Anyone who has interacted recently (in the last year...) with the Ethereum blockchain has felt the pain of high ETH gas fees for simple token transactions. When you are interacting with more complex DeFi smart contracts, the fees start to really sting quite a bit unless you are juggling some serious amounts of money! So, for all of the Ethereum protocols that I've used in the past, I've just left the pools and liquidity just sitting and not being updated or touched, no tweaking for best APR or anything. Meanwhile, I've been playing around on the Binance Smart Chain (BSC) as that is much friendlier with the gas fees!
Anyway, my L1 Synthentix has been sitting at around 16000% overcollateralised as the act of rebalancing tends to cost at a minimum around 10-20 USD in ETH gas prices... and it's something that you need to keep up to date unless you feel like being liquidated!
I've not been bothering to collect the weekly staking rewards as the act of claiming is also quite expensive in terms of ETH gas fees and makes it not really worth the effort of remembering! To be honest, I'm not a fan of the weekly reward claim as opposed to a continual claim. It is to ensure a constant interaction with the contract, but I don't think that they ever foresaw that the ETH gas prices would make it so unfeasible.
At the end of last year, Synthetix begin community testing their L2 solution on Ethereum OVM testnet (Optimistic Ethereum) and I had the chance to try it out. I was seriously impressed! The speed and low gas prices in comparison to the L1 mainnet version was just night and day. Speeds measured in millisecond confirmation times, and gas prices that were essentially zero. Of course, these transactions would later have to be written back to the Ethereum mainnet, but they could be batched together resulting in a much better user experience.
So, I was quite excited when last night (just before I went to sleep), I saw on the Synthetix Discord that they had rolled out the L2 OVM on MAINNET! Official Blog post here. This would be a great chance for non-whale participants in the Synthetix protocol to escape to L2 and join the pool there. At the moment, there is no market and trading for the sythetics, and the migration is currently 1-way (you can't get back to L1), but these features are coming in the next month or so!
Still, the staking of SNX is active, which means that you can start immediately claiming your staking rewards for minting sUSD debt.
Participants in the L2 testnet have been airdropped SNX L2 tokens already. I guess there weren't a crazy amount of people who had taken part in the testnet process, as the airdrop was surprisingly generous!
Also, in order to mitigate the pain of high ETH gas prices (more on that in a moment...), the Sythetix team released the 12 month lockup on rewards for holders of less than 1000 SNX in rewards (that is around 15,000 USD). That meant that the SNX was immediately available to be traded for ETH to pay the L1 gas fees.
The act of migration needed quite a number of on chain L1 Ethereum smart contract interactions... I don't think I will ever stop flinching every time I have to sign one of these!
Migrate from older vesting contract on Mintr to new one at https://staking.synthetix.io/l2. This would free up the vesting schedule, to release any existing rewards from the 12 month lock-up. (roughly 7 USD in ETH gas fees)
You need to clear any existing debt on L1 before you can migrate to L2. So, that means that you need to purchase enough sUSD (on Binance with roughly 9.5 sUSD in withdrawal fees, or Uniswap with ETH gas prices...). So, I needed to approve SNX spending on Uniswap in order to swap some SNX for sUSD to be able to zero the existing debt for minting sUSD (staking SNX). (roughly 4 USD in gas fees).
Just a quick note, purchase slightly more sUSD than you need... sure, you won't use it all, but it will be more annoying if the SNX price shifts and you find yourself short and needing to make another transaction!
Burn sUSD to unstake SNX (clear debt) on L1 Synthetix. Again, I would advise that you use the custom burn setting to burn MORE sUSD than you need to. I saw on Discord that some people would have the price shift on them whilst the transaction was in process, and that would mean that they would still have a few cents in debt which would block the migration to L2 AND cost ANOTHER ETH transaction to remedy! (roughly 24 USD in ETH Gas fees)
Approve the SNX spend on https://staking.synthetix.io/l2. This is a new contract and not the Mintr one, so it needs to be approved to spend your SNX.... (roughly 4 USD in gas fees)
Finally, MIGRATE the SNX from L1 Ethereum mainnet to L2 OVM mainnet. (roughly 20 USD in gas fees)
Vest (release) the SNX from the reward schedule on L1 (roughly 6.50 USD in gas fees)
Swap SNX form reward schedule on UNISWAP to ETH to cover all the gas fees and replenish my Metamask balance that I have neglected for a while! (roughly 10 USD in fees)
So, that is quite some ETH that I spent there in terms of gas fees... for a once off migration to L2, it's worth it, but it isn't something that I would want to do too often! The last time I bit the bullet with high fees was for Uniswap pool migration...
Still, it is nice to be on L2... I immediately staked SNX to mint sUSD debt so that I could start claims on the reward pool. Perhaps when the wider Synthetix functions come to L2 in the coming weeks I will play around with those as well as the response and fees are so much lower than the L1 version.
Unfortunately, the L2 protocol interface is the old Mintr UI... a bit garish and clunky... but it works at least! Excited for the future of Synthetix!
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