SIP-123: Synthetix CurveDAO Governance Vault- XveCRV

Author
Milli╬×, Farmwell
StatusRejected
TypeGovernance
ImplementorTBD
ReleaseTBD
Discussions-Tohttps://research.synthetix.io/
Created2021-03-17

Simple Summary

Synthetix is highly integrated with Curve.fi with significant synth liquidity in their various pools. Currently there is no strategy for voting for the gauge weights of any synth pools. With veCRV being non-transferable / non-delegate-able , its being proposed Synthetix offers a vault that perpetually vote-locks CRV in return for veCRV fees. The synthetix XveCRV vault would enable the pDAO to vote on gauge weights and proposals at the discretion of the Ambassadors / Council

Abstract

We propose to deploy a Vault for Synthetix that vote-locks CRV in return for Curve protocol fees paid pro-rata to the depositors. The Vault would perpetually max lock CRV and thus would not be capable of withdrawals, all $Curve deposited would be permanently locked. The voting power that would come from the XveCRV vault would serve SNX holders' interests in Curve governance, vote on proposals and boost synth pools.

Motivation

Given Synthetix deep ties with curve and the large balance of $CRV in the sDAO wallet, it only makes sense to vote lock said CRV and leverage the voting power to benefit the SNX community. Many large SNX holders are also large CRV / veCRV holders with long term interests in both protocols, some have already deposited in other vote-lock CRV vaults (i.e. StakeDAO sdveCRV , Yearn yveCRV). The largest veCRV holder is the Yearn.finance yveCRV vault, whom owns over 10% of the circulating supply and is clearly the most successful example of pooling Curve governance power. As Curve governance is very active with new proposals and Gauge weight votes frequently, it would serve synthetix well to take part in these governance activities and skew them in favor of the SNX community. From Cross asset swaps to multiple synth pools as well as wrapped synth pools there are many reasons for synthetix to pursue active participation in CurveDAO. A failure to deploy an on-chain governance strategy would result in the dilution of synthetix vote-power (as is currently happening with the sDAO CRV). When it comes to cross-asset swaps in particular, its important to have a strong vote in the CurveDAO gauge weights to; incentivize deep liquidity in synth pools for low slippage trades which directly result in fees paid to SNX stakers. As mentioned earlier the xveCRV vault would not be a novel idea (initially an experimental yearnVault), and it should be noted that there are two successful implementations of this strategy publicly available.

Specification

Overview

Submit proposal to Whitelist an XveCRV vault with Curve.fi to leverage the voting power within the synthetix community and rally community veCRV holders to vote it through. Given the fact that synthetix does not offer any similar products currently, we propose to roll out this SIP in phases starting with the deployment of the vault and potentially finishing with full UI support within the Earn tab of staking.synthetix.io. Ideally the Roll out would begin with the creation of the contract, followed by the sDAO depositing its CRV. Once sDAO has successfully voted on a proposal and collected protocol fees from depositing, the vault may be offered to the public via a separate UI from synthetix.io (with the appropriate Disclaimers since depositors will not be able to withdraw their CRV). The spartan Council may later decide if the XveCRV vault should be displayed in the staking UI.

Rationale

Given the Restrictive nature of veCRV there are little options available for a pooled governance strategy in regards to CurveDAO. The best and most successful strategy has been a veCRV vault as explained above. An alternative to a vault strategy would be for the sDAO to manually deposit and 4-year lock their CRV and use it to propose any changes and vote on behalf of the Ambassadors, coupled with an aggressive social media and discord campaign to gather support from community veCRV holders. The trade-offs associated with the sDAO manually locking and voting supplemented by a social campaign, versus a pooled governance strategy, are quite significant when it comes to CurveDAO. Gauge weight voting would be particularly weaker without a pooled approach given the uncertainty of how veCRV holders would vote on a regular basis. As mentioned previously, both Yearn and StakeDAO offer a veCRV vault and attract depositors frequently, as their share of veCRV grows the sDAO's voting power over time diminishes. In addition to vote dilution there is a threat of the SNX community permanently losing voting power to veCRV vaults overtime as additional incentives may entice CRV holders to deposit to these vaults and forfeit their voting rights.

Technical Specification

TBD

Test Cases

N/A

Configurable Values (Via SCCP)

TBD