Background
With the successful deployment of the $5M loan to Synapse Labs in March 2024, the Synapse RFQ system has demonstrated significant improvements in bridging efficiency, cost reduction, and emissions optimization. This proposal suggest a renewal of the initial loan that helped to fuel this progress.
Review:
Whilst Synapse protocol has continued to onboard new relayers, the loan to Synapse Labs has significantly improved liquidity to Synapse RFQ, such that the RFQ ecosystem represents > 95% of all Synapse volume in under 12 months.
The Synapse Labs Relayer has been critical in this, meeting and exceeding several key KPIs:
- The median bridge time is < 4 seconds , down 90% from March 2024
- The protocol has gone through TWO emissions reductions, reducing emissions 70%
- Filled over $2B in bridge volume
- Supported several new, high usage chains (Linea, Scroll, World)
This growth has contributed to the long term sustainability of Synapse Protocol, whilst also providing an improved user experience, attracting new users to the protocol. A continued relationship would be beneficials for all stakeholders and users alike.
Chart Showing RFQ Growth:
https://imgur.com/ZouG6eL
Proposal
This proposal suggests renewing the $5M loan agreement with Synapse Labs for an additional year, under the same terms. The renewed deal would maintain the current structure of $1.5M ETH and $3.5M USDC.
Synapse Labs would pay the Synapse DAO $235,954.75 for the Year 1 loan.
Reference proposal: https://forum.synapseprotocol.com/d/1542-5m-protocol-owned-liquidity-rfq-relayer
Implementation Details
The renewed loan agreement would maintain:
- Principal Amount: $5M ($1.5M ETH + $3.5M USDC)
- Interest Rate: [New AFR rate for March 2025]%
- February 2025 is 4.25% compounding monthly for reference.
- Term: 12 months
- Current default and liability terms
Performance Targets
For the renewed term, KPIs remain similar. Emissions across liquidity based bridging should continue to decrease as liquidity, routes, and uptime improve. Additional Chain expansion, and support for larger liquidity on existing chains align with the long term goals for the protocol.
Conclusion
The initial loan period has demonstrated the effectiveness of protocol-owned liquidity in enhancing RFQ operations. This renewal represents a strategic continuation of a successful partnership, supporting both protocol sustainability and user experience while maintaining Synapse's position as a leading cross-chain infrastructure provider.
