The first major strategic move since the recent referendum, Synthetix acquires their ecosystem leading Perps trading platform Kwenta in a token for token transaction after approval of SIP-411 by the Spartan Council and KIP-138 by the Kwenta Council.
In the post-referendum era for Synthetix, we are reimagining what it means to provide a high-performing decentralized derivatives exchange. We are also focused on understanding the reasons why decentralized derivatives exchanges have struggled to compete effectively with their centralized counterparts. With this insight, Synthetix aims to become an industry innovator once again, pushing the boundaries of DeFi and growing its market share.
Regaining control of a Synthetix front end is step 1 in this process.
By combining protocols, Synthetix will regain ownership and operation of its dedicated front end. This change will bring several benefits, including enhanced brand exposure, better strategic alignment between liquidity provision and the front end, a stronger community, and greater control over the end-user experience.
Synthetix and Kwenta separated in 2020, with the vision to create a protocol solely focused on delivering the best trader experience for Synthetix derivative markets. While the vision enabled a dedicated team to create a market-leading front end, the presence of the KWENTA token resulted in differing strategic objectives for the Kwenta community.
Bringing the Synthetix and Kwenta communities back under one umbrella realigns their strategic objectives and roadmaps, allowing them to focus on the shared vision of delivering the best decentralized derivatives protocol and challenging the incumbent and dominant centralized exchange providers.
The acquisition of Kwenta will improve the robustness of Synthetix, bring many benefits to the protocol, and widen growth opportunities. Some of the additional benefits this transaction provides the Synthetix community include:
- Unified strategic motivations – Kwenta’s strategic priorities have recently drifted from Synthetix (e.g., additional integrations, points systems, staking module development, etc). This has resulted in delays for Synthetix, who are dependent on front end integrators, shipping products to market. Unifying strategic priorities will improve the ability of Synthetix to get products and improvements to market.
- Enhanced branding and market positioning – Market awareness and brand recognition will improve significantly with a Synthetix-branded front end at the center of the ecosystem. In crypto, awareness is essential to bring attention to our products and drive community sentiment.
- One team, one dream – Kwenta has a very talented base of core contributors (CCs). Having both Synthetix and Kwenta CCs working towards the same vision presents the best chance of delivering a market-leading product. Aligning strategic priorities, a unified vision, and a single roadmap will assist Synthetix to ship products and release trading updates faster.
- Merging of communities – Kwenta has a passionate community that overlaps greatly with Synthetix’s. Bringing these communities together and creating a cohesive, unified, passionate army of Spartans will strengthen our presence and brand.
- One token – Burning KWENTA for SNX will remove fragmentation and potential confusion caused by the presence of two assets. Having one token can result in more reflexive performance and attract more liquidity to Synthetix (e.g., $2m of new capital into one asset creates more value than $2m across two different assets).
- Additional growth opportunities – The addition of a front end to the Synthetix product stack can result in additional avenues to grow the brand and our product offering. A front end allows Synthetix to increase customer touchpoints, add new features, control the customer experience, and design strategies to drive adoption.
- Improved B2B offerings – Where previously we offered only infrastructure and liquidity to customers building front ends. Being an integrator ourselves, we will now have better tools for new integrators to build their own Perps trading platform. This will dramatically reduce the time and development effort required to launch a new Perps DEX powered by Synthetix.
- Efficiencies – Operational efficiencies are expected from the merger of Synthetix and Kwenta capabilities.
We couldn’t be more excited to bring the Kwenta community into Synthetix. We hope you feel welcome and enjoy Spartan energy over the coming months. Over the coming weeks, the transaction contract will be created to allow you to send your KWENTA to be burned in return for SNX. The primary attributes of the contract are as follows:
- 1 KWENTA will convert to 17 SNX
- There will be a 3-month lock, followed by a 9-month linear vesting period.
- Holders can redeem the portion of their SNX that has vested anytime during the 9-month vest.
- Neither Kwenta nor Synthetix Treasuries will be converting their KWENTA tokens, instead they will be burning them.
- The lock period for all KWENTA holders will start on November 15th, 2024, no matter when KWENTA tokens are sent to the contract.
- After 2 years, any KWENTA not sent to the contract will be deemed lost and will not convert into SNX.
This strategic acquisition of Kwenta marks a significant milestone in Synthetix’s commitment to expand its capabilities, generate more value for SNX stakeholders, and become the premier decentralized derivatives protocol.
This is the first big step in Synthetix’s reboot, and we’re excited by the opportunities that owning our own front end will bring.
To learn more about what the acquisition means for Kwenta users, see their blog.
