"Synthetix Cancels $27M Derive Deal: Community Concerns Addressed"

Synthetix Cancels $27M Derive Deal After Community Concerns

Decentralized finance platform Synthetix has decided to scrap its $27 million plan to acquire the crypto options platform Derive following a wave of negative feedback from the community.

A spokesperson for Synthetix revealed on May 22 that the proposed acquisition did not resonate with the community or with Derive, leading to both projects agreeing to abandon the deal.

Earlier on May 14, Synthetix had announced its intention to acquire Derive in a token exchange deal where 1 SNX token would be equivalent to 27 DRV tokens, valuing Derive at around $27 million, pending approval from both communities.

However, concerns arose within the community regarding the three-month token lock-up period and the deal's pricing, prompting Synthetix to address some of these issues by exempting holders of less than 1 million DRV from the lock-up requirement.

Despite some members from both communities finding the deal fair and acceptable, Synthetix acknowledged that the overall response fell short of expectations, leading to the decision to abandon the acquisition.

Synthetix's strategy lead Ben Celermajer stated that the platform will now focus on exploring opportunities to build a decentralized derivatives platform on the Ethereum mainnet.

Derive Community Expresses Concerns Over Deal

Members of the Derive community raised several concerns regarding the proposed deal on the project's forum, particularly questioning the token exchange rate and the overall benefits of the deal to the platform.

Some users expressed dissatisfaction with the token exchange rate, stating that it did not reflect the true value of Derive as a platform and likened it to selling at a low point in the market.

Additionally, concerns were raised about Derive generating more revenue than Synthetix and the lack of safeguards in the agreement to prevent Synthetix from inflating the token supply, diluting the value for existing holders.

One user pointed out the potential issuance of an additional 170 million SNX tokens, representing a 60% increase in supply from 330 million to 500 million, which could significantly impact the value offered to Derive.

Derive, originally launched as Lyra in 2021 within the Synthetix ecosystem, later rebranded to operate independently from Synthetix, including moving away from using Synthetix's sUSD stablecoin and liquidity.

Conclusion

The decision by Synthetix to abandon the proposed acquisition of Derive highlights the importance of community feedback in decentralized environments. Despite initial optimism about the deal, concerns raised by community members prompted a reassessment and ultimately led to the cancellation of the agreement.

Moving forward, Synthetix will continue to explore opportunities for growth and innovation, particularly in the development of decentralized derivatives platforms on the Ethereum mainnet.

As the DeFi space continues to evolve, collaboration and dialogue between projects and their communities will be essential in shaping the future of decentralized finance.