

• Protocol aims to reward users who lost heavily in trades with "liquidation points" as a way to engage and appreciate the community.

• Taking inspiration from other exchanges, the referral program is a key feature of TLX’s product in order to facilitate more users migrating to the platform.

TLX vision

• TLX's vision is to create a niche market for leveraging tokens within the DeFi ecosystem.

• TLX aims to be the best leverage tokens protocol, focusing on dominating the niche and providing a go-to platform for trading leverage tokens on chain.

Introduction

• Joined by Jayant CTO of Douro Labs, a company working on Pyth, a decentralized high frequency low-latency oracle solution 

• Jayant has been interested in crypto since 2014, when he created a trading bot when the market was less competitive. 

A market data vertical for DeFi applications.

• Jayant explains that Pyth is a first-party Oracle that provides market data from licensed data providers, ensuring sustainability for both data providers and users.

• Jayant highlights how Pyth differentiates itself from other Oracle services by being a first-party Oracle, allowing data providers to retain ownership of their data and license it for distribution.

• Pyth provides real-time US equity prices through its network of data providers, including big traditional finance firms like Two Sigma and Jane Street.

• Pyth is designed to work across multiple blockchains, with price data available on over 50 blockchains in real-time, every 400 milliseconds.

• Pyth’s differentiating factor is a “pull-based” oracle versus a “push-based” which helps further reduce latency. 

Data aggregation and price feed distribution in blockchain.

• Data providers stream quotes to software, which sends prices to Pythnet chain.

• Jayant explains how data providers stream prices to Pythnet, where a program aggregates the data to prevent manipulation.

• The system uses Wormhole to bridge the price updates to other blockchains [from Pythnet], and contracts on each blockchain can verify the messages.

Decentralized data providers and security measures.

• Jayant explains that prospective data providers for the network must have first-party data and go through an onboarding process to be permissioned to publish prices for specific symbols.

• The number of high-quality data providers has increased over time, with over 100 data providers now on the list, including major crypto exchanges and trading firms.

• Jayant: Data providers are permissioned, reducing risk of malicious attacks.

• Reputation of data providers guards against exploits, making it less likely for individuals to collude.

• Having many data providers also helps alleviate any issue with a single provider

• Jayant doubts other permissionless systems can work due to security concerns

• Other oracle's potential slashing system may not be feasible due to economic incentives and data security concerns.

Integrating Oracles into DeFi protocols with latency considerations.

• Jayant: Decentralized Oracle systems are unlikely to be faster than high-frequency traders' optimized pipelines.

• Built-in delay is a natural part of the trading process, with prices and fills occurring within seconds of each other.

• Oracle data can have confidence intervals, which are used by protocols to make decisions based on the uncertainty of the data.

• Jayant suggests that protocols can use these confidence intervals to tolerate latency in certain situations, such as borrowing and lending.

Decentralized governance and price uncertainty in a decentralized protocol.

• Jayant explains the purpose of confidence intervals in market data, which represent uncertainty ranges for asset prices and can be used to incorporate dispersion information into downstream usages.

• There is an additional layer of risk analysis provided by confidence intervals for protocols ingesting and using this data.

• The governance model of Pyth is controlled by token holders through a decentralized governance system.

• Jayant discusses the challenges of decentralized governance and how Pyth Gov system is based on the Synthetix’s model, with token holders electing members to two councils: Pythian Council and Price Feed Council, each with different powers.

Decentralized governance models

• Community engagement and representation in direct tokenholder voting is limited, but representative council system could improve it.

• Jayant: Ideal governance system is no governance, but practical in some cases.

• Representative councils improves community involvement and shares insights on future features and improvements.

• Jayant discusses the company's focus on investing in the features of their Oracle product to maintain its lead in latency, reliability, and performance.

Synthetix Perps and Pyth Network solutions.

• Pyth's speed and efficiency in listing and dropping new tokens impresses, with dependence on smaller Oracle services decreasing.

• Matt discusses the evolution of Synthetix governance and the importance of Pyth in the space.

Synthetix Perps impresses with a 7-day total volume reaching $678 million, showcasing active market engagement. Bitcoin and Ethereum lead positions amidst BTC's surge to $60,000, stirring interest in market dynamics. Synthetix Loans undergo parameter changes for enhanced stability, while the Pyth Retrospective Airdrop celebrates platform milestones. Excitement brews with the collaboration between Synthetix and Ethena Labs, promising further innovations. Stay tuned as we delve into the dynamic world of decentralized finance, with much more to uncover.

