This sips aims at negating the voting outcome of SIP-212.
SIP-212 originally proposed to list Silver and Gold as spot Synths and for shorting. However, the product-asset fit makes more sense in having these commodities listed as futures markets (SIP-217). Below are the major reasons:
- Synth and shorts are strictly worse than futures in utilization of sUSD liquidity, given the ability of traders to take on leveraged positions with the same amount of synth liquidity.
- There isn't any interest rate embedded into silver/gold spot synths. While buying exposure to such derivatives in the traditional finance world incorporates a cost of carry and convenience yield. Furthermore, the need to calibrate interest rates via governance for shorts is not ideal, given day-to-day market volatility.
- The user base procuring spot XAU and XAG synths would do so with the intention of holding them to gain exposure to that asset class. This is not optimal due to the difficulty of generating large synth volume without leveraging the debt pool with wrapprs.
- The short synths cannot be paused, unless the until entire market is paused. Therefore, during periods where the oracle feed is not updated, users would be able to short synths at outdated prices.
- There are not open-interest caps with spot synths and therefore, the exposure on the debt pool is unlimited and the risk therefore amplified.
- SNX stakers would be much better off underwriting the commodotiy exposure when it comes from futures, due to the funding rates updates that encourage balancing of the skew.
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