DeFi is arguably the only crypto application (not tool) with sustained product market fit. And Synthetix has a long and rich history in the role it has played in this category.
Synthetix should be front and centre and leading a DeFi renaissance, but during recent times it seems to have lost sight of a grander vision than just building product reactively and developing for the sake of developing.
This blog post outlines a vision which, should this referendum be approved, will act as the North Star for Synthetix in 2025 and will be how I personally measure success and hold myself accountable to the community. Let’s strive to reinvigorate Synthetix and in doing so join the DeFi Renaissance that’s currently taking place without us. Let’s make being a Spartan fun again.
It is still unclear which Synthetix entity is responsible for the roadmap (it isn’t, but no one actually adheres to this aspect of governance).
- Kain Warwick, February 2024
This triggered me when I first read Kain’s 2024 vision because I believed the sentiment embedded within this statement to pertain to so much more than simply roadmap responsibility. Synthetix has become crowded in inefficiencies, responsibility for delivering the project’s strategy and vision has been lost and accountability for execution seems limited at best.
The result is a loss of relevance for what was once a top 5 DeFi protocol in most lists, a drop out of the top 100 by market cap, a culture that is resulting in CC attrition and a once strong army of advocates and large token holders becoming despondent and frustrated (I’m by no means the only one…).
What is most frustrating as an ICO buyer and long-term holder/believer is that Synthetix the protocol still works, and works well. Perp contracts execute as designed through market volatility, V3 is launching on new chains, sUSD continues to maintain its peg, SNaXchain is being rolled out, and more.
But constant delays of key work modules, low energy product launches, limited vision (at least publicly communicated), reduced market awareness and limited accountability have threatened the sustainability and long-term viability of this once great project.
This needs to change immediately or Synthetix risks becoming an irrelevant protocol with diminishing market share, consistent price decline against peers and development stagnation.
As mentioned above, Synthetix works, and it works well.
Contracts span multiple chains, with live deployments on Ethereum mainnet (not perps), Optimism, Base and Arbitrum
V3 perps are the most efficient on-chain amm perps design
The recently implemented buy back and burn is effective
SNaXchain is deployed on the OP Superchain (unified Governance only)
and much more.
Unlike DeFi 2.0, 3.0 or whatever they are up to now, Synthetix is and will always be in a class of OG protocols that have withstood two savage bear markets, a raging bull market, the 2022 collapse of many CeFi products and 2024 (worst bull market ever…). During this time, it has:
Launched a highly performant derivatives system (perps V3)
Deployed contracts across three L2s (Optimism, Arbitrum and Base)
Processed over $60B of on-chain volume
Created crypto primitives or been instrumental in innovation (e.g. liquidity farming, early support of OP, on-chain governance, industry low fees, neutral skew decentralised perp markets, etc)
Built infra that is an integral part of several other protocols (e.g. Kwenta, TLX, dHedge, Toros).
This is a GREAT foundation on which Synthetix can once again return to its former status as a leading DeFi protocol and industry innovator.
With the right structures, incentives, leadership and vision, this foundation can be built upon to once again bring Synthetix into a place of relevance, importance and leadership amongst DeFi (still crypto’s primary use case outside of trading animal coins, or food coins for those around in 2020).
I believe the following priorities for 2025 will go a long way to achieving this (not in any particular order):
Put the SNX token back at the centre of Synthetix – Conduct a token design review and upgrade tokenomics. The SNX token has an identity issue in V3 and the community feels this. Synthetix needs to make SNX token holders first class citizens again and reimagine how the token can govern, generate revenue and benefit from the project.
Operationalise SNaXchain
Transition all SNX tokens and debt shares – This could come with a debt jubilee (details and plausibility need to be further explored)
Deploy a new SNX backed stablecoin to be utilised across all V3 deployments
Fix or outsource Synthetix staking front end - not intuitive to use and a hurdle for adoption.
Restart work on Synth Teleporters – remember atomic swaps? Let’s drive cross chain atomic swaps, but a lot more economically efficient, by restarting work on creating seamless and efficient cross EVM teleporters.
BD BD BD and an ABS (Always be selling) mentality - Synthetix is like a B2B software company. It develops smart contracts to be leveraged by product developers. But it has NEVER closed one outbound contract.
Juice up product marketing - Increase community awareness of the cool shit Synthetix is building.
