DeFi Protocol Synthetix Upgrading to L2 Scaling to Alleviate Gas Costs for Small SNX Stakers

Popular on-chain synthetic assets protocol, Synthetix is in the first phase of its transition to Optimistic Ethereum, a layer two scalability solution for the second-largest network that continues to grapple with congestion and sky-high fees thanks to all the DeFi craze.

Synthetix founder Kain Warwick is “unreasonably excited” about this development who recently hinted at what’s to come by saying those priced out of staking the digital asset will get “unpriced out” soon.

SNX is the 39th largest cryptocurrency with a market cap of $472 million currently trading in green at $4.70. The DeFi protocol also has about $600 million in crypto deposits.

Get those SNX Working

The first phase involves an incentivized testnet that trial SNX staking on Optimistic Ethereum, aimed at SNX stakers with smaller balancers who may have priced out of participating in staking due to high gas prices.

78.54% of SNX is already collateralized to mint synths.

Optimistic Ethereum is the only “generalized” Layer 2solution for Ethereum, meaning it doesn’t require any specific functionality to be built to support the existing L1 protocols.

“This is a huge milestone for Synthetix, Optimistic Ethereum, and indeed the entire Ethereum space,” reads Synthetix’s official announcement. “Launching SNX staking on OE is a crucial step towards full scalability for the burgeoning DeFi ecosystem, truly allowing anyone around the world access to open financial infrastructure without the friction of high gas costs.”

In this incentivized testnet, the eligible SNX stakers, addresses holding between 1 and 2500 SNX that have staked at least once historically, will get a snapshot of their SNX balance on Optimistic Ethereum’s L2 testnet.

It can then be used to stake, mint, and burn sUSD and also to claim rewards for their participation, which are claimable on the mainnet launch L2.

In other news, SNX is getting listed on crypto exchange Bitfinex on Sept. 26 at 10:00 AM UTC.

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Author: AnTy

Synthetix Becomes The Latest DeFi Project To Fully Integrate Chainlink’s Decentralized Oracles

  • Decentralized finance protocol, Synthetix, an exchange for trading synthetic assets on the Ethereum blockchain, is moving towards full decentralization.
  • In a blog post published on Sept. 1, the platform will integrate Chainlink’s decentralized oracles as a step towards its planned decentralized governance.

The DeFi protocol had previously integrated Chainlink oracles to connect off-chain data, relying on their internal oracles for on-chain data. However, Chainlink will now be fully used to remove any dependence on centralized parties as oracles providing data on the price of commodity crypto and forex synthetic assets (Synths) traded. The statement reads,

“We are excited to announce that after an eight-month successful implementation of Chainlink’s decentralized price oracles for our commodity and FX Synths, we have now switched the rest of our price oracles over to Chainlink as per SIP-36.”

Chainlink’s oracles provide a wide range of nodes that provide greater security while allowing scaling up of the assets (Synths) minted on the platform. Furthermore, Chainlink’s Data Price Reference allows multiple DeFi projects to finance the shared pools and price feeds, building a shared economic model that lowers the cost of data referencing across all projects.

Synthetix decentralization efforts follow a similar path being established by DeFi protocol such as Compound (COMP) –which switched from centralized governance to a decentralized system with its governance token.

The integration comes barely a month following the decommissioning of the Synthetix Foundation as the governing council, replacing it with three community-led autonomous organizations (DAOs) – synthetixDAO, grantsDAO, and protocolDAO.

Synthetix suffered a massive attack in July 2019 after hackers breached the oracles making away with over $37 million. Investigations showed the oracle attack arose from faulty bots and a centralized point of attack. The full integration of Chainlink oracles marks a significant improvement in Synthetix, with such cases expected to reduce to a minimum as decentralization improves.

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Author: Lujan Odera

UMA Project Launches Synthetic Token ETHBTC Which Tracks Relative Value of ETH to BTC

UMA Protocol, a decentralized finance (DeFi) project, has approved an innovative contract to create a synthetic token called ETHBTC which would track the relative value of Ether concerning BTC.

