Synthetix Proposes $13.2 Million Acquisition of Spin-Off Kwenta to Boost DeFi Reach

To complete the acquisition, Synthetix will buy all circulating Kwenta tokens (532,375 KWENTA) for 9.05 million new SNX tokens, valued at $13.2 million. This will increase the total supply of SNX by 2.8% and the token swap will be at a 19% discount to the recent average trading ratio.

Key Terms of the Proposed Acquisition

Under the proposal, Kwenta’s treasury would be merged into Synthetix’s resources, while Kwenta’s governance structure would dissolve, transferring control to Synthetix’s Spartan Council.

Synthetix also intends to simplify liquidity access for current KWENTA holders through a token migration program, where KWENTA holders would exchange tokens for SNX vesting contracts.

These vesting contracts would lock tokens for three months, followed by a nine-month gradual release schedule.

Synthetix proposes $13.2M acquisition of Kwenta to unify protocol and strengthen market position

Synthetix has put forward a $13.2 million token-for-token acquisition of Kwenta, intending to consolidate its operations and strengthen its decentralized derivatives platform,…

— CoinNess Global (@CoinnessGL) October 29, 2024

Highlights of the Acquisition Terms:

• Acquisition cost: $13.2 million (9.05 million SNX tokens)
• Exchange rate: 1 KWENTA for 17 SNX tokens, reflecting a 19% discount
• Governance transfer: Kwenta’s governance structure to dissolve, merging with Synthetix

In a tweet, Synthetix acknowledged past mistakes, saying the 2020 spin out was a mistake that distanced the company from its users. The acquisition will allow Synthetix to get back in front of customers and improve perpetual products.

DeFi Derivatives on the Rise as Markets Change

DeFi derivatives are getting attention as investors use derivatives to get exposure without full capital commitment. A recent Financial Times article noted that derivatives trading now accounts for 71% of all digital asset trading volumes with open interest over $40 billion this year.

After the major lender collapses in 2022, unsecured borrowing options have dried up and traders are turning to derivatives as a capital efficient solution. The proposed acquisition aims to help Synthetix enhance its DeFi product offerings and capture a larger share of the derivatives market.