SIP 147: Adding sMATIC Source

AuthorMiLLiE
Discussions-Tohttps://research.synthetix.io
StatusDraft
Created2021-06-09

Simple Summary

This proposal aims to introduce an sMATIC synth. MATIC is the native token of Polygon, an ethereum side chain which uses a combination of a plasma bridge/PoS-bridge to enable transfers between Ethereum and Polygon. Polygon is an EVM compatible sidechain which can support most dapps built on ETH. The Market cap of MATIC is $9B as of this writing with a daily trade volume of over $2B across exchanges such as Binance, Coinbase, OKEx, Huobi and Kraken and others. Chainlink already supports a price feed for MATIC, thus the deployment of sMATIC be completed in the same way as any traditional crypto synth.

Abstract

Deploy sMATIC for trading on Kwenta with 100 bps fee, using the MATIC chainlink price feed.

Motivation

The Polygon sidechain has gained significant popularity in recent months thanks to extremely low transaction fees, liquidity mining incentives and adoption among well known defi brands. As a result of increased adoption the MATIC token has seen tremendous growth in both price and volume on major exchanges putting it in the top 20 crypto assets by market cap and top 15 by volume (as per CoinGecko). The Polygon team has already collaborated with Curve.fi in liquidity mining and coupled with high trade volumes, $MATIC may be a great candidate for cross asset swaps via virtual synths, if Synthetix were to offer an sMATIC.

Specification

Overview

The deployment of an sMATIC using its chainlink price feed would be in the same form any traditional synth would be deployed as well as with a 100 bps trading fee.

Rationale

The Matic token does a lot of volume on CEXs’ such as CoinBase and Binance (over $2B in average daily volume over the past 30 days), putting it at a relatively low risk of manipulation. ref: https://www.coingecko.com/en/coins/polygon#markets

Chainlink already supports a MATIC oracle: https://data.chain.link/ethereum/mainnet/crypto-usd/matic-usd

It should be noted that in light of its market cap and very large trade volumes, the MATIC token is highly volatile and some times has significant daily price swings, and the Polygon sidechain, as with all sidechains, comes with its own security implementations. With those points in mind, all crypto assets saw extreme volatility over the past months and MATIC was subject to the same conditions. Naturally all sidechains/bridges carry some risk in crypto and yet it did not impede the deployment of sRUNE (the native token for Thorchain) for trading on kwenta.

SNX stakers would stand to benefit from the introduction of synthetic MATIC and its daily trade volumes. The risk of manipulation in particular is minimal, and any existential risks related to the sidechain are not isolated to Polygon but are a part of crypto and defi in its entirety.

Technical Specification

Reference previous newly deployed synths.

Test Cases

Reference to similar deployemnts.

Configurable Values (Via SCCP)

n/a

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