Simple Summary

Synthetix, as part of the future product vision, is launching in-house owned and operated vault strategies. One of the first strategies will be leverage tokens. Rather than cold start and compete with TLX, Synthetix is proposing to acquire TLX in a token<>token transaction. The vision is to integrate the TLX community and key products into Synthetix’s fullstack vision of derivatives, leverage and yield.

The terms of the transaction are as follows:

• 18 TLX <> 1 SNX, this represents an 8% discount to the 30d average price. Given recent price movements of both tokens however, this conversion rate represents a trade at par value.
• This is an implied valuation of $4.0m based on a circulating supply of 47m and a 30-day average SNX price of $1.53.
• SNX received in the conversion are subject to a 1 month lock and 4 month linear vest following the lock period.
• TLX tokenholders will receive a pro rata distribution of 700k stablecoins 6 months after the start date defined in the transaction contract. The distribution weighting will also account for the duration a converted TLX holder held their SNX claim in their conversion address.

The valuation is contingent on accurate Treasury reporting, no material liabilities, or changes to circulating supply.

Motivation

TLX has developed, owns and operates an attractive suite of leverage tokens, but has been unable to reach its potential due to low market awareness and low brand recognition. In an increasingly integrated market, vault strategies are but one part of a robust market offering.

As part of Synthtix’s new strategy and 2025 vision, Synthetix vaults are a key part of improving user experience. Rather than building our own vault strategy, Synthetix believes there are several complementary aspects of bringing TLX, its community and associated products into Synthetix.

For details on why Synthetix is considering the acquisition, please refer to SIP-412.

Synthetix would like to see TLX leverage tokens reach their potential and attract hundreds of millions in TVL. Synthetix believes this can be achieved by utilising the Synthetix brand, marketing channels, reputation and leaning into our active and engaged community.

Why we believe this is an attractive opportunity for the TLX community:

• Tokenholders receive a much more liquid token - TLX has an average daily volume of $35k over the last 30-days, relative to SNX which has $50m daily volume.
• Whilst there is a lock/vest period as part of the transaction, given TLX holders will convert into SNX, they will continue to maintain market exposure throughout the lock/vest period.
• TLX holders will convert into SNX, giving them exposure to a protocol with a more diverse suite of products (derivatives, leverage tokens, yield vaults, etc).
• One combined super-community; no more token fragmentation. TLX tokens would be burned. This proposal would bring everyone into the Synthetix community and align all interests towards the SNX token.
• Benefit of access to Synthetix resources - with additional marketing, BD and development resources, TLX vaults will have more opportunity to grow and attract attention.

Specification

This acquisition is for everything related to TLX, including but not limited to all smart contracts, all repos, all IP, all multisigs, all off-chain operations and everything in its treasury and treasury related wallets.

All products would be rebranded to leverage the Synthetix brand reputation and to avoid fragmentation and confusion amongst customers and the broader crypto community.

Upon approval, a new transaction contract will be created to allow TLX holders to burn their TLX and in turn access a SNX vesting contract. The parameters of the transaction are as follows:

• 18 TLX <> 1 SNX, this represents a 8% discount to the 30d average price. Given recent price movements of both tokens however, this conversion rate represents a trade at par value.
• This is an implied valuation of $4.0m based on a circulating supply of 47m and a 30-day average SNX price of $1.53.
• SNX received in the conversion are subject to a 1 month lock and 4 month linear vest following the lock period. This will be a universal lock/vest timeline for all TLX holders (i.e. if TLX is sent to the transaction contract 2 months into the vest, it will be treated the same as if it was sent on the first day).
• Whilst the contract may not be ready, the initial lock date will fixed on the day the TIP is officially approved. On this day, rewards that accrue to staked TLX holders will end.

The valuation is contingent on accurate Treasury reporting, no material liabilities, or changes to circulating supply.

Other notes

• Current OP rewards program - this will continue as is (i.e. 10k OP per week for 5 weeks) unless it is replaced with a bigger incentive program.
• The TLX referral program will continue as is in the short term.
• Synthetix may require key personnel from TLX and offer them roles as Synthetix core contributors pending review.

Governance

The Tabby Council will be dissolved if the governance proposals pass in both communities. At this stage, governance will be transitioned over to the Spartan Council.

The TLX treasury will be absorbed into the Synthetix treasury. The Spartan Council will also become responsible for establishing operational efficiencies and allocating a new budget based on synergies created by the acquisition.

For this proposal to pass, not only will the Tabby Council need to reach a majority, but the sister proposal, SIP-412, will need to reach a majority within the Spartan Council as well.

Summary

TLX vaults have been operating for over 6 months now. Despite getting off to a strong start, they have struggled to attract meaningful TVL and awareness for their product. Synthetix is launching vault strategies, including leveraged tokens within the next 3-6 months. Synthetix believes that acquiring TLX provides a unique opportunity for both ecosystems to create value and benefit from synergies from aligning product vision, and avoiding unnecessary competition.