DFP-54: Add Synthetix V3 Liquidity Provisioning

Header Content
Author Edson Ayllon (@relativeread)
Created 2023-12-18
Status Draft


dHEDGE has always had close ties with Synthetix. It was originally built on Synthetix entirely and allowed anyone to create synth vaults. As dHEDGE has evolved, our vaults have continued to support Synthetix with Toros’ dSNX. Adding Synthetix V3 would be the continuation of our support for the Synthetix ecosystem.

As we’ve heard from Toros and their users, Toros would like to expand dSNX to be not just a debt hedge, but a fully automated liquidity staking solution.


This proposal is to begin support for Synthetix V3, which is codenamed Andromeda. Andromeda supports the following specifications:

  • SIP-336: Deploy Synthetix V3 Core on Base
  • SIP-338: Deploy SNX token via Base Bridge (superseded if 350 passes)
  • SIP-350: SNX Token Bridging via Wormhole (superseded by 338 if fails to pass)
  • SIP-337: Perps v3
  • SIP-346: Perps v3 Integrator Incentive (20% fee share for integrators)
  • SIP-348: Enable USDC for Andromeda on Base
  • SIP-345: Buyback and burn SNX on Base (50% fee share for SNX via buyback and burn)

For this initial dHEDGE integration, this proposal is to support the following:

  • Enable liquidity provisioning
  • Enable synth creation

For Andromeda, liquidity provisioning includes supplying USDC. And synth creation includes minting sUSDC from the USDC provided.

These supported features will allow vaults to also provide liquidity, where only hedging was possible in the past, as seen with dSNX.


Due to the nature of the integration, withdrawals will see some increased complexity. Namely, if there’s not enough available liquidity outside of Synthetix liquidity provisioning, depositor capital will be locked up. This means user capital will have limited exit liquidity which will be made available weekly.

Due to the nature of the integration and these lockups affecting depositors, Synthetix liquidity provisioning will be available to managers on a case by case basis.

Managers who take advantage of Synthetix liquidity provisioning may still provide liquidity with the entirety of the vault’s value, however, they should support withdrawal windows for some period every week, where liquidity is partially withdrawn for users to be able to exit the vault.




This might be the most uncontroversial proposal in the history of defi

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Seems very important to implement, certainly with the optimism/base-support.

However, as you state, maybe provide enough explanation for managers and users in the interfaces regarding the mentionned risks of withdrawal limitations.

Could one implement an indicator maybe showing the health of a vault regarding withdrawals? Of course, it’s only the current situation, but it may give an indication of the risk in a simple way.


Sure. Something like that can be implemented on the UI side.

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