Synthetix Cancels $27M Derivatives Agreement Following Community Opposition

Synthetix has decided to cancel its intention to acquire the crypto options platform Derive for $27 million.

This move came in response to significant criticism from both user bases involved.

### Community Reaction

The acquisition was initially disclosed in a blog post dated May 14, proposing a token exchange of 1 SNX for 27 DRV. The objective was to leverage Synthetix’s established market strengths and on-chain capabilities alongside Derive’s off-chain matching technology to create a leading decentralized derivatives platform.

However, the deal required approval from the communities of both platforms, which did not materialize.

In an update, the protocol stated, “Synthetix has pulled back SIP-415, the proposal for acquiring Derive, after considering feedback from the community and stakeholders.”

The team noted that responses reflected discontent regarding both the terms of the token exchange and the valuation of Derive.

On the public forum of the crypto options platform, a user known as “Ramjo” criticized the token exchange rate, asserting it did not accurately represent Derive’s worth and likened it to “selling the bottom.” Another member, “AlvaroHK,” referred to the proposal as “terrible” and expressed concern that it wouldn’t provide any benefits.

They highlighted that Derive’s revenue surpassed that of Synthetix and raised alarms about potential risks associated with Synthetix, including the recent devaluation of its stablecoin sUSD, which dropped to $0.68 in April, potentially affecting the protocol’s treasury and token supply.

In a follow-up comment, the user questioned the absence of information regarding what would prevent Synthetix from issuing more tokens, revealing findings that suggested plans to expand the SNX supply from 330 million to 500 million. They contended that this undisclosed aspect would further dilute the Derive offering by an additional 60%.

### Competition for Market Leadership

Originally part of Synthetix when launched in 2021 under the name Lyra, Derive transitioned to operate independently, distancing itself from using the sUSD stablecoin and its associated liquidity.

Had the acquisition been successful, Derive would have received up to 29.3 million SNX tokens, which would have been subject to a three-month lockup followed by a gradual release over nine months. Nevertheless, the token’s trading price, nearly 97% lower than its all-time high of $28.53 from February 2021, likely contributed to the community’s reluctance due to concerns about dilution and diminished value.

Despite withdrawing the proposal, Synthetix stated it would continue to pursue strategic avenues to fulfill its aim of developing a leading decentralized derivatives platform on the Ethereum network.

This decision occurs amid intensifying competition in the crypto derivatives sector, with platforms such as Binance, dYdX, and Hyperliquid striving for market influence. Additionally, Coinbase recently announced its intention to acquire Deribit, the largest exchange for digital asset options, in a deal valued at $2.9 billion.