SIP 126: New ERC-20 Synths Source

AuthorKain Warwick
Discussions-ToDiscord
StatusApproved
Created2021-03-01

Simple Summary

As virtual Synths and other cross-asset swaps become more viable it is important the protocol continues to add liquid in-demand assets. There are a number of highly liquid assets not yet supported by Synthetix, this SIP proposes to add two of them s1INCH, sRUNE.

Abstract

This SIP will add the two new ERC-20 assets as Synths, s1INCH, sRUNE. It does not propose adding inverse Synths for these assets.

Motivation

There are two main reasons for adding additional ERC-20 asset support, the first is the growing usage of virtual Synths for cross-asset swaps. The second and more important reason is that as Synthetix transitions to OE many ERC-20 assets will have low liquidity initially, so Synthetix will be able to support exchanges of these assets helping to bootstrap liquidity.

Specification

Rationale

The Synths proposed were chosen as they are some of those most in demand by the comunity over the last few months. The reasoning behind only proposing the sSynths and not the iSynths is to allow avoid the need for depreacting them when iSynths are eventually depracated. Once thye have been live for a reasonable amount of time a SIP will be required to enable shorting of these assets.

Liquidity Analysis - 1INCH:

The tables below showcase statistics on the cost of pushing the price of 1INCH on binance (on the 1INCHUSDT pair) by the percentage mentioned in the header (denoted in bp):

Pump 25 50 75 100 150 200 400 600 800 1000
mean $56,796 $79,048 $105,613 $137,488 $166,456 $207,182 $453,708 $801,630 $1,191,356 $1,756,847
median $57,998 $79,997 $98,785 $133,560 $153,780 $179,074 $366,420 $671,488 $1,093,728 $1,577,410
std $12,026 $15,415 $27,046 $38,501 $46,130 $60,952 $212,806 $365,072 $465,601 $923,797
Dump 25 50 75 100 150 200 400 600 800 1000
mean $68,559 $125,757 $250,543 $308,556 $389,461 $429,370 $681,888 $875,155 $1,051,078 $1,246,203
median $50,022 $95,246 $187,280 $254,212 $311,988 $348,612 $653,752 $829,534 $1,022,643 $1,246,826
std $61,214 $70,966 $141,135 $165,148 $197,977 $210,618 $154,716 $174,454 $139,609 $211,652

1INCH is mostly traded on Binance, however, alternative exchanges offer consider amount liquidity as well. 1Inch maintains an average bid/ask spread of 6 bp with around USD 36 million in average daily trading volume (measured over a full week).

Liquidity Analysis - RUNE:

Similarly, the tables below showcase the orderbook statistics on RUNE (on the RUNEUSDT pair on binance):

Pump 25 50 75 100 150 200 400 600 800 1000
mean $69,524 $111,231 $148,296 $183,766 $204,593 $281,115 $724,894 $1,016,487 $1,273,839 $1,433,138
median $39,018 $82,748 $115,865 $130,021 $141,407 $242,320 $762,496 $963,728 $1,205,664 $1,365,055
std $67,957 $66,500 $81,134 $134,595 $154,953 $138,044 $374,762 $506,396 $544,376 $609,127
Dump 25 50 75 100 150 200 400 600 800 1000
mean $26,695 $50,853 $74,691 $109,591 $131,743 $181,965 $296,782 $647,294 $827,880 $1,040,284
median $25,735 $47,149 $75,717 $105,921 $128,126 $161,634 $277,742 $488,113 $747,229 $1,107,528
std $8,876 $19,439 $7,397 $30,103 $42,464 $68,903 $104,761 $347,462 $249,942 $257,418

There is also considerable volume available for trading on RUNEBTC pair on binance which increases the depth seen in the table above. The average trading volume over the course of the week stands at USDT 50 million with an average bid/ask spread of 12 bp. It should be mentioned that RUNE’s orderbook encompasses slight assymetry tilted towards the bid side.

Technical Specification

N/A

Test Cases

TBC

Configurable Values (Via SCCP)

N/A

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