April 17, 2023
The next publish comprises a assessment of a neighborhood Discord dialog from the spartan-council channel concerning tokenomics.
Particular weblog publish incoming! A few weeks in the past there was an in depth neighborhood dialogue within the spartan-council channel of the Discord about tokenomics, collateral, and many others. It was delivered to our consideration that it is likely to be useful to a few of our readers to assessment this dialog, and we agree. So let’s get into it.
As a quick background, SNX is the one collateral that may at the moment be staked within the Synthetix protocol. This drives worth to SNX stakers, since they’re rewarded for providing up their collateral to backstop the community.
One of many challenges of SNX being the one accepted staking collateral is a really actual ceiling being placed on scalability, for the reason that financial bandwidth is in the end constrained by the market capitalization of SNX. Community exercise can also be constrained by staking participation, which is often between 60% and 80% and varies primarily based on market situations. We are able to recall that in a earlier incentive program, sUSD briefly traded close to $1.10 because of the liquidity constraint.
Nonetheless, on condition that many facets of the protocol are being reimagined in V3, a chance is introduced to remodel tokenomics surrounding the SNX token as effectively.
Because the macro panorama in crypto continues to shift away from centralized exchanges, the potential of this could possibly be very enticing if the scaling points are labored out. Including different, extra liquid staking collateral would alleviate a number of the constraints, however there are after all professionals and cons. That is the place the Discord dialog is available in…
Let’s begin with a remark from CT, who was discussing the worth proposition of SNX with SynthaMan and synthquest:
CT’s issues have been that customers won’t have an interest within the token if it doesn’t supply any worth past governance. Synthquest introduced up the chance that one other protocol might fork V3, not supply a token, after which distribute the entire charges to LPs (stakers), which might be far more fascinating for LPs.
It may additionally be useful to incorporate Afif’s feedback right here:
There have been additionally a number of different necessary feedback from members of the neighborhood, like Burt Rock, Hauntid, and JVK.
In V3, it could finally be potential to create markets with practically any collateral kind together with ETH (pending governance after all). From there, it might be so simple as the Spartan Council voting on whether or not or not the debt pool would again that market.
JVK additionally introduced up that being a longtime “blue-chip” DeFi protocol presents Synthetix a reputation-backed benefit {that a} potential fork must overcome so as to entice customers. He believes that is very true given the entire latest CEX mayhem:
Afif agreed with this, however reiterated that the main target must be making the product the perfect that it may well presumably be. And Daver instructed a configurable charge share relying on the protocol’s speedy liquidity wants.
Kain then clearly introduced a number of the concepts hashed out earlier within the dialogue in a method that appeared to resonate with everybody. He additionally agreed {that a} dynamic charge sharing system was seemingly the perfect path ahead.
Total, this was a reasonably productive neighborhood dialogue that’s going to be an ongoing matter of dialog. We are going to proceed to offer updates as they arrive, and monitor extra formal governance discussions as they occur!
