An activist investor’s plan to completely “reboot” decentralized finance protocol Synthetix and save it from becoming a “zombie” chain has now garnered over 99% approval from voters.
In a Sept. 25 SR-2 proposal, Benjamin Celermajer outlined a plan to “completely overhaul” and improve the governance and day-to-day operations of Synthetix.
Despite the recent resurgence in the wider crypto market, Synthetix has failed to build momentum or witness any sustained adoption, due to major flaws in its governance and day-to-day operations, says Celermajer.
This has caused the Synthetix protocol to miss several major opportunities and has seen its development marred by delayed product launches and a “lack of vision”, he added.
As of the time of publication, the proposal has garnered near-unanimous support from SNX holders, with 99.4% of the votes from 200 holders — 18 million SNX tokens — being cast in favor of the overhaul.
The SR-2 proposal has received 99.4% from 200 SNX holders. Source: Synthetix.io
Speaking to Cointelegraph, Celermajer said the SR-2 proposal “outlines a path forward to re-energize the project and inject some novel and high growth ideas.”
“These include a token redesign, new methods for the protocol to capture additional revenue, and new contract deployments on additional chains — such as the Ethereum mainnet and Solana,” he added.
“The ultimate goal is to return the internal operations to a culture of innovation, rapid iteration, fast shipping and to build back industry confidence that Synthetix is a DeFi leader.”
The overhaul’s key changes
The overhaul features several crucial alterations Celermajer believes will help steer the protocol back onto course for success in the long term.
The first is to completely redesign the protocol’s native SNX token and ramp up the functionality of Synethix’s recently launched Layer-2 network Snaxchain.
"Synthetix needs to make SNX token holders first-class citizens again and reimagine how the token can govern, generate revenue, and benefit from the project,” Celermajer wrote in a Sept., 25 post.
Additionally, the overhaul will add further functionality to the L2’s native SNAX token, migrate SNX to the L2 and launch a native stablecoin on the network.
The SR-2 proposal also includes deploying the Synthetix protocol on Solana in a bid to capitalize on the growing use and “strong community” that has been built up on network.
Celermajer believes an “increasing cohort of DeFi protocols will find their way onto Solana” to service the strong community that has persisted on the network over the years despite several issues — such as its ties to the FTX estate and frequent outages — that could have stifled adoption.
Governance takes centre stage
Another core issue SR-2 looks to solve is the governance problem. Synethix is currently governed by three separate councils: the Spartan Council, Grants Council and Treasury Council.
Celermajer says this current model is “too fragmented” and often leads to a lot of “incomplete decision-making and inefficiency.”
If approved, SR-2 will consolidate all governance all power into a single Spartan Council made up of seven seats with equal voting power.
“By consolidating the councils there is ultimate accountability for all decisions in one body, and that body must ensure that all strategic, commercial, and operational considerations are deliberated on before decisions are made,” Celermajer said.
Celermajer believes this shift in governance can help the protocol deliver new products faster and make a strong return to relevance in the DeFi sector.
TVL on Synthetix is down 90% from its 2021 all-time high. Source: DeFiLlama
The total value locked (TVL) on Syntehtix is currently sitting at $262 million, an 89% decrease from its all-time high of just over $2.9 billion which it notched on Feb. 12, 2021, according to data from DeFiLlama.
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