Previously, in an effort to bolster SYN’s on-chain liquidity, we partnered with FRAX and Ondo to create a SYN-FRAX liquidity pool. At it’s height, this pool had over $10 million in on-chain liquidity, making it easy for users to swap SYN on-chain with minimal slippage. This pool expired last month, and in an effort to restore SYN’s on-chain liquidity, we believe a longer-term partnership with FRAX is an advantageous route to pursue.
As we’ve outlined in prior SIPs, low liquidity, especially on-chain, is a detriment to holders as it makes exchanging SYN more costly. Currently, SYN has roughly $8 million in on-chain liquidity across our SYN-WETH pool on Sushiswap and a new, unincentivized SYN-USDC pool on Sushiswap. This is on the lower end of SYN’s historic on-chain liquidity.
Greater on-chain liquidity will be a net-benefit to the protocol as it will be easier to onboard new network participants.
For context, Frax is one of the most established decentralized stablecoin protocols, with over 1.3 billion in total circulating supply and some of the deepest on-chain stablecoin liquidity pools. Today, FRAX boasts over 5k unique holders and routinely does over $10 million in daily trading volume, offering users a liquid, decentralized alternative to storing dollars on-chain.
Given FRAX’s standing in DeFi, I am proposing the creation of an additional incentivized SYN-FRAX liquidity pool. With the recent expiry of the Ondo pool, Frax currently holds over 7 million SYN that they have agreed to deploy into this new liquidity pool Full context on Frax’s positions can be found in their recent governance proposal.
- The Synapse DAO would commit 350k SYN to be paid in liquidity incentives to this new pool over the course of 6 months
- Frax will match SYN incentives with FXS incentives
- This new pool will add an additional ~$9.5 million USD of on-chain liquidity
Partnering with FRAX on this new liquidity pool is expected to lead to the following benefits for Synapse:
- Significantly improves SYN’s on-chain liquidity
- Allows larger amounts of SYN to be traded, with a lower slippage and price impact
- Facilitates the onboarding of new users to the protocol
- Makes SYN more attractive for CEX listings
A vote “For” of this proposal approves the SYN incentives for the new SYN-FRAX pool.
A vote “Against” this proposal rejects the SYN incentives for the new SYN-FRAX pool.