A Synthetix Reboot

Abstract

This proposal outlines a plan to overhaul and improve Synthetix’s governance and operations to ultimately improve the performance of the project. Additionally, it touches on a vision forward for Synthetix to regain prominence and significance within crypto and DeFi. Its primary aim is to reinvigorate the Synthetix ecosystem and return it to relevance, importance, and prominence within the DeFi ecosystem.

The outcome of this proposal should reflect the will of the SNX token holder. Should token holders share similar frustrations at the project’s direction this last 12 months, the limited communications, the lack of vision (has anyone seen a team-generated 2024 roadmap?) and the continued delays in development, this proposal provides an opportunity to act and bring about change.

Motivation

Change is necessary - Synthetix continues to lose relevance in markets, SNX continues to underperform crypto and DeFi, protocol revenue continues to decline, deadlines continue to run over, product launches continue to underwhelm and community frustrations and disappointment are voiced daily in Discord. There is little evidence to suggest that things will fix themselves in their current state. It’s time to rattle the cage, implement changes and establish a vision and roadmap that will give Synthetix the best chance to return to prominence and status as a DeFi OG.

When an otherwise perfectly fine and performing system starts failing, more often than not, the solution is to unplug and restart with a software update.

The Synthetix project is failing. It is fading into obscurity and is at risk of becoming a zombie protocol, destined to live on only as hopium for a select few devoted followers.

Synthetix continues to become less and less relevant in DeFi and risks continuing down a path of irrelevance if things do not change. Synthetix has suffered from:

• Delays in development which have prevented Synthetix from capturing market narratives, user attention and product adoption – e.g. launch of a perp contract on Ethereum (L1) that Ethena could utilise early in 2024.
• Governance failings are resulting in confusion and undesirable outcomes. Councillors have low accountability, largely sign transactions without too much consideration towards a broader strategic plan, provide limited oversight and strategic direction towards the project and have a fairly high turnover.
• Low/no commercialisation focus – Synthetix continues to miss the opportunity to make the protocol financially robust, missing grant opportunities and putting low consideration towards economic drivers during product development. This has resulted in missed opportunity for Synthetix to access grants for work (i.e. the 900k ARB grant we just lost), and fee models that are not optimal for long term project sustainability.
• Limited/no accountability has meant Core Contributors operate without incentive or motivation to deliver work on time. It has also resulted in Governance Councils operating without authority and without adequate incentives to innovate and drive positive change – leading to many Council members largely collecting stipends and blind signing transactions as per CC recommendations.
• No marketing efforts have succeeded in driving a meaningful increase in perp usage, resulting in low fees and low incentives for new investment in the Synthetix ecosystem.
• Inefficiencies from a globally distributed team have resulted in low accountability, low transparency on work being conducted, a poor culture of innovation and reduced output. This is resulting in attrition amongst key members of Synthetix Core Contributors.
• A lack of direction. Synthetix doesn’t have a 2025 vision, let alone a 2024 vision. There is no roadmap that extends beyond 3 months. There is no strategic consideration for future pipeline of integrators or partners. This results in confusion and limited/no enthusiasm for the project. Without a vision, it becomes hard for existing holders, let alone new potential investors to get excited and invest in the project, resulting in poor performance and SNX falling well outside the top 100 crypto projects by market cap.

This referendum outlines a plan to reset, update and reinvigorate the project through streamlining governance, increasing accountability, improving transparency, revitalising culture, and aligning key stakeholders.

Should this referendum be ratified, Synthetix will undergo a significant transformation towards a much more efficient and effective structure with a defined vision, clear objectives, and outcomes, as well as accountability and more transparency to the community. The key short-term (2025) objectives to re-energise Synthetix are listed below. More details can be found in this 2025 Synthetix Vision Statement.

• Put the SNX token back at the centre of Synthetix via a token redesign
• Operationalise SnaXchain – add functionality, migrate SNX, launch a new stablecoin
• Restart work on Synth Teleporters
• Business development and sales focus to onboard front ends and to build stronger relations with existing integration partners
• Significantly improve product marketing to raise awareness
• Get Carina (Ethereum Mainnet perps) over the line and finally launched
• Deploy Synthetix on Solana
• V3 perp proliferation
• Perp V3 expansion and V2x depreciation

This is not about reinventing the wheel, as some of the above is already included in current plans. This is about implementing a new structure and approach and executing with a razor-sharp focus on delivering the 2025 vision in a timely manner. Additionally, it’s about bringing fresh ideas and energy to the project to ensure Synthetix continues to be at the forefront of DeFi and crypto markets.

