Decentralized finance protocol Synthetix has officially withdrawn its proposed $27 million acquisition of crypto options platform Derive after facing intense criticism from both its own and the Derive community.
The acquisition, originally aimed at deepening collaboration and integration within the DeFi ecosystem.
The purchase was abandoned due to a wave of negative feedback centered around perceived imbalances in the deal.
Synthetix strategy director Ben Celermajer acknowledged that while some stakeholders viewed the transaction as strategically sound.
Synthetix ultimately failed to receive the anticipated support and was formally terminated by mutual agreement.
The recent development marks a significant shift for Synthetix, which had aimed to absorb a project it once launched under the name Lyra.
Tokenomics Concerns and Revenue Discrepancies Undermined the Deal
The core of the backlash stemmed from serious community concerns regarding token valuation, dilution risks, and revenue transparency.
Critics argued that the token redemption ratio offered in the acquisition grossly undervalued Derive.
One Derive user, “Ramjo,” criticized the offer as “a poor reflection of the value of Derive as a platform,” equating it to “selling the bottom and locking in lows.”
Additionally, user “AlvaroHK” highlighted a troubling revenue mismatch, claiming Derive actually outperforms Synthetix financially.
These concerns were compounded by the absence of contractual safeguards preventing Synthetix from issuing new SNX tokens, raising fears that token holders’ value could be significantly diluted post-acquisition.
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Allegations of Hidden Token Inflation Deepen Distrust
Further inflaming the situation, members of the Derive community uncovered plans by Synthetix to increase its SNX token supply from 330 million to 500 million, a 60% expansion.
The revelation, brought to light by AlvaroHK, was particularly controversial due to its alleged omission during early discussions about the acquisition.
Critics argued that this planned inflation would drastically reduce the value of the proposed offer to Derive stakeholders.
The lack of transparency surrounding this development led to growing skepticism about the motives behind the acquisition and further eroded trust between the two communities.
The threat of dilution proved to be a decisive factor in the deal’s unraveling.
Derive’s Push for Independence Clashes with Synthetix’s Expansion Plans
The collapse of the acquisition also highlights a deeper strategic divergence between the two projects.
Although Derive was originally launched by Synthetix under the name Lyra in 2021, it has since pursued a path toward independence, rebranding.
The aim is to move away from reliance on Synthetix’s sUSD stablecoin, and developing its own liquidity mechanisms.
These steps reflect Derive’s intent to establish a standalone identity in the DeFi space.
The proposed acquisition was seen by some community members as a step backward, potentially undermining Derive’s autonomy.
With the deal now off the table, both projects appear poised to continue on separate paths, shaped significantly by community governance and transparency expectations.
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