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Synapse ProtocolSynapse Protocolby0x3e4eE39f99D536FB801E0A43e097577dE1B937e8googlysynapse.eth

[SIP-18] Deploy a new stableswap pool on BNB Chain without BUSD

Voting ended almost 3 years agoSucceeded

TLDR:

  • Deprecating the existing nUSD / BUSD / USDt / USDC pool
  • Replacing that pool by a new nUSD / USDt / USDC pool (i.e. without BUSD)

Background: On 13-Feb-2022, Paxos announced it will end its relationship with Binance and stop minting BUSD tokens: https://www.prnewswire.com/news-releases/paxos-will-halt-minting-new-busd-tokens-301744964.html

Existing BUSD tokens are redeemable through Paxos Trust company at least until February 2024. This limits the riks of a potential BUSD depeg as it can easily be arbed.

Synapse liquidity providers on BNB Chain have exposure to BUSD through the nUSD / BUSD / USDt / USDC pool (note that BUSD on BNB Chain is issued, like any Binance-peg token by Binance itself; in essence it is wrapped and bridged by Binance).

As a result, some people asked in the Synapse discord on whether governance would look into that pool: https://discord.com/channels/887411327696511027/887413395467415582/1076172126127661077

While BUSD still remains the dominant stable on BSC, a few points are noteworthy:

  • APR on the BNB Chain stablepool has increased significantly, due to liquidity outflows: liquidity providers are asking for almost 4p.p premium compared to Arbitrum or Optimism, 3p.p. compared to Polygon or Fantom, etc. This reduces the liquidity available on the bridge, increasing slippage
  • This can be observed in selected other pools on BNB Chain: https://twitter.com/ArkhamIntel/status/1628360373341487105
  • General BUSD supply has reduced by 25% in the last month: https://defillama.com/stablecoins
  • As CZ pointed out, supply is expected to continue to reduce as no new tokens can be minted: https://twitter.com/cz_binance/status/1625067487984340993

A post was made in the forum suggesting to replace the existing pool by a new pool, which would not include BUSD: https://forum.synapseprotocol.com/d/246-removing-busd-from-the-bnb-chain-pool

General feedback, conveyed in the Discord and on Telegram seemed to agree it was the best course of action

Actions to be undertaken by Synapse DAO contributors, should the Synapse DAO vote in favour of that proposal:

  • Existing nUSD / BUSD / USDt / USDC pool (4 stables) to be deprecated
  • New nUSD / USDt / USDC pool (3 stables) to be deployed
  • Once liquidity in the new pool is high enough, the Synapse bridge would route swaps through that pool
  • DAO contributors to explore routes to still have BUSD on the bridge, without the use of Synapse liquidity pools, by routing cross-chains swaps through other protocols (in line with an approach already taken on selected chains)
  • All other parameters to stay unchanged
  • Situation to be reevaluated in the future, should there be changes with regards to BUSD in the future (e.g. PAXOS starting to mint tokens again) or another stable (e.g. Binance backed) becomes dominant on BNB Chain

Off-Chain Vote

Yes, deploy nUSD/USDt/USDC pool
5.45M SYN100%
No, keep the existing BUSD pool
4.63 SYN0%
Quorum:109%
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Timeline

Feb 22, 2023Proposal created
Feb 22, 2023Proposal vote started
Feb 25, 2023Proposal vote ended
Oct 26, 2023Proposal updated