Proposal: Separation of Nerve and Synapse

This proposal is a polished version of the separation part of @Meat’s proposal (can be found here).

Synapse was launched as a brand-new protocol – with brand-new pools – and a brand-new token. Nothing about Nerve really needs to be seen as altered by anyone (regardless of construction of prior events) in order for Synapse to move forward and succeed, and the birth of Synapse does not in and of itself require the demise of Nerve.

The Nerve smart contracts are fully deployed. The bridge and AMM remain functional. If the community votes to do so, the emissions can be restarted, and through that mechanism liquidity can continue to be incentivized. In that sense, independent markets can be maintained for both $SYN and $NRV.

However, it does not make sense to turn those rewards back on quite yet – not while the Migration function on the Synapse page is still functional. Doing so with the tokens remaining directly interlinked (and arb-able) would prevent an environment where they can coexist as different protocols and independent markets.

To that end, we may consider the following proposal (voted on by holders of NRV and SYN as a collective, with a ratio of 1 vote per NRV and 1 vote per 2.5 SYN):

  1. A snapshot will be taken of all $NRV holders – including those providing Pancake liquidity, of course – as of a certain date. Immediately following the snapshot, the migrator will be terminated.
    a. All such holders of $NRV will be airdropped $SYN at a 2.5:1 ratio. No $NRV will be burned under this mechanic.
    b. So as not to provide those who have not yet migrated from $NRV to $SYN a windfall (or those who migrated and sold $SYN), and not to discriminate those who bought $SYN, a snapshot of all $SYN holders (included those providing Sushiswap/TraderJoe liquidity) on ETH/Polygon/AVAX chains will be taken. All such holders of $SYN will be airdropped $NRV at a 2.5:1 ratio (1 $NRV for 2.5 $SYN in the snapshots). No $SYN will be burned under this mechanic.
  2. Following the airdrop and termination of migration, $NRV emissions will resume on the prior schedule for LPs, xNRV stakers, and stablecoin liquidity providers.
  3. Unvested $NRV rewards (“unvNRV”) will vest – directly to the address that provided the liquidity or staked the xNRV – exactly 6 months following the block that created the emissions, and will be claimable on a weekly basis. If implementation of this proposal is delayed past the point where those first payouts would occur, any delayed payouts will come immediately upon smart contract deployment. There will be no additional conditions enacted, and the market will take the wheel from here for $NRV.
  4. At the time of the above snapshot, a snapshot will also be taken of each address’ unvNRV, and each such address will be allocated “unvested $SYN” (“unvSYN”) at a 2.5:1 ratio to unvNRV. The exact procedure of dealing with unvSYN is to be determined by the Synapse DAO.
  5. Following the above implementation, the Nerve DAO and Synapse DAO will be completely independent of one another. The proceeds from the Nerve treasury sale will be transferred to the Synapse DAO, but all historical Nerve protocol revenues and existing assets will remain with the Nerve DAO treasury to do with what it pleases.
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My two cents on the separation:

I believe this proposal is the most fair one out of all in regards to both Nerve and Synapse.
Separating and making them run independently means that Nerve continues to exist with a healthy treasury, revenue from the stableswaps, rewards still going, and no compromises about dealing with unvested NRV rewards needs to be done.
Similarly, if Synapse is independent of Nerve, it can deal with migration of unvested NRV to have the least impact on its economics, while still rewarding those who were LPs in Nerve.

If the proposal passes, Synapse and Nerve will both continue to exist without having to make compromises.
If the proposal doesn’t pass, we will need to continue discussing the compromises to make Synapse both successful and “Nerve v2” at the same time.

A small FAQ on the proposal:

  1. Why split into Nerve and Synapse? Can’t Synapse just be a Nerve v2?

Unfortunately, it’s close to impossible to build a much bigger product (Synapse) on top of Nerve’s tokenomics. The reasons for that were covered by @Quijote (link here), me (link here) and a few other community members in Discord.

  1. What does the airdrop part of the proposal mean for NRV/SYN holders? If the proposal passes, should I migrate before the migrator is stopped?

Nothing changes. Everyone, who is holding SYN (either migrated or bought), will receive NRV “back”. Anyone who hasn’t migrated to SYN, will receive SYN for their remaining NRV. And the migrator is stopped.

In other words, having 1000 NRV or 2500 SYN now will be totally equivalent after the separation is done. Imagine you have 1000 NRV now, you will receive 2500 SYN after the separation.
If you have 2500 SYN now, you will receive 1000 NRV.

In both cases you will end up with 1000 NRV and 2500 SYN and the migration is no longer possible.

That means, if you have “only SYN” bag, “only NRV” bag, or “a mix of two” bag, there’s no need in migrating or selling.

  1. Why do you propose that the vested rewards are only claimable once per week? What does it mean exactly? I would like to receive them exactly 6 months after I claimed the 1/3 part of NRV rewards.

The weekly scheme is exactly what Sushi did with their unvested rewards (link here).
Basically it aggregates your unvested NRV on a weekly basis (i.e. over first/second/third/etc week after the vesting was introduced).
6 months after the first week you will be able to claim the unvested NRV from the first week, etc.

  1. It’s not fair that Synapse DAO will decide the fate of my unvSYN. I want them to be distributed same as unvNRV.

If the proposal passes, Synapse DAO will become an independent entity and it’s only fair that the Synapse tokenomics are to be decided by the $SYN holders.
You have to remember that both $NRV and $SYN are governance tokens (not just a “reward token”).
Anyone who wants to have a say in the governance should not have sold their governance tokens.

  1. What will happen with Nerve if the separation is done?

Here’s what @Aurelius said:

In terms of long-term future development work for Nerve - there are a wide number of technical people in the current Nerve community, who I believe would be happy to contribute.

In terms of the short-term dev work of Nerve, if the DAO votes for this proposal - I’m happy to commit to contributing to the vesting distribution smart contracts, which will ensure that that the 2/3 vested NRV is distributed as the DAO determines via the contracts. The dev team has already been working on indexing the exact vested NRV data via The Graph.

I’ll also be there to help with onboarding future contributors, as well as help and support any transitions to new core members of the Nerve community.

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After reading the discussions over the past week, I think that the proposal outlaid above to separate Synapse and Nerve makes the most sense and clearly has community consensus.

However, I’d like to suggest an amendment should be made to the current proposal.

I believe that Nerve should retain its full treasury - for a few different reasons:

  1. The Nerve treasury needs to remain thoroughly well capitalized throughout the upcoming vests
  2. While I will devote as much time & contribution I can to Nerve, it’s clear that in any case: Nerve will need to scale the team and hire additional developers. The treasury will need to have a strong mix of both liquid assets as well as NRV to incentivize future contributors.
  3. Most relevantly, Nerve retaining its treasury pushes forward the goals of this proposal - proper independence between Nerve and Synapse. Nerve earned its treasury, and for Synapse to be truly independent, Nerve should retain its rights to those assets.

In my opinion, this amendment should be included into the current proposal that is being voted on.

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