SIP-169: Deprecate Low Volume L1 Synths

Simple Summary

This SIP proposes to deprecate a number of L1 Synths as we move closer to launching L2. The proposed Synths are generating low volumes for the network with most having high exchange fees on L1 and add various front running and other risk factors which can be better solved for on L2

The Synths to be deprecated include s1INCH, sXTZ, sGOOG, sAMZN, sAAPL, sCOIN, sCOMP, sCRV, sDASH, sEOS, sETC, sFTSE, sFB, sLTC, sMSFT, sXMR, sNFLX, sNIKKEI, sREN, sXRP, sRUNE, sTRX, sTSLA, sUNI, sYFI, sBNB, sXAG, sXAU, sOIL, sCEX (originally part of SIP-166 but since migrated here).

Once deprecated each asset can be re-evaluated and then launched on L2 as per SIP-121.

Abstract

This SIP will remove synths from L1 via the SIP-174 process. A contract will be created that will allow holders of a synth (that is deprecated) to redeem them at a fixed price for sUSD

Motivation

With the imminent launch of Synth trading on L2 the requirement to maintain a comprehensive list of L1 Synths becomes less desirable. Many of the listed Synths can be exploited in ways that are detrimental to Stakes. Soft front running and spot manipulation have been identified as practical attack vectors the protocol has been dealing with on L1. Front running issues also cause the exchange fee on many of these Synths to be high and adds an unnecessary perception that Synthetix is a prohibitively expensive protocol to use for exchanging assets.

More recently the project has been discussing the focus on L2 as the primary environment for trading Synths, while keeping a handful of more liquid L1 Synths for larger composability opportunities.

The Synths that would continue to be available, traded and utilized (including through various integrations) are sUSD, sEUR, sAUD, sKRW, sJPY, sGBP, sCHF, sDEFI , sCEFI, sETH, sBTC, sLINK , sAAVE , sDOT , sADA

Reducing surface area during this transition to L2 will minimise chances of an exploit, accelerate the shift to a better, faster trading experience and refine the protocol’s focus on desirable Synths.

Specification and Overview

As per SIP-174 Allow the owner of the protocol to remove a synth with existing supply by issuing the equivalent amount of sUSD of the synth's open interest at the current exchange rate to a new contract SynthRedeemer and allowing holders to redeem back to sUSD at any time in the future their deprecated synths using the redeem rate.

When a user later invokes SynthRedeemer.redeem(IERC20) then contract will burn the synth tokens and send the user the equivalent amount of sUSD

Rationale

Deprecating low volume Synths reduces the surface area for front running while allowing high velocity Synths to remain as fee generating commposable tokens on L1.

Using the redeem method means any deprecated Synths won't break various contracts where they may currently be deposited, such as Balancer, Uniswap, Curve. This method allows for a user lead redeemption flow while allowing the protocol to remove the Synths from being tradable.

Technical Specification

N/A

Test Cases

N/A

Configurable Values (Via SCCP)

N/A

Copyright

Copyright and related rights waived via CC0.