{"componentChunkName":"component---src-pages-sips-sip-markdown-remark-frontmatter-sip-tsx","path":"/sips/sip-125/","result":{"data":{"markdownRemark":{"fileAbsolutePath":"/vercel/path0/content/sips/sip-125.md","frontmatter":{"sip":125,"sccp":null,"title":"Create synths for top traded US stock index etfs","network":"Ethereum","author":"FinanceGuy82415 (@jchoi18)","type":"Governance","proposal":null,"implementor":null,"release":null,"created":"2021-03-23T00:00:00.000Z","updated":null,"status":"Rejected"},"html":"

Simple Summary

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Adding the top 3 traded US stock ETFs to Synthetix (S&P 500, Nasdaq 100, Russell 2000)

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Abstract

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This SIP proposes to add 3 new synths sSPY, sQQQ and sIWM, consisting of the top 3 US Stock ETFs': S&P 500, Nasdaq 100, and Russel 2000.

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Motivation

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Given the importance of the US stock markets in the world financial markets, offering on a comprehensive set of top traded US ETFs is a unique proposition which could bring synthetix exchange volume and provide traders with a unique offering on ethereum as well as allow provide risk management benefits for investors who want to hold a diversified portfolio.

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The current available equity synths TSLA, FAANG and MSFT offer exposure to some of the most popular US tech stocks, but they do not constitute a comprehensive offering from an investing or risk management perspective. These stocks are all under the same category of \"growth\"/\"tech\"/\"momentum\" and lack diversification into different types of risks that may be preferred with changing market conditions and/or risk appetite.

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Overview

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These Synth will be implemented in much the same way as the other long crypto Synths.

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Upon initial release, sSPY, sQQQ and sIWM will take into account periods of Market Closures:

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In later iterations dividends would need to be taking into consideration as well, in case shorts are based-off of these price feeds.

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Rationale

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The main rational on adding these ETF's in particular are as follows:

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  1. SPY is the most traded stock etf in the world tracking the S&P 500 index (widely used benchmark of large cap US companies)
    2. \n
  2. QQQ is the most traded stock etf tracking the NASDAQ index (widely used benchmark of US tech stocks)
    3. \n
  3. IWM is the most traded stock etf tracking the Russell 2000 index (widely used benchmark of small-cap US companies)
    4. \n
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Even though these are US stocks, it should be emphasized that investors/traders around the world speculate and hedge risk with US equities given the maturity of the market as well as the influence of the US economy globally.

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I think this will prove to be a significant step for Synthetix in growing its equity offerings not just for retail, but for institutional users as well.\nThis will benefit both stakers (increased volume & more diverse flows -> debt neutrality) and traders (more comprehensive exposure to US stock markets for speculation/hedging)

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Key Liquidity Figures

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The table below the showcases the average daily volume exchanged for the different indices proposed:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
PeriodSPY $ADVQQQ $ADVIWM $ADVTotal $ADV
2018$26B$7B$3B$37B
2019$20B$5B$2B$28B
2020$30B$11B$4B$46B
2021*$25B$11B$5B$42B
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*For the months of January and February

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Test Cases

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N/A

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Configurable Values (Via SCCP)

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N/A

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Copyright

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Copyright and related rights waived via CC0.

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