The Synthetix ecosystem has entered a pivotal phase of evolution. As its founder re-engages with the community, a series of bold, forward-looking proposals have emerged—each designed to strengthen protocol sustainability, incentivize participation, and unlock new growth vectors. This article outlines the core strategic opportunities identified, ranging from incentive redesigns to structural upgrades, all aimed at securing Synthetix’s position as a leading decentralized derivatives platform.
Core Contributor Alliance: Aligning Incentives for Long-Term Success
One of the most pressing challenges in decentralized protocols is maintaining alignment between contributors and stakeholders. The lack of traditional corporate hierarchies means motivation must be intrinsically tied to both impact and reward.
To address this, a Core Contributor Alliance is proposed—a system where quarterly SNX bonuses are allocated based on peer-reviewed performance. These rewards would be determined by the Treasury Committee (TC), informed by feedback from Core Contributors (CC), ensuring fair, merit-based distribution. While the exact amount remains under discussion, an ideal range could be several million SNX per quarter.
This model not only recognizes high-impact work but also fosters a culture of accountability and transparency within a flat organizational structure.
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Transaction Incentives: Fueling Growth with eSNX Rewards
Despite success with OP-based incentives, SNX-denominated rewards present a more sustainable path forward. By distributing incentives in escrowed SNX (eSNX), traders are naturally introduced to staking mechanics—deepening their engagement with the protocol.
A proposed allocation of 5–10 million SNX to this initiative could create a powerful feedback loop: increased trading volume → higher fees → greater staking returns → stronger network security.
This approach aligns trader behavior with long-term protocol health, turning short-term activity into lasting value creation.
Passive SNX Staking: Lowering Barriers to Entry
Staking SNX remains complex, creating friction for new participants. Even simplified solutions like dHedge strategies require understanding hedging mechanisms—an obstacle for many.
To bridge this gap, a passive staking pool is recommended. This would allow users to stake SNX with minimal risk and technical overhead, functioning like a "freemium" model where reduced complexity comes at the cost of slightly lower yields.
Initial rewards could be funded by the treasury—preferably in sUSD—and dynamically adjusted based on the ratio between active and passive stakers. A cap of around 10% of total fees would prevent imbalance while encouraging broader participation.
A three-month pilot with a budget of $1–2 million in sUSD or equivalent SNX would provide clear data on adoption impact.
Integrator Incentives: Building a Sustainable Ecosystem
As Synthetix transitions into a liquidity layer, integrators become critical to user experience. However, current models create competitive disadvantages for frontends that add value.
Two primary models have been debated:
- Pure Model: Integrators add their own fees on top of base protocol fees.
- Shared Revenue Model: A fixed percentage (e.g., 10%) of fees is distributed to integrators.
A hybrid solution offers the best balance: guarantee a base revenue share (e.g., via staking 10 million SNX on behalf of integrators, generating 3–5% yield), while allowing optional incremental fees for differentiated services.
This ensures fair compensation without triggering race-to-zero pricing wars, fostering innovation across the ecosystem.
3:1 SNX Split and Treasury Buyback
With inflation no longer essential in V2x, the time may be right to reconsider tokenomics. A 3:1 SNX split would generate approximately 90 million additional tokens—ideal for a treasury-funded buyback and burn program.
Funded by treasury yield (currently ~$5M annually), burning these tokens could take about ten years if fully allocated. However, rising trading volumes could accelerate this timeline significantly.
Crucially, this approach avoids increasing circulating supply while enhancing scarcity—a powerful signal to long-term holders.
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Distributing Treasury SNX to Stakers
An alternative to burning is distributing treasury-held SNX to stakers. This would effectively simulate a 3% annual inflation rate over three years, allowing the protocol to test whether inflation is truly necessary for liquidity bootstrapping.
However, challenges exist—primarily the debt liability attached to these tokens. Debt must be cleared or transferred before distribution, which may delay execution until after buyback completion.
Treasury-Funded Working Groups: Enhancing Coordination
Two specialized working groups are proposed to fill critical operational gaps:
- Integration Support Team: Works directly with large traders and integrators—similar to Salesforce’s partner success model—to ensure smooth onboarding and optimal use of Synthetix infrastructure.
- Analytics Team: Maintains real-time dashboards and ensures all key metrics are publicly accessible and up-to-date—a historically under-prioritized but vital function.
These groups would report directly to the Spartan Council, funded by the treasury for a 6–12 month trial. If successful, they could become permanent fixtures, improving transparency and accountability.
Synthetix Ecosystem Fund: Investing in the Future
While early governance decisions avoided external investments, market conditions now favor establishing a dedicated ecosystem fund. With anticipated growth in Synthetix-based projects, allocating a portion of treasury assets can catalyze innovation.
Owned proportionally by SNX holders, this fund could eventually recycle returns into further buybacks or staking rewards—creating a self-sustaining growth engine.
Subsidizing Keeper Costs: Towards Frictionless Trading
True zero-cost trading isn't feasible due to protocol design constraints. However, fixed keeper fees can deter small-volume traders.
The solution? Treasury-subsidized keeper costs, either through direct payments or rebates to traders. Whether funded in SNX or sUSD will depend on economic modeling—but the goal is clear: eliminate cost barriers for retail participation.
Perps Referral Program: Accelerating Adoption
Now that perpetual futures (Perps) are mature, a protocol-level referral program can drive user acquisition. Referrals paid in escrowed SNX ensure no immediate sell pressure while encouraging recipients to stake—locking in long-term alignment.
As trading experience improves and new markets launch, this creates a flywheel: referrals → trading activity → fee generation → staking rewards → ecosystem growth.
Treasury Committee Proposal Template
To improve transparency, a standardized proposal template is being developed—based on SIP formats but tailored for treasury initiatives. This will help community members evaluate funding requests, even when formal voting isn’t required.
Phasing Out the Treasury Committee
Eventually, the Treasury Committee should be dissolved—not because it has failed, but because its responsibilities can be decentralized further. Splitting its functions across specialized governance bodies reduces single points of failure and advances true decentralization.
Frequently Asked Questions (FAQ)
Q: Why not burn treasury SNX directly instead of buying back?
A: Direct burns have limited impact since many treasury tokens are already effectively locked. A structured buyback allows strategic timing and potential redistribution post-burn.
Q: How does passive staking differ from active staking?
A: Passive staking removes complex risk management requirements, offering lower but more accessible yields—ideal for newcomers testing the ecosystem.
Q: Will integrator incentives increase fees for traders?
A: No—integrator revenue would come from treasury-staked SNX or protocol-level fee sharing, not additional charges to users.
Q: What happens to the Treasury Committee after dissolution?
A: Its roles would transition to other governance entities like working groups or decentralized autonomous organizations (DAOs), enhancing resilience.
Q: Is inflation still necessary in Synthetix V3?
A: Not necessarily. Alternatives like veCRV-style voting or temporary treasury distributions can bootstrap liquidity without permanent inflation.
Q: How will referral rewards avoid market dilution?
A: Rewards are paid in escrowed SNX (eSNX), which cannot be sold immediately and ideally gets staked—supporting network security.
The path ahead for Synthetix is ambitious—but grounded in practical upgrades that enhance usability, fairness, and long-term viability. By rethinking incentives, lowering barriers, and empowering contributors, the protocol is positioning itself for sustainable growth in 2025 and beyond.
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