Summary:
Three options are possible for Synapse
- Join a partnership with 0xDAO
- Join a partnership with Solidex
- Manage ourselves the NFT and/or keep re-assess at a later stage
I believe that joining a partnership with 0xDAO will likely provide the best value to Synapse in the long term by maximising bribe revenues from Solidly and deepening DAO-to-DAO relationships within the Fantom ecosystem.
Detailed review of options and proposition:
As one of the largest projects on Fantom, Synapse received a veSOLID NFT with a voting power of 727,329, giving Synapse a share of Solidly.
In order to maximise value accretion to Synapse (and hence $SYN holders), a number of different approaches are possible:
i) Sell the veNFT, for example on PaintSwap
ii) Fractionalise it ourselves and distribute the newly created tokens $SYN holders
iii) Manage the veNFT position alone
iv) Partner up with like-minded protocols that received veSOLID NFTs
v) Partner up in a "Convex-like" protocol built on top of Solidly
A couple of weeks ago, I posted a proposal in the forum on why I believed a "Convex-like" protocol built on top of Solidly was the best approach. More specifically, Solidex seemed the leading option as (i) I believe a Convex-like protocol was better suited than any informal alliance and ii) it was already expected to gather 7 partners (including protocols who were in the midst of a snapshot vote but clearly leading to Solidex).
To ensure there would be no unforeseen developments prior to us committing to a snapshot vote, we had discussions with a few Fantom protocols on the back of this proposal. But a few days ago, 0xDAO published this interesting medium post marking its transformation into a Convex-like platform: https://medium.com/@0xdao/0xdao-a-liquidity-hub-for-solidly-made-with-love-by-fantom-builders-265b86130ec1
More details on the exact mecanics was then given here: https://medium.com/@0xdao/0xdao-launch-preparation-135f0955ef27
With this proposal, 0xDAO transforms itself into a Convex-like protocol with which other Fantom projects can partner with. As such, further thoughts need to be given to directly compare Solidex and 0xDAO and decide what offers the best value proposition to Synapse.
A) Joining the Largest Platform
Anybody who followed the Curve wars would be familiar with the importance of controlling votes.
Solidly is not too dissimilar albeit with two additional considerations: i) bribe revenues are higher if you direct your vote towards winning gauges and ii) it includes negative voting (eg a direct competitor can vote against your pools.
In that context, being part of the largest Convex-like protocol matters.
My understanding of where things likely stand right now are as follow:
- Solidex: Yearn, veDAO, Curve, Geist, Multichain, Ren, Abracadabra, Saddle = 33.7% of voting power
- 0xDAO: 0xDAO, Spooky, Tomb, Scream, Reaper, Beets, Liquid, Tarot = 37.0% of voting power
- Alone: Beefy, Iron Bank, Hundred Finance, Morpheus = 12.8% of voting power
- TBD: Radial, Spirit, Sushi, FRAX = 12.9% of voting power
- Synapse: 3.6% of voting power
As such, 0xDAO currently holds a small advantage compared to Solidex. The choice Synapse would make here would matter quite a bit though, as it would in theory give a majority to either side:
Should Synapse join 0xDAO, it would hold a 6.9% lead on votes with 40.6% of voting power
Should Synapse join Solidex, it would hold a 0.4% lead on votes
Obviously, things are not 100% set and further protocols may join either 0xDAO or Solidex (see the TBD above).
Unfortunately, while we have waited as long as we could (to have a better view of where things were going and the exact tokenomics behind 0xDAO), we now need to make a decision. Based on the numbers above, 0xDAO does have a lead and, should Synapse join it, would be one protocol away from being ahead of Solidex comes what may (as some protocols have already announced they would go alone).
Additionally, 0xDAO does not have a cut-off to join. This means that some protocols, which are currently going alone, may join 0xDAO at a later stage. However, in the case of Solidex, it would be more difficult as founding partners would have received “Advance Sex” (see B), but not protocols joining at a later stage
From that perspective, 0xDAO has an advantage here over Solidex
B) Realising short-term value
Should Synapse want to realise the $ value of the NFT immediately, the most attractive option would obviously be to keep the custody.
We would also have the possibility could in theory sell it through Paintswap who put NFT vaults forward. If you were to assume that veDAO is a wrap / a tokenised version of those NFTs, this would value Synapse NFTs around $14m.
However, nothing guarantees that Synapse would be able to receive that value in a NFT sale as the buyer universe of the NFTs themselve would be significantly smaller.
An intermediary step would be to go for Solidex as we would on day 1 receive liquid tokens (SOLIDsex). However, by realising the $ value by selling those tokens, our influence within Solidex would be significantly lower. From that perspective, it is unlikely to be an approach we would take.
