SIP-345: Buyback and burn SNX on Base

Simple Summary

Use 50% of fees earned on Base to buyback and burn SNX.

Abstract

After any share to integrators, use 50% of net fees to buy and burn SNX via market auction. The other 50% of net fees will be earned by the LPs, which is currently expected to be ETH and USDC.

Motivation

Fees from the isolated Base deployment need to be aportioned to the LPs and wider Synthetix protocol participants.

Specification

Overview

1. Deploy a market buyback contract for SNX on Base, using Yearns https://etherscan.io/address/0x6903223578806940bd3ff0c51f87aa43968424c8
2. Register a Rewards Distributor on the Spartan Council Pool
3. Configure any Markets on Base to send fees to a Rewards Distributor on the Spartan Council Pool
4. Set SNXFeeShare = 50%
5. Configure the Rewards Distributor on Spartan Pool to direct SNXFeeShare of net fees (after integrator share) to the buyback contract.
6. Withdraw and burn purchased SNX

The remaining 1-SNXFeeShareis earned by LPs in the Spartan Council Pool. For example if $10 of fees were earned on Base, and integrator share is 10%, then $4.50 will go to Spartan Council Pool LPs, and $4.50 used to buyback and burn SNX.

Rationale

Buyback and burn SNX is the most elegant use of fees earned on Base, and tests the model of how isolated V3 deployments on other chains could operate.

Burning fees was considered as one solution, but is significantly more complex. In an ideal world, fees for SNX LPs on other chains would be distributed to each staker in the same form that fees are earned in. However, due to the limitations of cross-chain communication at this time, and the complexity of managing these operations across multiple networks, the proposal will instead use the fees to buy SNX back from the market, and subsequently burn the purchased SNX.

Technical Specification

TBC

Test Cases

N/A

Configurable Values (Via SCCP)

• SNXFeeShare: percentage of fees used to buyback SNX and burn

Copyright

Copyright and related rights waived via CC0.