For many years Synthetix has been doing the hard thing, building a truly decentralized derivatives platform. That work is coming to fruition, the road ahead is becoming clear and its time to reap the rewards. Here’s how we can focus our efforts and accelerate.

Outrunning entropy

In a magical combination of the lunacy of the founder, the persistence of the early team, and the creativity of the current team, Synthetix is in a stable state - although it’s not yet default alive. For us to accelerate and fully capture the opportunity that lies ahead, we need to improve our coordination.

Being decentralized makes coordination more difficult, and most protocols have taken an easier path, being more centralized from the outset, or increasingly so over time as the difficulties mounted. Synthetix continues to building open, composable onchain derivatives, as a fully decentralized organization - something I think is beautiful.

Operating as a decentralized organization tends to add friction and variance, in the process of gaining resilience. Being decentralized means no individual makes final protocol-level decisions, but it’s a slippery slope to no-one making decisions. With the founders no longer involved, entropy has done its work and the protocol has become rather disjointed.

We have built truly impressive technology, and now we need to organize ourselves to refine the products, and bring them to market. Our success depends on our ambition and ability to coordinate, and both can be increased without compromizing our ethos. Some of the governance structures from years ago no longer serve us and require an update.

Diagnosis

Coordination

• The number and size of Synthetix councils is great for coverage and decentralization, but the current state is hampering coordination. Decentralization does not need to mean uncoordinated → the protocol still needs roadmap for a clear path forward, and accountability for its execution.

• The current Synthetix councils structure makes coordination difficult. The councils don’t meet often or transparently enough, and end up overlapping or drifting apart

• The connection and feedback between capital allocation from the Treasury Council, protocol decisions by the Spartan Council and delivery by core contributors is distant at best

• The Grants Council hasn’t approved a grant in two years, so at a minimum needs a new name, and more likely a mandate or structural change

Product

• Synthetix has finally built a stable and profit earning product in perps, but has not reached the penetration and usage it deserves. There are “defi*”* perp competitors, mostly much less decentralized, but getting more usage - there’s no reason Synthetix can’t compete more aggressively with other perp protocols.

• Years have gone into designing and implementing novel perp and collateral orchestration mechanisms. To bring these to market in a dramatic way requires a shift of focus to deploying and productizing what has been built, to scale into the next crypto cycle, wave of users, chains and integrators.

• We have all the tech overhead of our v2 system, as well as the new surface area of the v3 system, on multiple chains. Its a large burden to deal with and will only increase unless we focus by turning things off, or migrating to v3.

• Integration partners are vital to our success, and while we have improved how we serve them, we still have a way to go to be known as a compelling platform to build upon.

Guiding principles

Coordinate

• Elevate the importance and ownership of clear protocol milestones

• A proposal to change how the CCC seats are appointed is in progress, but at a minimum the composition should be strongly influenced by the Spartan Council.

• Evolve our governance structure to retain its decentralization, but imbue more accountability and remove diffuse responsibility across the 23 council seats

Ship

• Deploy v3 with perps to important chains, including L1

• Once v3 with perps are deployed, welcome integrators to create Pools and Markets

• Proactively migrate collateral and debt from v2 to v3 to reduce the technical debt surface area, collateralize the new v3 system, and increase yields for SNX stakers

Accelerate

• Deploy Treasury assets for high leverage incentives, like perp trading and liquidity provision in v3

• Establish working groups to augment core contributors, for finite, well-scoped projects and responsibilities

Coherent actions

Coordinate

1. Return responsibility for roadmap creation to the Core Contributor Committee (CCC), give token holders a role in appointing the CCC seats, and resume monthly cross-governance coordination.

2. Reform the Grants Council from passive grant-giving denying, to proactively canvassing for opportunities, identifying talent and product managing to delivery

3. Eventually, consider sharpening the scope of each governance body, and consolidate to fewer seats and or councils

Ship

1. Scale Base Andromeda to >$20m/day perp volume and >$10m+ LP

2. Migrate L1 SNX from v2x to v3

3. Launch L1 Perp Carina

4. With learnings and proof from Base, launch on a new chain (cue Draco)

5. Launch Appchain Draco and migrate L2 SNX there

6. Shift to fully onchain governance

   1. Move elections on-chain (Election Module)

   2. Move code releases on-chain (Safe Module)

Accelerate

1. Deploy SNX from the Treasury Council to stimulate usage on Base and other chains

   1. STP-14 for Liquidity Provision

   2. STP-8 and 10 for perp traders and integrators

2. Enable the formation of Working Groups, with a new governance primitive, the Working Group Charter

With a growing suite of products, a rich ecosystem of partners and a quickening market sentiment, Synthetix has never been in a better position to accelerate.