Synthetix requires an update and reboot - historically Synthetix has captured market attention and interest, and is truly one of a small handful of projects that can claim to have:

• Been battle-hardened through two crypto winters - true DeFi OG status
• Processed over $60B of on-chain volumes
• 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, Lyra, Thales).

However, over the last year, the SNX token has underperformed as crypto markets have recovered in the wake of the 2022 bear market. Underperformance against its peers has seen SNX slip from challenging to be in the top 50 assets by market cap to falling outside the top 100 for a sustained period of time. This underperformance risks Synthetix falling out of relevance and becoming a forgotten product/token. One that is flirting dangerously close to being trapped in a negative feedback loop where low attention → lower volumes → lower SNX price → lower attention → repeat. This can be very hard to ever recover from and needs to be rectified immediately.

Many different paths could have been taken but the current path is one of irrelevance and potential ruin. But there is still time to salvage the project - especially if rapid and swift action is taken. Synthetix cannot simply rely on its Defi OG status to stay relevant, it needs to bring back the focus on innovation and get the attention it deserves.

Several drastic changes need to be made to achieve this. Below are several of the more prominent current issues in the project and proposed changes required to address them.

Specification

Synthetix needs a more succinct vision and an execution plan that allows it to operate as the de facto suite of smart contracts that powers decentralised derivatives marketplaces.

To do so, Synthetix needs to re-establish itself as a leader in the DeFi ecosystem by:

• Efficiently developing and maintaining a scalable and sustainable protocol for creating and trading synthetic assets.
• Continuously innovating to meet evolving market demands.
• Fostering a thriving ecosystem of developers, traders and liquidity providers.
• Promoting financial inclusion and accessibility.
• Ensuring the long-term robustness and sustainability of Synthetix governance.

But to do so – it is my strong belief that Synthetix requires a reboot. There needs to be some significant changes in the short-term to address current issues whilst developing a plan to execute on the longer-term vision.

Identification of several of the key issues

Below is a list of issues that are perceived to be at the core of Synthetix underperformance in recent times.

1. Low/No market attention – the primary issue is that no matter what progress takes place, Synthetix must find a way to maintain awareness and attention - Crypto is an attention game. Without attention marketability is low and no matter what progress is made, solution adoption is lacklustre and progress doesn’t result in more usage.
2. There is a lack of accountability - while decentralised governance is extremely powerful when it comes to community alignment and coordinating protocol changes, ownership of outcomes is also critical and the current structure is antithetical to this. At the start of the year, a proposal was made to deprecate the contributor committee and replace it with a contributor lead, unfortunately whilst this was probably a step in the right direction, it didn’t go far enough to achieve the required outcomes.
3. There has been mass attrition of contributors over the last six months resulting in output slowing and less proactive development (more reactive) - One of the most critical initiatives of the last 12 months, the L1 perp, has taken over a year to deliver, missing out on tailwinds from the carry trade narrative early in 2024 that has now closed. Network expansion has progressed, and the Base/Arbitrum launches were a big milestone, however Synthetix must be able to deliver innovation in a timely manner to capitalise on critical market opportunities.
4. There has been a limited (maybe no?) commercialisation consideration placed on several product decisions recently – Synthetix just lost a 900k ARB grant to incentivise usage on Arbitrum. Despite doing all the work and launching on ARB. Rather than accessing almost $500k to incentivise users to try Synthetix based derivatives markets, the project now has to cold start and compete against the incumbents GMX and Gains Network. When approached by a multi billion dollar protocol (Ethena) to build a product (Ethereum Mainnet perps), limited (maybe no) prioritisation was placed on development and additional capacity was not hired for. As such, it’s widely considered this opportunity has been lost. These are just two of many misses that have cost Synthetix money and opportunity over the last 12 months.

Short-Term Changes Required to Reboot

To address the aforementioned key identified issues within Synthetix, the below suggestions outline several structural changes that are to take place during the remainder of 2024. This is in tandem with the reprioritisation of project objectives and continuation of the work currently being conducted to further the protocol (e.g. Ethereum Mainnet perp development).