Performance Overview

📊 Synthetix Perps Data Report:

- 7-Day Total Volume: $1.767 billion

- Average Daily Volume: $252.4 million

- Lifetime Perps Volume: $48 billion

- Lifetime Fees: $36.7 million

In the past month, Synthetix Perps has shown strong performance in the derivatives market, with a high trading volume that shows a lot of liquidity and trust from its users. The platform has kept up a steady flow of daily trades, supporting its growth. This month's numbers match up with Synthetix Perps' history of having a huge total volume and collecting a lot of fees, proving that users are staying engaged and the market is active.

On-Chain Analysis - Follow The Whales

If you're new to Onchain Trading, you have the option to track your preferred wallet and observe their market trading strategies. The Synthetix Perps "Watcher" website serves as an excellent resource for traders on their journey. You can check it out here: watcher.synthetix.io/positions.

This month, the most significant positions held on Synthetix Perps have mainly been in BTC and ETH. In the last 30 days, In just the past week, BTC's value has surged by almost 20%. Currently, the funding rate for BTC stands at 106%. Remarkably, BTC has reached the $60,000 mark!

Parameter Changes for Synthetix Loans

In a significant update, Synthetix has announced changes to its loan parameters following the adoption of SCCP-2081. Starting March 1st, the platform will increase interest rates and issuance fees on existing sUSD and sETH loans, marking a shift towards aligning with market rates after nearly a year of disabling new loans.

Despite the pause on new borrowing, a substantial amount of debt in sUSD and sETH, backed by ETH collateral, remains outstanding. To address this and encourage loan repayment, Synthetix is making key adjustments:

• Issue Fee Rate Increase: Immediate implementation of a 1% fee for issuing sUSD and sETH against existing ETH collateral, up from virtually 0%.

• Borrow Rate Increase: Set for March 1st, the annual interest rate on existing loans will rise to 30%, providing borrowers ample time to settle their loans to avoid the new charges.

These measures aim to motivate the repayment of the outstanding $1.7 million in sUSD and 2,697 sETH loans, stabilize the sUSD peg, and prepare for the integration of a more efficient CDP loan system in the upcoming Synthetix V3 architecture. Importantly, these changes will not affect stakers, only borrowers using ETH collateral.

Read the Blog Post Here

DEFI Corner

In this section we will briefly discuss DEFI Options and Perpetuals in the on-chain space.  

DEFI Perpetuals:

Top On-Chain Perp Protocols this week by volume:

Optimism: Kwenta, Mux Protocol Polynomial

Base: IntentX, Basedmarkets

Arbitrum: Hyperliquid, Vertex

Ethena and Synthetix

Ethena Labs is developing a decentralized stablecoin, USDe, on Ethereum, aiming to offer a crypto-native financial solution independent of traditional banking. Synthetix is thrilled to announce a collaboration with Ethena to integrate its first decentralized perpetuals exchange, leveraging Synthetix for collateralization of USDe.

The choice to build on Synthetix is strategic, considering the platform's capability to offer deep on-chain liquidity and access to Ethereum's Layer 1 liquidity, crucial for operations and the successful deployment of USDe. Synthetix's advancements, particularly with version 3, align with goals by providing a flexible and efficient framework for liquidity deployment and introducing diverse forms of collateral.

Ethena plans to serve as a liquidity provider on Synthetix, using USDe as a margin instrument and approved collateral. This integration is expected to benefit both platforms significantly. For Synthetix, Ethena's stablecoin and volume contributions will enhance liquidity and create a more attractive environment for traders.

Looking ahead, Ethena is set to conduct internal testing of the delta-neutral USDe strategy with selected partners. This phase will ensure smooth integration with Synthetix perpetuals, marking a significant step towards providing a scalable, stable, and censorship-resistant financial solution on the blockchain.

