SIP 158: Deprecate Inverse Synths Source

AuthorJackson Chan, Kain Warwick
Discussions-Tohttps://research.synthetix.io
StatusApproved
Created2021-07-07

Simple Summary

This SIP proposes to deprecate inverse synths in favour of the shorting mechanism introduced in SIP 103. Once this SIP is implemented and iSynths are removed from the protocol a planned upgrade of Multi-collateral shorts will allow for more assets to be added to the shorting mechanism.

Abstract

This SIP will remove inverse synths from the protocol by pausing exchanging into all inverse Synths then purging holders into sUSD.

Once all holders are purged, the collateral manager will be updated to remove references to iSynths.

Motivation

With the introduction of shorting in Multi-collateral loans SIP 103 the ability to open natural shorts on ETH and BTC was introduced without using iETH or iBTC.

The ongoing mangaement of iSynths requires manual intervention by the pDAO to purge all holders and reset them each time they freeze. The design of the inverse synths pricing also introduced leverage as they reached their upper / lower limits, which required exchange fees to be increased to deal with frontrunning.

Upgrades to the multi-collateral loan and shorts contracts on L1 will enable shorting on a wider range of assets, starting with the top ten traded Synths by volume.

Specification

Overview

Technical Specification

Phase 1: Purge and remove Inverse Synths

  1. Pause exchanges on all iSynths.
  2. Purge remaining isynth holders and remove iSynths from the Synthetix and inverse pricing exchangeRates contract.
  3. Ensure Collateral Manager continues to open loans and shorts with isynths supply at 0.

Phase 2: Upgrade contracts to remove Inverse Synths

After delisting and removing iSynths, references to inverse Synths and pricing can be removed from:

  1. CollateralManager contract (Upgrade as part of the Multicollateral loan updates)

This would require a release to remove the references to inverse pricing and use of inverse Synths from these contracts.

Rationale

Splitting the deprecation of iSynths into two phases allows the isynths to be purged and removed from Synthetix exchange first, and then have contract updates to be done as a separate release.

Test Cases

Configurable Values

N/A

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