As noted in SIP-2059, Synthetix deprecates the trading of non-USD spot synths on Ethereum Mainnet (L1) and is preparing to migrate users to the V3 system. This update requires action from users holding SETH, sBTC, or other spot synths in addition to sUSD.
![Legacy Spot Synthesizer Migration to ETH Mainnet](https://blog.synthetix.io/content/images/size/w2000/2024/04/Legacy-Spot-Synth-Deprecation---Migration--1-.png)
As shown in SIP-2059, Synthetix advises against trading non-USD spot synths on Ethereum Mainnet (L1) and is preparing to migrate users to the V3 system. This update requires action from users holding SETH, sBTC, or other spot synths in addition to sUSD. The migration will help move liquidity to V3 and manage V2X bias.
Key points:
- Spot synth swaps (and atomic swaps) will be deprecated on April 15 on Ethereum Mainnet.
- Spot Synth trading on V2X Optimism will not be impacted.
- Users can trade their sETH, sBTC, and other non-USD spot synths before April 15.
- After April 15, all remaining non-USD spot synths will only be able to trade via the L1 exchange contract at the Chainlink price for sUSD.
- The Spartan Council has signaled its intention to reduce the discount factor, meaning users would receive less sUSD than is predetermined by the Chainlink price. Users must exit before this mechanism is implemented. Further announcements will be made before this action is taken.
- The liquidity migration to sUSD will help introduce liquidity to sUSD and accelerate activities on Synthetix V3.
- This change helps balance bias, as Spot V2X synthesizers do not balance naturally, unlike Spot V3 synths, which impose a bias-based price impact, similar to the Synthetix Perps design.
- As a result of this change, Skew is expected to become neutral and reduce/remove its current exposure to ETH/BTC.
Current spot synthesizers generate minimal fees for the protocol and create significant hedging costs and debt pool imbalances for SNX participants. In V3, spot synths like sETH will be hedged by imposing a bias-based price impact, similar to how Synthetix Perps incentivizes traders to maintain delta neutrality. Depreciating the trading of these point synthesizers, and then incentivizing users to trade these assets, is essential to supporting the launch of new products in Synthetix V3.
Users holding sUSD will not be diluted via a discount rate; users holding sUSD will not need to do anything. Additionally, users holding non-USD spot synths on Optimism do not have a next step – only Ethereum Mainnet users are affected.
Next steps for users:
- Check your wallet to have everything in sETH, sBTC or other spot synthesizer (in addition to sUSD).
- Visit 1inch, Curve, or Kwenta to trade your synths for sUSD or non-synths before April 15.
- If you miss the deadline, you can still trade them via the L1 swap contract, allowing you to trade non-USD synths for sUSD at the Chainlink price on April 15.
- To trade sUSD, please use aggregators.
- If you do not complete a trade-in by the initial deadline, Spartan Council may begin applying a discount rate that dilutes the value of your Spot Synths.
This schedule provides adequate notice while moving the protocol forward in Synthetix V3, which introduced a more optimized and sustainable model of spot synth offering without maintaining the hedging risks that the V2 system suffered from.
Please contact us on Discord with all the questions.