{"componentChunkName":"component---src-pages-sips-sip-markdown-remark-frontmatter-sip-tsx","path":"/sips/sip-258/","result":{"data":{"markdownRemark":{"fileAbsolutePath":"/vercel/path0/content/sips/sip-258.md","frontmatter":{"sip":258,"sccp":null,"title":"Trade Directionality In Pricing of Atomic Swaps","network":"Ethereum","author":"Kaleb (@kaleb-keny)","type":"Governance","proposal":"https://snapshot.org/#/snxgov.eth/proposal/bafkreicr7ccec5y44qdtnbjfxdrd3j5mzadhgjsihma4heacnwc2is2vx4","implementor":"MEB (@barrasso)","release":null,"created":"2022-07-05T00:00:00.000Z","updated":null,"status":"Implemented"},"html":"\n

Simple Summary

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The sip improves the pricing of atomic swaps, originally laid out in SIP-120 and recently updated in SIP-198, by incorporating directionality of the trade into the uniswap pricing methodology

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Abstract

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Update the atomic price methodology as to incorporate directionality of the trade into the uniswap price aggregation method.

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Motivation

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Currently, the function used to compute an atomic price for sETH and sBTC is the worse between chainlink price and the min(uniswap_twap,uniswap_spot). The intention of the atomic swaps is to offer the worse fill between all 3 price combinations. This would allow the protocol to lower fees to the point where we retain a competitive advantage over other amm exchanges. Updating the ExchangeRatesWithDexPricing incorporates directionality of the trade into the execution and allows Synthetix to offer competitive pricing for longer periods.

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Specification

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Technical Specification

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Update to the atomic price methodology

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Context on Pricing and Naming Conventions
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The price of an exchange when a trade materializes from a source (SRC) currency to a destination (DEST) currency can be broken down into two price components:

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Computation Methodology in Atomic Pricing Updated
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Atomic exchanges leads to combinations that involve the usage of chainlink in certain situations and the usage of uniswap in others or a combination of the two sources of prices. Although, the computation was laid out in SIP-198, it did not specify how would uniswap prices be derived, which resulted in the usage of the min between Uniswap-Spot and UniswapTwap, resulting in few edge case fills that are distant from market prices. The updated computation below clearly specifies how Twap and Spot should be used in order to arrive at the fill price.

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  1. PureChainlink Vs Not Pure Chainlink:
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  1. Naming Convention:
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  1. Below are the different scenarios that could arise for trading currencies that have or don't have the Pure Chainlink tag:
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Test Cases

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Configurable Values (Via SCCP)

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The same configurable values as those set out in SIP-120 and SIP-198.

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Copyright

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Copyright and related rights waived via CC0.

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