As such, to realise immediate $ value of those tokens, the best would be to keep custody of the NFTs, followed by partnering with Solidex.
However, given the trade-off it would entail, it is unlikely to be an option which would, in the long run, accrue the most value to Synapse.
C) Highest share of emissions
This one is a bit more tricky to evaluate & model given the number of assumptions required (how many partners end up with each protocol, what are they doing, etc.).
One thing we can easily compare though is the share of emissions in both protocols, if things stay where they are (no other protocol joins). Here, 0xDAO is more generous than Solidex when it comes to partners as a higher percentage of emissions go to partners.
I estimate that Synapse would get 1.0% of SEX emissions should it join Solidex compared to 1.5% of OXD emissions should it join 0xDAO.
This will prove to be more valuable in the long run compared to receiving a “SEX advance”.
0xDAO has also offered for a representative to the team to be added to the multisig, should we want it. However, I don’t think its a key considerations (but the % of emissions is)
Advantage to 0xDAO here.
D) DAO-to-DAO cooperation
Since inception, Synapse has thrived to establish strong and collaborative DAO-to-DAO relationship as demonstrated by partnerships with other DAOs. If we were to join either Solidex or 0xDAO, we would in both cases join first-class protocols.
When it comes to Solidex, existing partners are currently Yearn, veDAO, Curve, Geist, Multichain, Ren, Abracadabra and Saddle.
With 0xDAO, the partners are Spooky, Tomb Scream, Reaper, Beets, Liquid and Tarot.
Two distinctions can be made here:
- Solidex includes both Fantom-native protocols and cross-chain protocols while 0xDAO is more of an alliance of Fantom native protocols
- Solidex includes two stableswaps and two bridges which may potentially lead to a competition within Solidex in terms of pools that should be incentivised
Based on that list, it seems that 0xDAO is more of a natural fit to favor DAO-to-DAO cooperation (no direct competitor). Additionally, cooperation with other protocols that form 0xDAO could help Synapse getting a better foothold within Fantom, drive new partnerships which could result in new sources of revenues and ways to create value for $SYN / $SYN holders.
E) Cross-Chain-Considerations
It is quite likely that Solidly will become cross-chain in the future (see Andre’s tweet hinting AVAX).
However, it is more difficult to see which platform would be better placed here for Synapse, once a cross-chain expansion happens.
Intuitively, Solidex has the following advantages
- Team receives 20% of emissions which means it is incentivised to continue to deliver value to the token going forward, including deploying new code to facilitate a cross-chain expansion. They are also (likely) only focusing on that project while the 0xDAO devs also need to focus on their own protocol (it may be a controversial opinion but in DeFi I would rather have a team well remunerated incl. on ongoing emissions to ensure they continue to deliver)
- Most of Solidex partners are actually cross-chain already and therefore will be very keen for an expansion
However, it should also be noted that
- As the 0xDAO team is constituted of Fantom devs, they will want to make sure 0xDAO continues to deliver value to their NFTs and in turn to their own protocols
- Additionally, a few protocols have actually farmed 0xDAO themselves and therefore have an increased stake in its success, beyond their NFT (unfortunately, $SYN was not amongst the tokens that could be single staked to provide TVL to 0xDAO... if we had gotten the possibility of receiving 0xDAO emissions, or some SYN holders being able to get some in the first place, going for 0xDAO would have been a very easy choice. Technically note that we would so far be the only partner in that situation)
- If we are the only bridge of 0xDAO, we are perfectly placed to help them going cross-chain (TBD on Solidex as we would be in direct competition with Multichain, which will have more voting power to start with)
As such, it is more difficult here to have a clear view which protocol provides a clear advantage when it comes to a potential cross-chain expansion of Solidly
F) Other
With regards to the voting power, I believe part should be used to incentivise a SYN/USDC pair on Fantom and bring liquidity to SYN here (as well as provide an indirect benefit to SYN tokenholders). In the future, it could also be partly used to incentivise Synapse branded assets (e.g. nUSD) to reduce SYN incentives on Fantom.
Conclusion
I think 0xDAO does have an advantage when it comes to i) respective voting power of the platform, ii) percentage of emissions going to Synapse and iii) DAO-to-DAO cooperation, helping us to establish a proper home within Fantom.
As such, and all things considered, I believe that joining 0xDAO would likely create the most value for Synapse in the long run.**
Suggested options for a Synapse snapshot vote
- Join a partnership with 0xDAO
- Join a partnership with Solidex
- Manage ourselves the NFT and re-assess at a later stage