A refreshed vision and roadmap for Synthetix

From the outside and feedback amongst non-Synthetix investors, it seems like there has been a loss of focus and direction. New crypto participants are unlikely to have heard of Synthetix and once aware are unsure what the project wishes to accomplish.

A new and refreshed roadmap / vision needs to be produced and socialised. This will help realign the efforts of key stakeholders (i.e. the Spartan Council, contributors, community members and integrators) and allow the external non-Synthetix community to better understand what path the project is on.

In parallel with this referendum, this 2025 vision has been proposed. Should this referendum pass, a streamlined communication plan should be designed to share Synthetix's clear vision, roadmap, and core messages with the broader crypto community. The focus will be to go to market with a succinct message to increase awareness, attract additional integrations and further engrain Synthetix across the crypto ecosystem.

Forming a working group with a robust marketing function to execute on this and continue to drive the messaging is critical.

Formation of a new Spartan Council

The existing governance model of 17 members across 3 Councils isn’t working. In its current form, councillors have limited accountability, no clearly defined roles or responsibilities, limited engagement with CCs and next to no ability to influence decisions in a timely manner. As a result, Synthetix is lacking clear direction in development, cohesion in efforts and effectiveness in execution.

The proposed changes are as follows:

• Synthetix will remain a DAO that the SNX token holders govern.
• The new governance model will combine a bounded delegate system. All existing councils will be consolidated into a new Spartan Council consisting of 7 delegates, each with equal voting power.
• As part of this referendum, SNX holders will also be voting in the founding members of the new Spartan Council. None of the proposed members were aware of their intended involvement prior to this announcement and will need to accept their roles.
• Founding constituents of the new Spartan Council will be:
  • Strategy Seat – Benjamin Celermajer – Benjamin is a Synthetix OG, having invested in the Havven ICO in 2017 and remained in the community ever since. Before entering crypto professionally as an asset manager in 2017, he worked as a consultant, specifically working on strategy design and managing complex business transformations. Benjamin's knowledge of and experience in crypto, combined with his background managing complex business transitions, allows him to bring objective insight to Synthetix, enabling him to identify key challenges and design fresh and tailored solutions to successfully turn Synthetix around.
  • Ops Seat – Cav – Cav has been a Core Contributor at Synthetix for nearly three years, bringing a wealth of experience and a deep understanding of both the team and decentralised systems. He was elected to Spartan Council and Treasury Council, and ultimately proposed as the CC Lead role to improve protocol coordination. Cav’s relationships with Synthetix partners and integrators, combined with his knowledge of the ecosystem, make him a key asset in driving forward the next phase of Synthetix’s evolution.
  • Technical Seat – TBC – this is one of the more important roles, and without deep knowledge of the technical team within Synthetix it is hard to know who fits this bill. But technical expertise, the ability to distill complex technical problems simply, knowing how to cut to the core of difficult problems and the willingness to roll ones sleeves up to get sh*t done is what is needed here.
  • Treasury Seat – coKaiynne (OG Spartan) – coKaiynne invested in the Havven ICO and has remained close to the project ever since. Recognising the need for change he nominated for the Treasury Council and was elected at the start of 2024. He’s been instrumental in streamlining, organising, and consolidating the Treasury so that management and operations are simpler and more transparent moving forward.
  • Advisory Seat – Kain Warwick (Synthetix Founder / OG Spartan / Infinex Founder) –The once benevolent dictator played an instrumental role in digging Synthetix out of the 2018 bear market, was the creator of yield farming and helped kick off DeFi summer. We’re hoping to lure him back as an advisor to kick of the Synthetix revenge arc!
  • Advisory Seat – Jordan Momtazi (Synthetix Founder / OG Spartan) – Jordan carries a wealth of Synthetix knowledge and continues to stay close to updates and get involved where he can help. Jordan’s history running commercial and BD functions and his connectivity to crypto and VC networks from running Bodhi Ventures will be core to this transition and executing on several 2025 vision agenda items.
  • Advisory Seat – Spartan Glory (OG Spartan) – SG invested in the Havven ICO and has remained an active member in the community since 2017. Through his engagement on the Treasury Council, SG has developed a deep knowledge of Synthetix and will help maintain continuity in operations and treasury management through the transition. Additionally, he has strong networks in the crypto community that will come in handy as we look to expand our footprint.
• All seats will carry an equal voting weight of 1.00
• Multisig signing for SIPs, SCCPs, STPs, and Treasury Transactions will continue similar to how it has historically, just conducted by a single Council. All SIP/SCCP, STPs, and Treasury Transactions will require 4/7 signatures to be approved.
• The only exception will be that the Treasury Seat will be a required signer of all STPs and Treasury transactions, continuing to maintain Treasury independence from the broader Project.
• The Treasury Seat and 3x Advisory Seats are elected by governance voting.
• The Strategy, Technical, and Ops seats are not elected by community governance. These seats are hired by the elected seats and form the leadership team of Synthetix. This ensures the council has full project context when making decisions, helps maintain project consistency across epochs and ensures a point of ultimate accountability for the progress of Synthetix.
• Elect seats have the power to hire/replace the non-elect seats (via council vote).
• Elected Seats will have a 6-month term, with elections to be held in the first two weeks of every October and April.
• For the first epoch, stipends will remain as they have been for previous Council members (i.e. 2,000 SNX per month), with a review to be conducted and a potentially new proposed incentive model moving forward. This will generate savings of 20,000 SNX per month for the Treasury.
• The pDAO will continue to validate, stage, and execute upgrades to Synthetix in the short term with the scope to reconsider alternate models (e.g. Risk Council as proposed in SIP-401).