Synthetix Governance

Synthetix Improvement Proposals (SIPs) describe standards for the Synthetix platform, including core protocol specifications, client APIs, and contract standards.It is hard to play catch up with all the latest SIPs, checkout the latest ones:

1. SIP-360: Synthetix V3 Cross-chain Elections System - Status: draft

2. SIP-354: Perps V3 Asymmetric Funding - Status: draft

3. SIP-2054: List PENDLE on SNX Perps V2 - Status: draft

4. SIP-357: Chainlink Node with Staleness Check - Status: draft

5. SIP-358: Introduce ‘lockedOiMultiple’ to Perps V3 - Status: draft

6. SIP-359: Perps V3 — Bypass Checks on Position Risk Reduction - Status: draft

7. SIP-355: Add extra views to Spot Markets - Status: approved

8. SIP-2052: List CVX on SNX Perps V2 - Status: approved

9. SIP-2050: Deprecate sINR Synth - Status: implemented

10. SIP-2051: Deprecate Perp Markets with 0 Max Market Value - Status: approved

11. SCCP-2077: Activate the MMV Risk Control Module - Status: approved

Community Tweets

ΔLΞXΔNDΞR | Bet More: The @synthetix_io L1 perpetual will be the cheapest...

Vance Spencer: Ethena using SNX V3 is going to be one of the coolest...

Synthetix: Stake $SNX on Optimism or Ethereum to receive weekly fees...

MattLosquadro: synthetix perps is - live on @Optimism via perps v2...

TLX: Introducing TLX: The leveraged tokens protocol powered by @synthetix_io...

Infinex: Calling all @synthetix_io debt share holders...

Pyth Network: @synthetix_io is #PoweredByPyth...

Synthetix Ambassadors: SNX Ambassadors Project Spotlight: @dHedgeOrg!...

Ecosystem Update

Infinex | Kwenta | Polynomial | Rage Trade | Lyra | Thales | Toros | Pyth

Welcome to the third edition of the Spartan Research Collective. Building upon our previous issues, we remain dedicated to exploring the Synthetix ecosystem and the expansive Optimism network, offering fresh insights and updates.

In this week's edition, we dive into the most recent performance metrics of Synthetix Perps, investigate tools for tracking on-chain trading activities, propose strategic recommendations for the growth of Synthetix, and provide the latest updates from the protocol. Join us as we continue to unravel the complexities of Synthetix and its pivotal role in the Optimism ecosystem.

Performance Overview

📊 Synthetix Perps Data Report:

- 7-Day Total Volume: $289 million

- Average Daily Volume: $41.4 million

- Lifetime Perps Volume: $44.57 billion

- Lifetime Fees: $34.90 million

On-Chain Analysis - Follow The Whales

For those of you new to Onchain Trading, amidst the recent market volatility, you have the opportunity to follow your favorite wallets and observe how they navigate these volatile markets. A great tool to assist in this is the Synthetix Perps “Watcher” website. This platform is incredibly useful for traders embarking on their journey, offering real-time insights into trading strategies and market movements. Check it out at https://watcher.synthetix.io/positions to enhance your trading experience in these volatile times.

Currently the largest positions open are as follows:

The market has been really volatile lately, especially for Ethereum (ETH). In the past month, ETH's price has been ranging between $2,200 and $2,700.

Scaling Andromeda

In recent updates from Synthetix, the Andromeda Release has emerged as a key milestone. This release integrates Core V3 and Perps V3 on the Base chain, marking a significant step in Synthetix's evolution. Andromeda is already live, bringing in traders, developers, and integrators with initial caps on open interest and liquidity providers. These caps will gradually increase, transitioning users from Perps V2 to the more advanced Perps V3.

The Spartan Council, governing Synthetix, is closely overseeing this transition. They've outlined stages for ramping up, starting with initial liquidity seeding and moving towards expanding trading pairs and increasing caps. A notable update in Perps V3.1 is the introduction of asymmetric funding to balance liquidity provision.

Key features of Andromeda include multi-collateral support, enhanced liquidation processes, and a unique testing environment. It's a big leap for liquidity providers too, with USDC now an option for collateral, offering more efficiency. Traders can look forward to an improved experience with cross-margin and multi-collateral options.

Read the Blog Post Here

The Basics of Staking SNX in 2024

Staking SNX tokens is key to fueling liquidity in Synthetix's derivative markets, including Perps, spot, and options trading. As a staker or liquidity provider, you play a vital role in ensuring these markets run efficiently, offering deep liquidity and low fees. In return, you receive a share of the trading fees as a weekly reward, helping to offset your debt.