Launch V3 perps on Ethereum Mainnet – Carina is outrageously behind schedule and missed the whole Ethena narrative, missing out on the chance to capture attention, awareness and secure a massive partnership...
Deploy Synthetix on Solana – Solana has demonstrated a sustainable and meaningful level of activity and degeneracy. Let’s move to where we can attract new audiences and users.
V3 perp proliferation - Scale Base and Arb perp markets, incentivise new front-end deployments.
Perp V3 feature expansion and V2x deprecation – why V2x still exists is somewhat baffling.
The reasoning and some of the early considerations for each of the above initiatives is explained in more detail below. But should this referendum be approved, further design consideration and detailed planning will need to take place to ensure the desired outcome is achieved in an efficient and effective manner.
To achieve this, Synthetix needs a fresh start to reintroduce a culture of innovation, accountability and rapid iteration/development. This starts with a structural change to Governance and Core Contributor operations. This structural change is outlined in this Synthetix Referendum.
Without restating everything in the referendum:
The current Governance Council model has limited accountability, influence and responsibility (when was the last time a non-CC drafted a referendum, meaningfully influenced a decision or held CCs accountable for work?).
The distributed model of remote working CCs is inefficient, has created a bad culture and must stop.
There are a lot of specific workstreams previously mentioned that will go a long way to returning Synthetix into a prominent DeFi protocol once again. If these are achieved, I believe the project will stand a very good chance of:
Returning to popularity and being discussed as a leading DeFi protocol.
Making the SNX token attractive to hold again and catapult it back into the top 100 by market cap.
Become an increasingly integral part of on-chain liquidity and leverage markets.
Return to being an on-chain innovator.
It is important to outline a vision to ensure a core path and north star for the project. Below outlines the importance of each aforementioned 2025 priorities. We all appreciate how fast crypto moves, and thus it is also critical that this remains directionally relevant, but flexible enough to ensure the project can capture additional opportunities throughout the year.
The SNX token has lost a lot of its appeal in the last year. The complexity of managing debt and the low APY dissuades potential new holders, the launch of V3 has made the purpose of SNX less clear and a sinking price has resulted in holders losing interest.
The core of this initiative will be to make SNX holders first class citizens in Synthetix again by ensuring strong linkages between the SNX token and protocol performance - with the ultimate goal of making SNX a desirable asset to hold again.
Token split? ve-economics? Revenue share? Buy back and burn? Funding Rate Arbitrage? Basis trade revenue capture? Higher V3 fees? These are all on the table as part of the redesign.
On top of this, there are a lot of ideas being cooked that will generate additional sources of revenue and hopefully re-start the SNX flywheel, introduce token sinks and make SNX an integral part of the Synthetix project once again.
This is a big lift and incorporates a lot. SNaXchain is currently live, but only with the governance module included. This vision incorporates a huge redesign of Synthetix that will see the:
Migrate the majority of SNX tokens onto the SNaX Chain
A potential debt jubilee for Spartans? – Treasury could absorb a substantial portion of SNX debt. Loyal stakers have seen debt grow due to the presence of crypto synths and atomic swaps. To rectify this, stakers could receive reprieve via a debt jubilee. This would require action by stakers and will be condition dependent (i.e. must transition to SNaXchain by a date and potential vesting requirements to demonstrate future alignment).
Issuance of a new stablecoin and the generation of an amorphous liquidity pool for V3 deployments – Let’s call this snxUSD for now. This will be the new SNX backed stablecoin. With no synth-crypto assets, debt management will be unnecessary in this new design (recently the case after synth deprecation). snxUSD can be staked on SNaXchain and will act as an amorphous liquidity pool that any V3 deployment can utilise. Incentives, partnerships and liquidity demands will decide where the liquidity flows.
Fix the staking interface – make this unbelievably transparent and simple. Staking currently acts as an adoption hurdle, thus designing an intuitive interface for the new generation of crypto adopters will improve the attractiveness of SNX.
Multi collateral - who knows!
Explore the roadblocks that stopped teleporter work and strive to overcome and restart this initiative. I believe at the time it was shelved, Chainlink’s CCIP proved to be a slower and more expensive alternative to cross chain liquidity bridges. But now there are alternative solutions such as Wormhole’s messaging protocol which may prove viable.
Teleporters will:
Create a new revenue line item for the Synthetix
Enable the quick and seamless transfer of snxUSD across EVM chains to nimbly deploy liquidity amongst perp partners.
