SIP-186: Risk Committee


Simple Summary

This SIP aims to introduce a new governing body called the Risk Committee, consisting of members selected from the other governing bodies of Synthetix (i.e Spartan Council, Treasury Council) who will be responsible for risk analysis for the Synthetix Protocol.


If this SIP is approved, the Synthetix DAO will be expanded to include a Risk Committee consisting of 5 members selected from the existing governing bodies.

They will be responsible for:

  • Establishing an initial process for the analysis of risk within the Synthetix Protocol in the form of a SIP (i.e monetary policies, external partnerships/programs)
  • Carrying out the risk analysis to be introduced in the SIP life-cycle
  • Providing risk analysis summaries for the Spartan Council to take in consideration when debating and voting on SIPs


In a complex system such as the Synthetix Protocol, there are significant risks to modifying the Protocol. These risk can be introduced via changes internally, such as through the SIP process or externally, through ecosystem economics that may affect the Synthetix Network.

As we continue moving towards decentralized governance, it is important we establish a body that solely focuses on risk within the Synthetix Protocol.



The Risk Committee (RC) will be in responsible for managing and responding to the risks within the Synthetix Protocol. More specifically they initially will be in charge of:

  1. The "Risk Analysis" stage that will be introduced in the SIP workflow
  2. Protocol Risk Oversight
  3. Recommendations for SCCP based parameter changes

SIP Workflow

The RC will be responsible for an additional step in the SIP workflow which will run in parallel with the engineering "feasibility". In this step, the RC will be responsible for conducting an in-depth risk analysis to provide to the Spartan Council to utilize during their debating and voting process.

Each SIP will be assigned an extra status decided on by the RC, from the following:

  • Acceptable
  • Caution
  • Review Required
  • Non-Acceptable


If a SIP is assigned this label, the RC has found that there is negligible risk in the proposed SIP.


SIPs marked with this label require additional review of the highlighted risks by the Spartan Council when debating and voting on the SIP.


This label should be used by the RC if a particular SIP fails the criteria* created by the RC that the relevant stakeholders deem unacceptable risk to the Synthetix Protocol.

*Criteria - The RC is to introduce a criteria that outlines the certain risk that they propose are unacceptable to the Synthetix Protocol

The RC will also be able to introduce a checklist in this process that when failed will recommend rejection of the proposed SIP due to overwhelming risk.

Protocol Risk Oversight

Historically the management of risk has been dealt with on an ad-hoc basis by Core Contributors. The RC will be appointed the body to be responsible for managing risk in protocol policy changes (usually exposed via SCCPs - such as proposed inflation or c-ratio changes). For SCCPs, the same process outlined in the SIP workflow applies.

For external risk, the RC is responsible for providing a public forum to receive any community concerns in relation to ecosystem developments that may affect the risk to the Synthetix Protocol as well as be proactive in managing this risk.


The existing system whereby risk asesment is not assigned to a particular individual or body presents an existential risk to the Protocol. There have been several incidents over the last year where a more thorough risk assessment could have significantly reduced the risk of SIP implementation. The rapid growth and development of the Synthetix Protocol and ecosystem has increased the bandwidth required to manage risk within Synthetix.

The nomination and election process of majority of the RC are only picked from a pool of existing members in various governing bodies to ensure that the RC has enough context and reach to be able to perform their analysis effectively. Their stipend amount is also set to be the same as the Spartan Council as to ensure that the individuals are highly incentivized to serve with benevolent intent as risk is a critical aspect of the Synthetix Protocol.


  1. The governing bodies and stake holders will be notified that the Risk Committee will be accepting nomination and elections for the new epoch, the epoch should be set to sync to the current epoch of the other bodies (meaning that the first epoch may be shorter than 3 months)
  2. A different nomination sheet will be created for each category from which the members will be selected from
  3. The Risk Committee snapshot space will be created for hosting the individual proposals from the nominations above
  4. Members will be voted on by the voting strategy used in the Spartan Council elections (quadratic-weighted debt)
  1. Risk Committee members will be made known to the community and the Treasury Council will assign a budget to pay for the RC members stipends
  2. The SIP workflow will be amended to include the "Risk Analysis" stage
  3. The Risk Committee will setup with their internal communications and processes


Upon the approval of this SIP, the Risk Committee election will be conducted. The membership of the Risk Committee will consist of:

  1. 2x Core Contributors
  2. 1x Spartan Council member
  3. 1x Treasury member
  4. 1x External community member

The successful candidates from the above will then be appointed a seat within the Risk Committee and entitled to a stipend provided by the Treasury Council.

In addition the TC will set a budget for external risk assessment by the risk committee through engagement with external service providers.


Risk Analysis

A community member authors a SIP, to create a new string of liquidity incentive pools under the Synthetix Protocol. The SIP is merged in by the SIP editors and labeled as "Draft". During the CC Sprint Planning, an engineer is assigned to the SIP for feasibility, and the assignee notifies the Risk Committee members via Discord that there is a new SIP that they are conducting feasibility research on.

The Risk Committee schedule a meeting to discuss how the introduction of liquidity incentive pools (in which sUSD is apart of the proposed plan) might affect the system and they come to conclusion that it might cause the sUSD to de-peg. They label it "Review Required" as they think it might be viable to pass if they remove the sUSD pool from the proposal.

External Protocol Oversight

The Risk Committee has been operation for a while and has found its rhythm, upon their weekly proactive research they notice that a popular protocol has made a proposal to incentivize the short-selling of the Synthetix Network Token. The Risk Committee understands that this may have negative impacts on the Synthetix Protocol and rallies the DAO members to help petition against this proposal using governance power managed by the Synthetix Ambassadors.

The proposal ultimately ends up failing.

Internal Protocol Oversight

A SCCP is made that proposes to decrease the c-ratio to 10%, the Risk Committee upon seeing this SCCP holds a discussion and ultimately comes to the conclusion that it has failed their internal criteria and assigns it a risk summary of "Not Acceptable".

Configurable Values (Via SCCP)

  • Number of Committee members
  • Stipend amount per month
  • The quota of members that make up the RC from various bodies

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