Over the last year, Synthetix Perps has processed a massive $40 billion in trades, yielding over $30 million in fees for stakers. But remember, staking isn't risk-free. Market imbalances might require you to cover trader profits, posing a potential risk.

Here's a quick guide to SNX staking, specifically for the V2x system:

1. Stake SNX & Mint sUSD: Go to staking.synthetix.io, connect to either Optimism or Ethereum Mainnet, and follow the steps to stake SNX and mint sUSD.

2. Debt Dynamics: Minting sUSD is akin to a loan against your SNX. Your debt varies with the overall debt pool's performance, and trading fees reduce it weekly.

3. Manage Your Stake:

   1. Hedge Debt: Use dSNX for easy hedging or do it manually.

   2. Maintain C-Ratio: Keep your collateralization ratio balanced to avoid liquidation.

   3. Automate with Gelato: For efficiency, automate staking and minting.

   4. Lock Periods: There's a 7-day lock after minting sUSD or staking SNX.

   5. Unstaking: Burn all sUSD to free your SNX. SNX in escrow can't be moved.

   6. Weekly Rewards: Stay staked before each Wednesday for rewards.

   7. Liquidation Risks: Regularly check your C-Ratio to avoid penalties.

Read the Blog Post Here

Synthetix Governance:

Synthetix Improvement Proposals (SIPs) describe standards for the Synthetix platform, including core protocol specifications, client APIs, and contract standards.It is hard to play catch up with all the latest SIPs, checkout the latest ones:

1. SIP-355: Add extra views to Spot Markets - Recap of the presentation.

2. SIP-2052: List CVX on SNX Perps V2 - Recap of the presentation.

3. SIP-2050: Deprecate sINR Synth - Recap of the presentation.

4. SIP-2051: Deprecate Perp Markets with 0 Max Market Value - Recap of the presentation.

5. SCCP-2077: Activate the MMV Risk Control Module - Recap of the presentation.

6. SIP-2047: Begin migrating Perps V2 markets - Status: Implemented.

7. SIP-2049: Begin migrating offchain Perps V2 markets - Status: Implemented.

8. SCCP-309: Increase Base LP limit to 1M USDC - Status: Draft.

9. SIP-2048: MaxMarketValue Risk Control Module - Status: Draft.

Community Tweets:

Polynomial: The clan wars have come to an end, and...

Gauthamzzz: you can now trade jito...

PythNetwork: Pyth Data is on the move...

Toros Finance: February 5th. Stay tuned for what's unfolding at Toros...

mastermojo83: What I learned from the @Kwenta_io...

Infinex: Calling all @synthetix_io debt share holders...

Infinex: IR-3: Governance v1.2...

Ecosystem Update

Infinex | Kwenta | Polynomial | Rage Trade | Lyra | Thales

Subscribe now

Tweet Recap - Synthetix

TLDR:

• Infinex & Lit Protocol: Focus on bridging the gap between centralized and decentralized exchanges, enhancing user experience while maintaining decentralization and self-custody.

• Centralized vs Decentralized Exchanges: Centralized exchanges offer a better user experience but pose risks. Infinex aims to provide a decentralized platform with similar user experience to CEX’s.

• Infinex’s Innovation: Each user gets a unique smart contract for increased security and ease of use, integrating well with other DeFi applications. Users can log in with email & other methods + secure their account with typical 2FA.

• Security and Key Management: Infinex utilizes Lit Protocol's secure key management, enabling decentralized, flexible, and secure access to DeFi services.

• Future Developments: Ongoing enhancements to user experience and security, inviting community involvement in testing and feedback. Infinex is releasing soon on Base with the Synthetix Andromeda Release.

Questions and Summarized Answers

Centralized vs Decentralized Exchanges

• Question: Why do users prefer centralized exchanges and benefits?

• Answer:

  • Centralized exchanges offer superior user experience (UX).

  • Despite known risks, they provide convenience and reliability.

  • Users do not have to utilize their own keys (b/c who in the real world knows what a key is)

History and Purpose of Infinex

• Question: What is Infinex's role in decentralized finance?

• Answer:

  • Aims to combine the ease of centralized exchanges with decentralized benefits.

  • Utilizes Lit Protocol for secure, decentralized key management.