Create a new mechanism for EVM users to transfer value across chains (e.g. USDC on OP <> snxUSD on OP snxUSD on ARB <> USDC on ARB)
In its current form, Synthetix is a series of smart contracts that product teams and front ends can utilise to create derivative markets. Simply, Synthetix is a business-to-business (B2B) product. Its customers are business (e.g. Kwenta, TLX, dHedge, Toros). The customers of those businesses are traders. Despite this, Synthetix has NEVER generated one outbound integration. Kwenta and Lyra were born out of Synthetix and TLX, dHedge and Polynomial were inbound customers. Even products born out of Synthetix are leaving us due to lack of service and alignment (Lyra have launched their own perps and Kwenta now integrate GMX and Gains Network).
Synthetix is lacking a BD/sales function that allows its smart contracts to be ingrained across on-chain finance. Even when lucrative inbound customers approach Synthetix (e.g. Ethena), there isn’t a customer first always be selling mindset as evidenced by the development pace of L1 perps.
As a first initiative, a go to market strategy and a working group (BD/sales) to support the proliferation of Synthetix contracts across EVM compatible DeFi will be a priority. Thus restarting one of the OG Synthetix flywheels: More integrations → more fees → higher SNX yield v higher SNX price → attention → more integrations.
Synthetix desperately needs to better communicate its successes. I recently chatted with several large token holders within the SNX community and with external and prominent members of the DeFi community. A common theme was that none knew about anything Synthetix was doing. None even knew that SNaXchain was launched. Literally zero…
Synthetix builds a lot of cool shit and people need to be made aware. Without knowledge of the products and work being done, success becomes very difficult.
This is ridiculously overdue… One of the top DeFi protocols of this bull market extended an olive branch and requested Synthetix develop a market for them to help decentralised their hedging. And Synthetix threw an air ball that would rival my hooping skills.
Perps on Ethereum mainnet will allow for Synthetix to offer Ethena a decentralised venue to capture the basis trade and transition from their solely centralised exchange model (if they still want this from Synthetix…). It will also open many more opportunities for Synthetix to innovate and generate L1 integrations (watch this space).
Solana is increasingly becoming a chain with prominence in crypto. With the success of Jupiter and the increasing number of transactions/daily active users, Solana makes more sense for Synthetix to launch V3 on than any other L2 at this stage.
Solana is hot, lots of degens trade on Solana, let’s get them 100x leverage meme coin derivative markets, stat.
Establish programs to turbocharge incentives for integrators and drive users to Synthetix backed derivatives exchanges/platforms. Product and front-end builders are the lifeblood of Synthetix (remember B2B), and their users (i.e. traders) are at the core of their success (B2C).
Derivative markets trade multiples of spot markets, and 2025 will be a land grab for market share. Let’s incentivise integrations and empower Synthetix customers (perp marketplaces) to capture maximum market share, attention and users. Their success is directly correlated to the success of Synthetix, so where necessary let’s enable them to give them the best possible chance of being successful.
Ultimately, we will strive to ensure that Synthetix stands the best chance to be at the centre of every serious decentralised derivatives marketplace discussion.
I don’t know why V2x is still live. V3 has operated for 8 months now without issue. Some will argue as a fallback, to allow open trades to continue, blah, blah, blah. V3 has been live for long enough to know that V2x is not required anymore. Deprecating V2x will remove maintenance/development overhead and reduce protocol risk.
Burn the (V2x) boats, destroy the bridges and march on with V3!
V3 requires feature enhancements to reach product parity with centralised exchanges. This includes things like orderbooks and exotic trade strategies (e.g. trailing stop losses).
Everyone reading this understands that the future of France finance lives on-chain, and it is inevitable that derivative contracts will play a huge role as they do in traditional finance. Synthetix is uniquely positioned as an OG DeFi protocol, with performant contracts, good historical branding and proven longevity and development.
At the end of 2025, should we be able to execute on the above Synthetix would have:
A new and improved token economic design with several more sources of revenue capture;
SNX live on its own AppChain - collecting and aggregating fees;
A new stablecoin which is more robust and adopted;
V3 perps (only!) deployed and scaled across multiple L2s and additional L1s (i.e. Ethereum and Solana);
Integrated with several more product developers and front ends; and
Teleporters operating to fluidly transfer protocol assets across chains.
There are a lot of moving pieces, but with the above vision as the North Star for 2025 I believe Synthetix can return to prominence and significance in the DeFi sector and more broadly in crypto.