SIP 84: Pause Synths Below Open Interest Threshold Source

AuthorKain Warwick, Jackson Chan
Discussions-Tohttps://research.synthetix.io/t/sip-84-pause-synths-below-open-interest-threshold/189
StatusImplemented
Created2020-08-31
Requires https://sips.synthetix.io/sips/sip-83

Simple Summary

Pause synths that are below the open interest threshold in order to reduce the gas costs of issuance, fee claiming and transfers. In addition for all traders with open positions at 10771675 sUSD will be paid to the value of the open position as compensation for having their position closed.

Abstract

This SIP proposes to pause synths with a supply below 30k USD until a new SIP can be implemented that leverages Chainlink to reduce the cost of calculating the debt pool. Pausing these synths will reduce the cost of minting and burning by as much as 75%. While this proposal is not ideal, it is important as without it the migration to external oracles will increase the cost of minting and burning by more than 50%.

We propose to freeze the prices of synths below the open interest threshold of 30k USD, we will then purge them into sUSD and temporarily disconnect them until we can get a workaround implemented sip-83.

Motivation

In the current gas environment minting and burning costs can reach $50 USD per tx or higher. This is because the protocol needs to know the size of the debt pool, and it is calculated by summing up the USD value of all 40+ synths totalSupply.

With the migration to decentralized oracles in SIP-36, there is even more additional gas costs of reading state from external contracts via the CALL opcode for each and every synth, along with the existing SLOAD required to read contract state. These additional CALL codes impact issuance transactions by 5-100%. By temporarily reducing the number of Synths we can reduce the gas costs below the current amount even after factoring in the increase.

Specification

Overview

We will specificy a threshold for Synth open interest, any synth that falls below this threshold will be frozen and purged following the Pollux release. SIP-83 has been proposed that once implemented, will reduce gas such that these synths can be resumed. The changes will allow us to significantly expand the range of support synths without incurring incremental gas costs.

Rationale

Once temporarily reducing the number of Synths was deemed necessary we needed to choose a mechanism for removing them. While many of the the synths below the threshold have minimal open interst several have 10-45k USD in value, in order to minimise the impact to holders purging them into sUSD was deemed the optimal path. The alternative is to freeze the price and leave the Synths disconnected until such time as they could be reconnected and the price updated. The issue with this approach is that a holder would be unable to exit the position until the synth was reconnected expositing them to price volatility with no means of exit.

Technical Specification

The table below reflects the Synths (and their inverses) that would be paused based on a threshold of 50k USD.

Synth Open Interest
sEOS 27,165.32
sCEX 24,556.73
sTRX 18,874.18
sFTSE 11,836.85
sJPY 9,467.44
sXMR 9,215.42
sCHF 1,725.99
sETC 1,112.68
sGBP 453.27
sNIKKEI 93.1
sDASH 87.8

Test Cases

TBD

Configurable Values (Via SCCP)

N/A

Copyright and related rights waived via CC0.