This proposed model has been designed to ensure key responsibilities are directly delegated to council members for which they are ultimately accountable. A consolidated council function will be nimbler, enact more rapid change and engage more actively with key stakeholders across the Synthetix protocol.

Identification, Formation, and Operationalisation of Core Working Groups

There is a lot of work to be done across many different workstreams to return Synthetix to its former glory days. To do so efficiently and effectively, core working groups will be defined and formed. Under this proposal and the attached 2025 vision, Synthetix will require several functions such as sales, customer support, analytics, development, etc.

Each working group’s function, roles, and responsibilities will be directly aligned with the Synthetix 2025 vision. Importantly, Working Groups will be held accountable for the delivery of core workstreams and report to the Spartan Council.

As previously mentioned, the CC model of hiring over 20 globally remote individuals is resulting in mass inefficiencies. To overcome this, Working Group members will be co-located in the same time zone(s) to create an environment where team culture can grow, turnaround and iteration of work is rapid, team cohesion is strong, members become more accountable to one another, etc. One will be hired and operate out of Sydney, Australia with my oversight, with scope for another one (initially at least) in an additional geography.

Importantly, the formation of these working groups will allow for a contributor resync. Whilst work is being done, a critical development path needs to be established, communicated, and focused on to achieve core project milestones and work towards an end game for Synthetix.

Launch the Synthetix Foundation

Having an entity domiciled in a crypto-friendly jurisdiction has many benefits. It enables Synthetix to:

• Sign contracts with partners, potential integrators, and investors
• Have a contracting entity for domain services, cloud services, email services
• Engage with smart contracts that require a signing entity for KYC/AML (alpha?!)
• Take receipt of partner incentives that require a receipt from a signing entity
• Etc

This is simply aligning with a modern DAO approach that has been adopted by the vast majority of ‘new’ and many existing crypto projects.

Next Steps

• 25 September 21:00 UTC time – Referendum posted
• 27 September Friday 22:30 UTC time - Hold a town hall in Discord to discuss the motivations for this change and the referendum with the Community
• 27 September 23:59 UTC - A snapshot to vote for the referendum will be released. Quorum is 75m SNX tokens and success is defined as >66.67% 'yes' as outlined in SIP-408
• 2 October time TBC – second community town hall on Discord
• 3 October 23:59 UTC – referendum vote concludes

Should the referendum fail

• Carry on as is – no change

Should this referendum be approved and ratified by a community vote:

• Hand over governance to the new council members
• Hand over Treasury Multisig to the new council members
• Hand over governance wallets (from Ambassadors) to the new council members
• Engage legal representation to establish a Synthetix Foundation
• Realign existing operations with the Synthetix 2025 vision
• Conduct a review of current operations and processes
• Treasury review of balance sheet and budget/forecast
• Release a 30-day report to the community on the transition