Synthetix Governance Overhaul Garners Near-Unanimous Support

Synthetix, the veteran DeFi derivatives protocol, is undergoing a major governance change through a proposal called "SR-2."

On Sept. 27, voting on the SR-2 proposal commenced, and so far, more than 17 million SNX tokens, representing 99.93% of the total votes, have been cast in favor, with only 12,000 SNX tokens opposing the proposal.

The proposal outlines plans to improve operations for Synthetix’s Layer 2 network Snaxchain. The changes include adding more functionality, migrating SNX tokens, and launching a new stablecoin. SNAX launched on Sept.16.

The update also includes the deployment of Synthetix on Solana, the expansion of V3 perpetual futures, and the deprecation of the older V2x model.

"Synthetix needs to make SNX token holders first-class citizens again and reimagine how the token can govern, generate revenue, and benefit from the project,” Celermajer wrote.

Decline in Market Presence

The new proposal points to shortcomings in the current governance model, where decision-making is spread across several councils — the Spartan Council, Grants Council, and Treasury Council.

"Governance failings are resulting in confusion and undesirable outcomes. Councilors have low accountability, largely sign transactions without too much consideration towards a broader strategic plan,” the proposal read.

If the proposal is approved, the new Spartan Council will assume immediate governance control. The vote is set to conclude on Oct.3 at 23:59 UTC.

The overhaul comes at a time when there is a lack of commercial focus, according to the proposal.

"Synthetix continues to miss the opportunity to make the protocol financially robust, missing grant opportunities and putting low consideration towards economic drivers during product development,” the proposal said. “Synthetix doesn’t have a 2025 vision, let alone a 2024 vision. There is no roadmap that extends beyond 3 months.”

The past year has been marked by delays in product launches, missed market opportunities, and a lack of clear direction, according to the proposal. These issues have impacted Synthetix’s market presence.

Its total value locked (TVL) has plummeted by 73% to $268 million from its peak of $1.02 billion in March, reaching its lowest level since June 2020, according to DeFiLlama. Trading volumes for Synthetix Perps V2 also took a 40% hit, falling to $6 billion from $10 billion during the first quarter.

Key Changes

SR-2 aims to address governance issues by consolidating all power into a single Spartan Council made up of seven members with equal voting power.

“The Synthetix project is failing. It is fading into obscurity and is at risk of becoming a zombie protocol, destined to live on only as hopium for a select few devoted followers,” said Benjamin Celermajer, a Synthetix supporter and one of the key figures proposed for the new council.

Launched in 2017, Synthetix is a decentralized platform that allows users to trade synthetic assets representing real-world assets, such as gold or fiat currencies. Synthetix has processed over $60 billion in on-chain volume and played a foundational role in launching innovative DeFi concepts like liquidity farming and decentralized perp markets.

Synthetic did not immediately respond to a request for comment from The Defiant.