This past week, we hosted Synthetix Founder and DeFi OG, Kain Warwick, who shared an array of stories and lessons he learned throughout his half a decade building in the space. One aspect that clearly stands out is Kain's warrior mindset which was evident from the language he used to describe the participants and the environment in the early days of the protocol. Therefore, it's no surprise that community members have enthusiastically identified each other as “Spartans.” Yet today, Synthetix and Ethereum for that matter is in a much different place than a cycle ago being more mature in its development and evolution. Ultimately learning from the missteps of the past will lead to more favorable outcome in the future for the entire ecosystem.
Reflections on Ethereum and the Emergence of a Multichain World
One evident characteristic in Kain is his brutal honesty. He doesn't mince his words, openly stating how Ethereum dropped the ball in the past cycle by underestimating the impact of alt-L1s that frankly were much quicker to scale and onboard the next mass cohort of users. He points to the rise of BSC (now BNB Chain) as the canary in the coal mine of this phenomenon and how dogmatic echo bubbles and purist mindsets laid the foundation for such blind spots to form. As we move forward into a multichain world, the question remains will rollups be enough to attract future classes of users onchain or will they once again choose alt-L1s? As long as Ethereum continues to improve its scalability, have rollup solutions such as L3, and not get to comfortable, I am optimistic (pun intended).
DegenSpartan’s and Early Contributors’ Influence and Evolution
The alumni of the Synthetix community, both public and private, are impressive, to say the least, and have played a pivotal role in shaping DeFi itself. Kain shared stories of the most well-known spartan, DegenSpartan himself, whose name references the community he originated from. Kain acknowledges DegenSpartan's contributions in shaping the financial policy and culture early in Synthetix history and notes that he was a positive-sum member of the community, a far cry of how he presents his psyops and casual trolling on Twitter. However, DegenSpartan grew apart from the protocol and went on to make a name for himself in his own right. Yet he wasn’t the only one, Kain even mentioned that out of the 10 original core contributors, he was the only one still around. One of the values Kain holds dear is loyalty and a sense of duty, perhaps explaining why he continues to return. Kain has the utmost respect for DegenSpartan and all those who weathered the cold, desolate winter of 2018/2019 but is baffled by the fact that none of them stuck around. Granted, no one owes anyone anything, especially in crypto, and maybe it was the more individual pragmatic move to seek newer pastures, but the act of paying homage to one's roots makes it all the more special.
Synthetix’s Progression and Future Vision
Kain recognizes the need for Synthetix to evolve and meet users "where they are." Early liquidity providers (LPs) in the Synthetix system took on considerable risk, likened by Kain to giving someone an AK-47 and instructing them to charge into the heap of battle. This approach made sense early in Synthetix's history since those in DeFi at the time were the type of individuals comfortable with such risks and had the fortitude to stand volatility. Today, however, Kain envisions a future with more passive LPs who wish to test the waters before committing further. Regarding LPs, Kain firmly believes that SNX is the only collateral needed for Synthetix's system. Although some may argue better collateral exists, Kain's reasoning for SNX exclusivity is its proven functionality and accrued lindy over time. He believes only when it's absolutely necessary should Synthetix become multi-collateral, and when that time comes, this capability could be activated in Synthetix v3.
The Journey from Synthetix v2 to v3
One cannot understate how influential Synthetix v2 was when it came out. As one of the first derivatives protocols onchain, much of the optimizations and tooling that developers took for granted simply did not exist. Much of the infrastructure for Synthetix v2 had to be built from scratch. v2 has weathered an unforgiving onchain environment for years now, yet as time passed, more and more components of the protocol were pieced together in a makeshift manner. As Kain describes, one must be extremely cautious when implementing upgrades because a single misstep could be as dangerous as stepping on a live wire. Now, with all the advancements Ethereum has made, the time has come for the next phase of Synthetix's development.
The Dawn of Synthetix v3 and Its Promise
And here we are at the dawn of Synthetix v3, a permissionless liquidity platform where anyone can bootstrap their own market. From perpetuals to insurance to everything in between, v3 aims to solve the “cold-start problem” that often plagues markets at their genesis and allow anyone to plug into Synthetix’s liquidity layer. Kain points out that with Synthetix v3, market forces can determine if an idea for a market holds up much faster than before with natural selection overtime weeding out the undesirable ones. For those curious to learn more about v3, Synthetix’s product lead Cavalier outlined the ambitions he had for the protocol.
Kain's Anticipation and His Role in v3
It’s hard to predict what interesting markets and ideas will come out of v3, but Kain did hint that he is cooking something up in the Synthetix ecosystem. Although Kain admits his SNX stack makes up bigger percentage of his portfolio than ever before, he is not involved in the core development of v3 but is far from a passive observer as well. Playing on the themes expressed earlier in the interview, Kain described his latest endeavor in one word as “pragmatic” and that it would be out very soon™️.
If there is one thing for sure, whatever it is, you know that Kain will be coming out the gate with his heart on his sleeve ready to take on whatever challenge awaits him next.