Hi @gregdocter while I’m a co-author on the IIP, I’m very much a novice when it comes to SNX staking (I use xToken xSNXa…).
So, I’ve had a steep learning curve. Some of it can be found here: Synthetix Debt Pool Mirror Index - OverAnalyser’s crypto fund blog and here Synthetix Debt Pool Mirror Index - OverAnalyser’s crypto fund blog .
I would say that hedging the liabilities is in the top 5 list of things that the Synthetix community would like to address. I would expect the others to include moving to L2 (weekly on-chain activity for every staker), oracle security, and front running protection are likely in there as well.
Distribution looks very different. The aim would be to make SDI available within the SNX staking flow (which I believe is):
- stake SNX
- issue sUSD to the target capitalisation ratio
- swap 90% of the sUSD for $DSI in the Uniswap pool
- Use the other 10% sUSD as desired
- Check collateralisation and claim SNX weekly.
In many aspects, this fund has a similar structure to BED (~25% ETH, 50% ETH, 25% BTC…). However the aim is different and the target customer is very different. BED is aimed at the non DeFI native who wants broad exposure and who wants something simple to hold. They would most likely need education (from the coop) as to why this is a good choice.
SDI customers are SNX staker, so fully DeFi native. (SNX staking is complex !) They want a product that they don’t want to actively manage, but they are aware that we are helping them solve a challenging problem - the Debt pool is a complex beast. (and we won’t be a perfect hedge).
I’m not expecting INDEXcoop to require many resources to market SDI. The Synthetix community will be educating themselves in the benefits and providing liquidity. Coop resources will be required for the weekly rebalancing and intrinsic productivity.
As a fund targeted at DeFi natives, it should be possible to include Intrinsic Productivity early in the product. In addition, the large fraction of ETH and DAI gives some straightforward opportunities.
As SDI is intended for SNX stakers use, I’m not expecting to see SDI on any CEX so any potential to be considered security doesn’t become a blocker. (It may still have an impact on SDI’s use as collateral).
In terms of timing, I think the key bottle necks are Dev time (improving after FLI launch) and Product WG time (mainly getting the WG set up, and getting some long term alignment on liquidity mining so we don’t spend a significant part of the week talking about liquidity mining…).