I don’t take the step of posting this lightly as Synapse has been a bridge partner of GMX for multiple years, and one of the earliest and most active protocols on Arbitrum, but as a delegate and member of the STIP multisig responsible for the STIP funds (including on various times approving changes and stopping streams for other protocols) it is important to shine a light when there are matters in doubt.
Having taken the time to read Synapse’s original STIP application and Synapse governance vote (SIP-32) that were referenced but also the four weekly updates to the Arbitrum DAO, Synapse governance forum discussion and additional Synapse governance votes (SIP-35 onwards), was left with more questions than answers.
Hoping that the Synapse Team can answers these questions, while they also recognize what could have been done better. This way delegates can take that additional feedback into account.
Dislosure of the change
- Synapse changed the use of 1.5m ARB originally proposed to support ‘Synapse’s concentrated liquidity pools and traditional stableswap pools’ to instead support your new RFQ system. Appreciate that you have presented the RFQ system as being far superior product and wanted to move your incentivization in that direction.
- Your reports do mention RFQs regularly but in a more incidental fashion, ex. ‘In aggregate, bridge incentives have driven > $880m in bridge volume and thousands of transactions in its first week of distributions. The program is also driving adoption of RFQ versus other forms of bridging, as RFQ transactions made up nearly 10% of all transactions to/from Arbitrum in its first week.’
- From a disclosure standpoint your ongoing reports to the DAO never mention the Synapse vote, continuing to state ‘There are no changes to the original distribution plan’ and your final report stated ‘The final tranche of ARB rewards has been claimed. In the last week of the program, the rest of rewards will be distributed according to the original proposal.’
Protocols must have a degree of flexibility so the process should not be bureaucratic, STIP very much allowed for some flexibilty but Synapse could (and probably should) have done a much better job on disclosure and consultation of such a material change.
Relayers
This is the area where your responses lead to more questions than answers.
- In Synapse third update to the DAO (Synapse Protocol Bi-Weekly STIP Backfund Updates - #3 by moses) it references a Synapse governance proposal. This proposal appears to extend Synapse Labs a $5.0 million loan from its DAO for operating an RFQ relayer.
This past week the Synapse DAO passed a proposal that will drastically increase the liquidity for some of the initial relayers. This proposal should drastically increase the size of transactions that RFQ can offer competitive rates to.
It would be helpful to know if directly or indirectly Synapse Labs or anyone affiliated with it ran, or had an interest in one or more of the initial relayers or the relayer that is funded here if not part of the initial relayers. In short did Synapse or its Labs receive a portion of the ARB incentives?
Couldn’t find any information on your site or docs on how someone could participate as a relatyer, so additional information on how someone becomes a relayer, the process of recruiting them to participate for a share of the 750,000 ARB relayer incentives made available for growth?
Looking at the dune dashboard (https://dune.com/synapse_labs/synapse-stip-reporting), it looks like the RFQ system performed ~2000 transactions and bridged $23 million out of the 3 bilion in volume over STIP. Am i reading the chart correctly? If so in addition to the 750,000 ARB for relayer incentives how much of the 750,000 ARB in bridger rebates were used towards the RFQ system.
Appreciate your contributions to growing Arbitrum, am hopeful of your response and apologize in advance if anything i’ve flagged above is based on an incorrect understanding of the facts. Hopefully this can all be addressed.