Synthetix Ditches $27 Million Derive Acquisition After Community Pushback
In a surprising turn of events, decentralized finance (DeFi) platform Synthetix has abandoned its $27 million plan to acquire crypto options platform Derive. The decision came after significant negative feedback from both platforms’ communities regarding the proposed deal.
Synthetix initially announced the acquisition in early May, proposing a token exchange deal where 1 SNX token would be valued at 27 DRV tokens. This would have valued Derive at roughly $27 million. However, the deal was contingent on approval from both communities, a hurdle it ultimately failed to clear.
Community members expressed concerns about several aspects of the deal, particularly the token exchange rate and its implications for both platforms. A prominent concern was the perceived undervaluation of Derive, with some community members arguing that the exchange rate was a poor reflection of the platform’s potential.
“The token exchange rate is a poor reflection of the value of derive as a platform,” wrote one user on the Derive forum. “It is the equivalent of selling the bottom and locking in lows.”
Another major concern was the potential for dilution of the SNX token. Synthetix planned to increase its SNX supply from 330 million to 500 million by issuing an additional 170 million tokens. This move, according to some, would have significantly diluted the value of the SNX token and made the deal less attractive for holders.
“Derive generates more revenue than Synthetix, which makes the deal a tall order to justify,” said another user. “Why this information is not disclosed when asked about it? It will dilute an additional 60% off the value of the offer made to Derive.”
Despite some community members supporting the deal, the overall response was not as positive as Synthetix had hoped. The company ultimately acknowledged that the deal did not resonate with enough stakeholders, and ultimately decided to walk away.
This decision highlights the importance of community consensus in DeFi, where platforms rely heavily on community participation and support. While the acquisition may have been financially beneficial for Synthetix, the potential negative impact on both communities ultimately led to its abandonment.
Synthetix has stated that it will continue to explore other opportunities for building a decentralized derivatives platform on Ethereum. It remains to be seen how this decision will affect Derive‘s future and whether it will seek a different acquisition partner.
