KIP-138: Synthetix Acquisition Proposal

Simple Summary

Synthetix is proposing to acquire Kwenta in a token<>token transaction. The terms of the transaction are as follows:

• 1 KWENTA <> 17 SNX
• This is an implied valuation of $13.2m based on a circulating supply of 532,375.
• SNX received in the conversion are subject to a 3 month lock and 9 month linear vest following the lock period.

The proposed transaction price is at a 19% discount to the 30 day average KWENTA/SNX ratio. This reflects the relative liquidity of the SNX and KWENTA tokens. Synthetix frequently trades over $20m per day on leading exchanges such as Binance, OKX and Coinbase. Kwenta generally trades $100k per day.

Abstract

This proposal will hand ownership of Kwenta and everything Kwenta related to Synthetix.

Motivation

In 2020, Kwenta was born out of Synthetix, to be the front end to the deep liquidity that Synthetix could provide. This was done to prioritise the development of a high-quality decentralized frontend for Synthetix, with a distinct set of contributors dedicated exclusively to this effort. Historically, the focus on the frontend had been divided between staking and trading, and further fragmented across infrastructure and interface teams. As a result, the trading interface was consistently underfunded and deprioritized compared to other initiatives.

However, as Synthetix and Kwenta drifted apart, various unintended consequences and conflicts arose, primarily Kwenta’s ability to generate a sustainable business model in the mid-long term. This has resulted in the token losing significant value through the recent and prolonged bear market.

This transaction will provide Kwenta and KWENTA token holders with the following benefits:

• Low $KWENTA Liquidity - realistically, it is difficult for tokenholders to access the value for their assets given the low liquidity of KWENTA. SNX is a significantly more liquid asset that will give holders the opportunity to exit near par value across significantly more trading venues such as Binance and Coinbase.
• Kwenta’s runway continues to shorten - Whilst recent improvements have been made to the revenue stream of Kwenta, runway continues to be a primary concern. This is a beneficial transaction in that all of the hard work that has gone into building Kwenta will live on (under the Synthetix brand) and KWENTA holders get an exit or realignment with Synthetix.
• Become Spartans - Synthetix is an OG DeFi protocol that is currently undergoing a reboot to reimagine itself. Under new leadership, Synthetix has recently streamlined governance and operations and is executing on an ambitious and exciting 2025 vision.
• Maintain ecosystem exposure whilst vesting - Kwenta holders would not be sitting in a fixed cash position for the duration of the token lock/vest. They’d still maintain upside potential by holding SNX throughout the period.

Specification

For more information, visit the: Kwenta State Log