SNX bonds for LP tokens

Simple Summary

Uniswap is the perfect on-ramp and off-ramp for the synthetic ecosystem as it is permissionless and open, but it requires liquidity providers (LPs) to deposit tokens against sUSD. Currently, the Synthetix community has chosen LUSD as a perfect stable coin counterparty on Optimism L2 that is sufficiently decentralized and liquid. Providing LUSD/sUSD liquidity on Uniswap not only acts as a on-ramp and off-ramp to the Synthetix ecosystem, it also allows Synthetix stakers to convert their minted sUSD for LUSD, which they can in turn wrap back to sUSD, which helps in smoothing the long ETH debt skew.

Historically, Synthetic protocol has incentivized Uniswap liquidity on Ethereum Layer 1 with direct SNX rewards. The depth of the Uniswap liquidity with such an incentive model is present only while the incentives are being paid out, where the moment the incentives stop, liquidity is significantly pulled. Ideally, liquidity in Uniswap is owned by the Synthetix Treasury and can be achieved by selling escrowed discounted SNX bonds for the LP tokens.


This SIP formalises at the protocol level to divert a portion of SNX inflation to purchase LP tokens of the LUSD/sUSD Uniswap V3 pool through the sale of escrowed discounted SNX bonds.


The implementation of this SIP will be:

X% of inflation / treasury SNX is to be sold as bonds for LUSD/sUSD Uniswap V3 pool tokens. Bonds will be in the form of escrowed discounted SNX.

Escrow length
Bond discount

7 day escrow for 10% discounted SNX.


By incentivizing through the sale of bonds, Synthetic Treasury takes ownership of sUSD/LUSD LP tokens and assures the liquidity in the pool stays after incentives end.

Per Discord #governance discussion, this seems to be redundant at this time.