Synthetix is going through a pivotal phase of the V3 rollout, introducing a new foundation and architecture for the protocol. This transition also marks an important step toward improving the scalability and decentralization of the Synthetix stablecoin, sUSD.
Synthetix is going through a pivotal phase of the V3 rollout, introducing a new foundation and architecture for the protocol. This transition also marks an important step toward improving the scalability and decentralization of the Synthetix stablecoin, sUSD.
Accelerate real output
The previous V2x system primarily incentivized participation via the inflationary minting of the SNX token. However, Synthetix V3 moves away from this model and instead focuses on:
- Generate and distribute real yield from trading fees to liquidity providers
- Introducing a buyback and burn mechanism, in which trading fees will purchase and remove SNX from circulation, thereby aligning incentives for shareholders and SNX holders.
This new approach aligns with Synthetix's goals of scaling a decentralized derivatives ecosystem built on its liquidity and infrastructure.
Extension of the sUSD guarantee
In the V2x system, sUSD was collateralized only by the native SNX token. With V3, sUSD will be backed by a range of collateral assets, including SNX, ETH, USDC, yield-generating collateral (stataUSDC), and other governance-approved tokens. This expansion of collateral options will contribute to the scalability of the sUSD stablecoin in V3.
At the same time, LPing (formerly staking) is simplified in Synthetix V3, due to its delta neutral design for Synthetix Perps and Spot Markets, making it easier for users to participate in the ecosystem.
Facilitate migration to V3
The migration of SNX and sUSD from the V2x system to the new architecture will begin in June, marking a critical step toward scaling the new system. To facilitate the upcoming migration, several support measures are starting next week:
- Increased OP incentives for sUSD liquidity on Vélodrome (Optimism): Incentives for providing liquidity in the sUSD/USDC pool on Vélodrome will be increased to 10,000 OP tokens per week. Vélodrome and Synthetix will use their OP sUSD Growth Grants to support this initiative.
- SNX Incentives for sUSD Liquidity on Curve (Ethereum Mainnet): Synthetix will introduce 20,000 SNX tokens per week as liquidity provider incentives in the sUSD/USDC/DAI/USDT pool on Ethereum Mainnet.
Migration plan and mechanisms
The migration to Synthetix V3 will take place in two phases:
- Ethereum Mainnet Migration: SNX participants on the Ethereum mainnet will be able to migrate their positions to V3 in June.
- Optimism Migration: Following the Ethereum Mainnet migration, Synthetix V3 will be deployed on Optimism and the migration process will extend to Optimism SNX players.
The migration mechanisms described by SIP-306 provide a clear framework for the transition:
- SNX Migration: The SNX token will continue and be migrated from Synthetix V2X to V3 without the need to burn stakeholder debt.
- sUSD migration: sUSD will be migrated to a new sUSD V3 token (snxUSD). This new stablecoin will be collateralized by SNX, ETH, USDC, and other types of governance-approved collateral, contributing to the scalability and resilience of the Synthetix stablecoin.
As the transition to Synthetix V3 comes to fruition, the focus remains on creating a scalable, decentralized and robust ecosystem of derivative protocols on Synthetix liquidity and infrastructure. The V3 migration represents a critical step toward realizing this vision and enabling an ecosystem of builders, traders and liquidity providers to scale on-chain derivatives.
Questions?
If you have any questions, please visit Synthetix Discord.