Infinex’s Unique Positioning

• Question: Why is Infinex crucial now?

• Answer:

  • Addresses UX challenges in DeFi.

  • Bridges the gap between centralized convenience and decentralized security.

  • We’re at a point where DeFi has solved core UX problems across various protocols, but no one has combined all of these innovations together like Infinex is doing.

UX Challenges in DeFi

• Question: How does Infinex tackle DeFi UX challenges?

• Answer:

  • By creating a user-friendly interface that rivals centralized exchanges.

  • Simplified log in experience for users.

  • Ensures security and transparency inherent to decentralized platforms.

Infinex Security Core

• Question: What led to Infinex’s new security architecture?

• Answer:

  • There is a need for a balance between user control and minimized risk.

  • Integration of advanced technologies like MPC and SEV for robust security.

Partnership with Lit Protocol

• Question: How does the Lit Protocol partnership benefit Infinex?

• Answer:

  • Provides a decentralized key management system.

  • Enhances security and flexibility for Infinex users.

Decentralized Key Management System

• Question: Can you explain Infinex's decentralized key system?

• Answer:

  • Uses Lit Protocol to manage keys securely and efficiently.

  • Ensures user access is safeguarded and decentralized.

Challenges and Risks

• Question: What are Infinex’s main challenges and risks?

• Answer:

  • Balancing user control with risk mitigation.

  • Ensuring smooth integration with other DeFi platforms and third-party dApps.

Future Developments

• Question: Any upcoming developments for Infinex?

• Answer:

  • Continuous improvement of UX and security.

  • Inviting community involvement in testing and development phases.

  • Release on Base

Twitter Thread - Synthetix

What were the key factors behind the success of Synthetix Perps V2?

Synthetix has been involved in the perps race for years, and on-chain perps have shown much more interest recently. Perps V2 moved away from the tokenized synthetic asset model Synthetix was using and shifted towards credit-based liquidity provisioning. V2 has finally broken through in scaling perps infrastructure and has gotten there reliant on mechanism design and game theory by incentivizing arbitragers to keep markets neutral. It seems like we’ve hit limits in what the user base can support, but each wave of this gets higher every time as there is more demand.

With the introduction of USDC as a new collateral type in Andromeda, what impacts do you foresee on market liquidity and stability, and how might this influence trader and LP behavior?

Historically, Synthetix has had to solve two hard problems at once: a stablecoin and a derivatives protocol. This is both ambitious and becomes quadratically harder with two objectives. So, when you reach a point where demand gets too high and liquidity is constrained, this is compounded by the fact that the stablecoin starts to feel some headwinds. In V3, this is separated out, LPs can provide liquidity in USDC. In addition, if you look at the current model, SNX needs to be 500% overcollateralized. With USDC, this allows for much better capital efficiency and higher yield.

Has not having USDC stopped people from using Perps V2?

Having a decentralized stablecoin, the price can fluctuate a good amount based on flows of funds to and from perps trading, which can be tough in terms of UX. You want to easily go in and out of stablecoins with your positions, which is tougher with just sUSD. This will be much improved with Andromeda.

Can you (Afif/Sunny) elaborate on the key new features that are upgrading Perps V3 and how this is helping to bring Synthetix Perps into feature parity with CEX exchanges?

• Cross Margin

• Margin backing multiple positions at once.

• Multi Collateral (spot synth collateral)

• Can use synths as collateral, USDC, etc., but can expand from there via governance.

• MEV-Resistant Liquidations

• Can't have a centralized liquidation address anymore, so some configurable parameters mean liquidations happen progressively.

• Deterministic Order Settlement Improvements

• Users get better and more transparent prices.

What’s the initial release of Andromeda going to look like - with LP Caps, OI, market support, etc?

Starting on the mainnet with LP Caps that will be slowly raised over time. It's hard to say what the timeline looks like. The guess as to when it will be fully live is February.

What key metrics and indicators are being used to define the success of the Andromeda Release in the short to medium term?

First and foremost, make sure there are no critical bugs and that things work. Once things are up and running, we want to ensure the risk profile for LPs is as expected, seeing more people trade and plug in to scale the market. In particular, looking at LP returns being up and to the right is the most important thing.

Can you elaborate on the technical improvements introduced in Core V3 for the Perps V3 market?

