December 4, 2024
The following post contains a recap of news, projects, and important updates from the Spartan Council and Core Contributors from last week.
👉TLDR
- SIP-412, to acquire TLX and launch Synthetix Vaults, was presented last week.
- TLX is a Synthetix leverage token protocol, and vaults are an important complimentary service to Perps.
- Strategic change: shift away from being just a passive liquidity layer, and towards being more active as product builders.
- SIP proposes an 18:1 token to token transaction from TLX to SNX & would also be paid for via issuance of 2.6 million new SNX tokens.
- The vaults have generated $600,000-$700,000 in fees over the previous 6 months on 100,000 in TVL and those fees would start accruing to a treasury wallet.
- See below for reasons why Synthetix is hoping to acquire vs build its own vaults
- Synthetix Meme Competition
Spartan Council and SIP updates
Present at the November 27, 2024 Spartan Council Weekly Project Sync:
Spartan Council: Cavalier, Fenway
Core Contributors: Jared, Kiwi, Matt, Mithrandir, Nikita, robin, Samuel, Tim, Toran
Last week SIP-412 was presented to acquire TLX and launch Synthetix Vaults. In today’s recap we’re going to review this proposal as well as what was discussed during the presentation call, so let’s get into it:
Starting off with a quick high-level explanation of the SIP — Synthetix is seeking acquisition of TLX, a Synthetix leverage token protocol, as the foundation for launching an integrated vault strategy. Vaults are a very important complimentary service to Perps because they promote volume and liquidity and provide a very attractive revenue source for tokenholders.
The major strategic change underpinning this acquisition (and Kwenta) is the shift away from being just a passive liquidity layer, and towards being more active as product builders. It hasn’t panned out the way it was envisioned (single digit integrators rather than 100s)
The current proposal details an 18:1 token to token transaction from TLX to SNX, which represents an 8% discount to the 30 day average price. The SNX would be locked for 1 month followed by a linear 4-month vest. This would also be paid for via issuance of 2.6 million new SNX tokens, as the acquisition values TLX at $4 million.
The vaults have generated $600,000-$700,000 in fees over the previous 6 months on 100,000 in TVL and those fees would start accruing to a treasury wallet immediately following the acquisition. In the new token design, which will be announced by the end of the year, the plan is for these fees to accrue directly to tokenholders.
It was discussed whether it would be worth it for Synthetix to build its own vaults and strategies from scratch, and the explanation for the TLX acquisition was the following reasons:
- Hot start: Rather than spending the time to build and market its own vaults, the acquisition of TLX would present Synthetix with the opportunity to go live with over 50 leverage token vaults with up to 10x leverage.
- Revenue Diversification: Vaults generate a new revenue stream that can be captured by SNX tokenholders.
- Complementary products: Leverage token vaults can generate volume and fees on Synthetix perp markets (e.g. levered token strategies like 3x BTC utilize Synthetix perps and continuously rebalance, generating volume and fees).
- Strategic Fit: The acquisition aligns with Synthetix’s long-term strategy to broaden its offerings in DeFi, thereby strengthening its position as a market leader.
- Efficiency: Operational efficiencies are expected from the merger of both Synthetix and TLX capabilities.
Despite the pros for acquiring TLX, work is still being done in the background amongst the Synthetix team to launch some variation of vaults in the scenario where TLX decides not to go through with the transaction.
Voting on this proposal begun last week and will take place through today. Cav also wanted to stress that this strategic shift is not meant to restrict integrators, but rather it’s a push to add a selection of Synthetix-managed products to the mix.
In other news, the Synthetix Meme Competition also wrapped up yesterday — this competition saw a lot of participation on X and Discord, and brought a lot of bullish vibes to the community. Results will be announced soon, keep an eye on the Synthetix platforms!
SNXweave Youtube Podcast: https://www.youtube.com/@snxweave
Follow us on Twitter! @snx_weave
SIP/SCCP status tracker:
SIP-412: Acquire TLX and Launch Synthetix Vaults, Status: vote pending
