Synthetix‘s recent governance call sparked a wave of new interest in the leading derivatives protocol. Coming out of the call, many prominent DeFi Twitter personalities highlighted their bullish outlook on the future of Synthetix given the numerous upcoming launches that will drastically expand the protocol’s product offerings.
I haven't been as active and involved in the @synthetix_io community recently but the latest governance call completely reignites my bullishness again.
The amount of support it gets from people across different spectrums is simply astounding.
— Arthur👨🌾🌽⚔ (@Arthur_0x) June 23, 2020
As such, we’ve decided to compile a brief summary of the recent community governance call to give our readers an idea of what’s coming next for Synthetix
Thanks to everyone who joined us for the recent community governance call, here's the video link for anyone who missed out: https://t.co/DoUWQKlriQ
— Synthetix ⚔️ (@synthetix_io) June 23, 2020
Acrux Release (in 1 week)
In about a week, Synthetix is launching the Acrux upgrade which will feature a notable new product to the protocol – Binary Options. While Acrux will feature more than just Binary options, like SIP 48 and the stale rates update, the introduction of this new options contract is one of the more notable launches in the product roadmap. Binary options will allow users to take a position on a future event that provides a fixed payout based on the binary outcome in the future (hence the name). Like normal options contract, binary options have a maturity date where the contract will payout on maturity if the price of the chosen asset is above (or below) the specified level. Ultimately, the introduction of binary options allows users to take a position on the future price of any asset supported in the Synthetix system.
With that, we can imagine popular binary contracts where users can bet on whether or not the price of their favorite assets with BTC being the prime example. Users could bet on whether or not the price of BTC will be above or below $10,000 by next week. Users can gain exposure to either side of the trade and earn a fixed payout if they’re right. What’s great about Synthetix’s implementation is that the protocol will allow anyone to come in and mint an options contract with any maturity date of their liking. The only requirements are $1,000 sUSD to seed the contract with a max maturity date of two years. That said, we can imagine that a lot of token communities – LINK being another example mentioned on the call – launching binary contracts with long-term maturity dates betting on the price of LINK reaching astronomical levels. While obviously there’s some joking going on here, it is interesting to highlight that the binary options on Synthetix effectively acts as a prediction market for future asset prices, including SNX.
The Acrux upgrade will also feature the launch of a new ETH collateral trial. This would be the second trial for Synthetix to test out ETH-based collateral for the protocol’s Synths. The interest rate on ETH collateralized loans is 10% right now (from the first trial) and will increase to 50% on June 26th in order to force participants to close their loans and prepare for Trial #2.
UI teaser for Synthetix Options – Screenshot from June 23rd Governance call
Synthetix Futures & Margin Trading
While the highly anticipated Synthetix Futures were originally slated for the Acrux upgrade, the introduction of futures will be rolled out in the Albedaran upgrade at a later date. The team is primarily focusing on R&D right now with the preliminary specification expected to be published in the coming weeks. More details to come on that end! The second upcoming product launch is margin trading on the platform. While this implementation is still in the early stages, the launch of margin trading will allow Synthetix users to capitalize on the volatility and access leverage through Synthetix while minimizing liquidity issues that are present across other similar margin trading exchanges.
In the call, contributors brought up the concerns surrounding too large of product scope for front-end development with futures, margin trading, and options all expected to launch this year. Synthetix CEO – Kain Warwick – refuted this concern as ideally, there’s plenty of room for contributors to build individualized, customized UIs for specific products on top of the protocol. The team is currently exploring ways to incentivize these types of contributions. As such, we can imagine that GrantsDAO may play a significant role in funding the build-out of these interfaces in the coming future.
Launching V2 of sDeFi and sCEX
Daryl Lau, a Research Analyst from CoinGecko, also joined the governance call to propose some new updates surrounding the relaunch of sDeFi and sCEX Synths. The goal was to include some DeFi tokens that have risen to prominence since the original launch of the DeFi index back in November 2019.
As it stands today, the current sDeFi token is missing LEND, UMA, COMP, and BAL to name a few. The goal would be to include these assets and likely re-weight the index’s allocation. While it’s widely accepted that these tokens should be included in the basket eventually, there are some concerns surrounding the liquidity of the tokens along with lacking a diverse range of secure price oracles for the above assets.
Kain suggested that in order to include the asset into the basket, there needs to be sufficient redundancy in the price feeds to ensure the security of the Synth. As a result, the team will likely hold off on updating the sDeFi index until there are deeper liquidity and further price discovery for the newer assets like COMP, UMA, and BAL.
Daryl’s brief also included updating the sCEX Index to include Crypto.com and FTX Exchange into the index – two liquid Centralized Exchange tokens boasting significant market caps of $2B and $976M, respectively.
Chicago DeFi Alliance
While not a major product upgrade, we thought it was important to highlight that Synthetix joined the Chicago DeFi Alliance featuring other DeFi protocols like 0x, Compound, and others as well as many large High-Frequency Trading (HFTs) Firms including TD Ameritrade, Cumberland, CMT Digital, Jump Capital, and VC firms like Volt Capital.
The alliance does a weekly seminar to discuss issues surrounding liquidity provisions and market-making as well as coordinating MM services for prominent DeFi protocols. While Kain highlighted that he was talking 1-on-1 with multiple large players to help with market-making, he did note that Synthetix is still far away from anything of substance and there’s tons of work to do, but the bridge is being built. It’s a positive sign nonetheless.
The governance call also took some time to dive into updates on the protocol’s growth strategy and expanding the Synthetix Community. With that, Synthetix is onboarding Synth Ambassadors, an invite-only group of dedicated contributors to promote usage of Synths across other DeFi protocols, projects and more.
The Synthetix Foundation is also expanding its team into Asia as the foundation recently hired a full-time Korean lead to drive the growth strategy in Korea as well as coordinating and producing localized content for that community. In addition, the Foundation is also exploring its growth strategy in China as they’ve engaged with Chinese markets to replicate the push into Korea. With that in mind, they’re still in the early stages of their China growth strategy, but more to come on that in the coming future.
Lastly, the Synthetix team is working on a handful of branding initiatives including the distinguishment between Synthetix applications like Mintr and the Exchange as well as expanding the income-generating opportunities for SNX holders beyond staking on Synthetix.Exchange.
With all of that in mind, there are tons of opportunities in the pipeline for active contributors as well as SNX holders so be on the lookout!
While this may seem like a lot of new updates, this is just the tip of the iceberg of what was detailed on the governance call. The team and the encompassing community are working on dozens of initiatives to grow and expand the protocol including decentralized circuit breakers, integrating limit order features, working on generalized approaches for converting price data from futures markets into a single reference price, launching S&P 500 indexes with ChainLink V2, introducing Keeper Synths, and more.
The pace of innovation in the Synthetix ecosystem is mindblowing. And it’s being recognized by the broader community too. Since the governance call, SNX has soared to new all-time-highs as the price reaches nearly $2 and a $360M liquid market cap, according to Messari.
If you’re looking to listen to the full governance call, it’s live on Youtube here!
For those looking for a concise bullet-point summary on everything that was highlighted throughout the discussion, this Twitter thread does an amazing job.
Anyone interested in hopping in on Synthetix discussions should join the official Discord which features the most in-depth discussions on the Synthetix ecosystem!
Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.