The main goal was to set things up in as modular a process as possible. The flexibility will be a huge unlock: new collateral, new markets, new configurations, etc.

Built on the same router infrastructure as V2, building a “super-market.” It will be great once we get multiple “super-markets” in the wild. We should be able to ship new features very quickly.

The LP can pick which super-market they deploy to, which will depend on how governance decides to introduce how these markets are separated out. The core system and LPs have their debt paid off by the performance of the super-market.

How does the deployment of Andromeda on Base fit into Synthetix’s broader multi-chain strategy? What comes next?

We have a repository that has whatever features we want on each deployment, so cross-chain deployments are easy. We can manage an infinite number of them in theory.

Oracle implementations are a huge part of the protocol. The original EIP needed for this kind of thing was ERC-3668. It has some limitations, so it was replaced by ERC-7412, which can be explained as: If I need oracle data and it's not showing up, I can call something that fetches the data and puts it on-chain. This is a big unlock because as long as there's this verifier contract on-chain, the whole system can be deployed using that dependency. It allows for more cross-chain scalability.

Cross-chain queries would be similar, but rather than price feeds, it would be getting something like the amount of collateral backing the market on a different chain.

Goal: If the standard gets widely adopted, we can have all sorts of oracle networks that can be used, allowing end-users to make orders and have them settled with any price feeds without relying on keepers to write the data on-chain.

What can we anticipate for the future of Synthetix post-Andromeda?

Focusing on getting things right on Base first. Shift things over to V3 and into different deployments over time. Maybe move to another chain being entirely collateralized by ETH. We would also love to see the introduction of markets besides perps. Ensuring gas is not a limiting factor, and the introduction of new governance code for better decentralized governance will also be a goal in 2024.

Conclusion

Andromeda is live on Mainnet with minimal parameters as a testing ground. We are getting closer to launching it on Base. There will be plenty of communications to follow with respect to the move to Base.

Twitter Recap - Synthetix Twitter

1. Introduction to Infinex

• Overview: Infinex, a new Synthetix integrator front end, aims to integrate the advantages of DeFi with the user experience of centralized finance.

• Key Features: Focuses on self-custody, transparency, and composability.

• Users will log in using social logins

• Deposit from ETH L1, Infinex in the backend handles bridging to wherever Synthetix liquidity exists (initially only on Base)

• Integrating with Synthetix Andromeda Release & Perps V3

2. User Experience in Centralized vs Decentralized Exchanges

• User Preference for Centralized Exchanges: Many users favor them for their superior user experience.

• Trading Volume Dominance: Centralized exchanges still lead in trading volumes, despite risks like the FTX collapse.

3. Barriers to Decentralized Finance Adoption

• Complexity of Private Key Management: Users find managing private keys and wallets challenging.

• Identity Verification: Centralized exchanges offer a simpler and more user-friendly process, and do not have the same risks of lost keys. Though, they do have other risks.

4. Simplifying User Experience in Crypto

• Industry Challenge: Making the management of seed phrases less intimidating.

• Security vs. Usability: Balancing complicated security measures with user accessibility.

5. Vision and Goals of Infinex

• Combining Security and Ease of Use: Aiming to merge decentralized security benefits with centralized user-friendliness.

• Bridging the Gap: Maintaining decentralization benefits while offering a centralized exchange-like experience.

6. Technological Innovations in Infinex

• Trustless Compute: Key to creating a decentralized yet user-friendly platform. Building this alongside Lit Protocol.

• Competitive Technology: Decentralized trading technology now rivals centralized databases.

7. Advantages of Infinex's Fresh Start

• No Legacy Constraints: Ability to integrate the best-decentralized infrastructure seamlessly.

• Connecting to Decentralized Ecosystems: Linking users to DeFi.

8. User Experience and Decentralization

• Shift in Focus: Prioritizing better user experience, even at the expense of some decentralization.

• Diversity in Web3 Interfaces: Catering to various user needs in the open, permissionless Web3 environment.

• Users can decide to utilize ‘social recovery’ or stick to their own hardware wallets.

9. Synthetix's Role and Strategy

• Infrastructure Development: Building a foundation for scalable projects.

• Robust Environment for Developers: Synthetix V3 facilitates the integration of complex components.

10. Future Prospects and Scalability

• Synthetix and Infinex's Growth: Tied in with Synthetix Andromeda Release on Base.