This synthetic token would allow users to bet on the relative value of the second largest token concerning Bitcoin. However, the synthetic ETHBTC token would not involve either ETH or BTC for minting.

While introducing Bitcoin’s synthetic value (tBTC being the latest project) on the Ethereum network as a collateralized asset has been the trend in 2020, the idea of creating a synthetic token that is pegged against the value of bitcoin and Ether is one of a kind.

This synthetic token would be the first deployment of the UMA project, and they are calling it a priceless token model since it will be built from scratch without the need for any oracle.

Hart Lambu, the co-founder of UMA, commented on the reason behind going for an unconventional defi project model despite it being their first deployment, to which he responded:

“ETHBTC was selected as the first test for UMA’s priceless synthetic design because it’s DeFi-centric but not too serious.

This first token is still experimental, so it felt wise to choose a product that appeals to hardcore DeFi natives – the type of people that might want to bet on this rate, and who best understand the risks of ‘new’ things.”

The UMA team has, however, cautioned users who were enthusiastic about buying tokens to be careful. According to them, not only is the token quite new, but even the concept behind it hasn’t been widely tested, and thus users must proceed with great caution.

How ETHBTC Works?

In order to mint ETHBTC, a user needs to deposit DAI in a smart contract, allowing them to withdraw ETHBTC against it. The user can then either trade it in the open market like any other Ethereum based token until the contract expires or increase the liquidity of the ETHBTC pool.

When the contract expires, the collateralized DAI is split between holders and stakers, and if the relative value of the ETH against BTC is higher, the token holder receives a profit and if the value has declined the token staker receives a profit. This means ETHBTC holders would go long while the stakers go short on the synthetic token.

The other interesting aspect of this priceless synthetic token is that it doesn’t require any oracle to track the price, unlike many other token systems (see chainlink’s decentralized price oracles). Primarily because there is no on-chain activity required to keep this model flowing, and Lambur believes this could be a perfect way to scale the DeFi platform.

In case of any dispute, the involved parties can settle the issue through a vote, and the decision-makers who vote for the winning side would receive the same UMA tokens.

Lambur also explained that the voting would be unbiased since the UMA’s economy has been designed in a way that people buying tokens to gain an advantage in the voting process would remain unprofitable. As of now, the ETHBTC can be purchased on Uniswap, which just launched v2.

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Author: Rebecca Asseh

BoE Deputy Governor: Central Bank Digital Currencies Are “Worth Looking At”

According to Bank of England deputy governor Dave Ramsden, developing a synthetic central bank digital currency is “worth looking at.”

Ramsden who oversees payments and fintech said currently, the UK central bank is “very focused” on what needs to be done to provide infrastructure to encourage private innovation.

Now, creating a digital currency with other central banks is “worth looking at because there is a big issue with the cost and efficiency of payments” across borders.

This idea was also raised by BoE governor Mark Carney, who back in August during a speech in Jackson Hole, Wyoming talked about replacing the dollar as a reserve currency with a stablecoin like Facebook’s Libra.

On Tuesday in London, the BOE chief said currency offerings to business and consumers are “not good enough in this day and age.”

“We should always be challenging ourselves on whether we do more, because the consumer demand, both in advanced economies and in developing economies, is for greater efficiency,” Ramsden told Bloomberg. “There’s a big prize here.”

This week, European Central bank member Benoit Coeure said the regulators have to be prepared for revolution in digital currency space and central banks must adapt. Earlier this month he said Libra was a “wake-up call” for central banks while Germany’s Finance Minister, Olaf Scholz, said:

“We encourage European central banks to accelerate work on issues around possible public digital currency solutions.”

Meanwhile, some of the G20 central banks are experimenting with central bank digital currency (CBDCs). China is one of the prime examples that are “almost ready” with its sovereign digital currency.

The US is not considering issuing a CBDC right now but “following very carefully.” Japan and South Korea are other countries without a plan to issue a central bank digital currency. Russia has repeatedly indicated its plans to issue a CBDC, but not in the immediate future. India, on the other hand, is working on a draft bill for the same.

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Author: AnTy