• Opportunities for Experimentation: The deployment on platforms like Base influences Infinex's trajectory.

• Innovation within the Ecosystem: The Synthetix ecosystem allows for experimentation and development within V3.

Twitter Recap - Synthetix

Spartan Council Update

• A significant number of SIPs, particularly core V3 SIPs, received approval from the Spartan Council.

• Transitioning Synthetix to a zero-inflation, deflationary model was a key strategic move, with the Andromeda release incorporating a buyback and burn mechanism funded by 40% of accrued fees.

• The Council expressed a cautious approach towards bridging solutions, preferring to evaluate additional proposals over time. When bridging SNX from base to LP, users will use the native bridge from Base or aggregators like Bungee.

• Upcoming epochs will involve close monitoring of the base deployment and Perps V3 on base and readiness for adding more markets and integrators.

• All SIPs that got approved this epoch can be found here: https://sips.synthetix.io/all-sip/ 

Review of Perps V2 Successes

• Perps V2 has seen a strong 2023, generating 40b+ in volume and 30m+ in LP fees. This has demonstrated an effective model that provides highly delta-neutral exposure even for long-tail markets.

• The robustness of the risk management system was confirmed by the rapid and efficient balancing of large positions and liquidations.

• Liquidators are even bribing the OP sequencer with large ETH transaction fees to liquidate before others.

• Risk management is underpinned by two key features - dynamic funding rates and price impact.

• If you were to plot fees/trading volume/etc on a chart, it'd be up and to the right, which is great.

• Perps V2 Review - 

https://twitter.com/synthetix_io/status/1737193612180623710

• /photo/1 

Andromeda Release Overview

• Live on Base mainnet for integrator testing. Very low caps for trading and LP'ing.

• This includes core V3 LP app + trading functionality from integrators.

• Andromeda represents the initial phase of Perps V3, showcasing new features such as cross-margining, multi-collateral margin, improved deterministic settlement, and enhanced liquidation processes for large positions.

• Initial deployments will use USDC as collateral, with multi-collateral capabilities to be gradually introduced post-launch with governance approval.

• Link to learn more about Andromeda:

https://twitter.com/synthetix_io/status/1735734268624609719

Perps V3 on ETH Mainnet

• Perps V3 has been tailored for Ethereum L1 to accommodate larger traders and protocols, enabling strategies like staked ETH collateralizing ETH shorts from protocols like Ethena

• The Ethereum L1-specific perps market will focus on capital efficiency and reducing reliance on cross-chain bridges.

• This offering will be built to support those who can stomach large gas fees, something in the $50-100 per trade.

• Ethena & Synthetix blog post - https://mirror.xyz/0xF99d0E4E3435cc9C9868D1C6274DfaB3e2721341/tjd5bOkKWK4rpmAIjTrRH4xs4-OF4ym66mg9jMkhrKo 

Core V3 Updates

• For Core V3, the following steps are to make configuration changes as required, remove the feature flags on permissionless pools and permissionless markets once approved by governance, and onboard new governance collateral types and such with governance approval.

DAO and Ecosystem Brief

Council Updates

• Ambassadors: Focused on governance representation within the Optimism ecosystem, securing RPGF for Synthetix-related projects, and aiding in grant applications.

• Grants: Supported new use cases within the ecosystem and community-driven programs.

Ecosystem Updates

• Kwenta: Reported substantial growth with increased daily active traders and volume, highlighting organic traction without additional incentives. They are working on a secret project utilizing Synthetix V3 and planning to introduce social login and account delegation for an improved user experience.

• Polynomial: Focused on revamping the V3 infrastructure and optimizing the limit order system, with an eye on account abstraction and referral programs.

• Infinex: Preparing for mainnet launch with user onboarding and UX improvements to mimic a centralized exchange experience. Their incremental fee strategy aligns with the ecosystem's buyback and burn model.

• Lyra: Launched V2 with a new optimistic roll-up, introducing portfolio margin for multiple asset classes. They're working on expanding composability and cross-collateralization with other protocols.

• Thales: Launched speed markets with a fast oracle solution and is developing a cross-chain staking and revenue-sharing mechanism using Chainlink's CCIP. Account abstraction and mobile user experience are significant focus areas to enhance accessibility and user engagement.