The Merger Agreement Between Two Decentralized Derivatives Protocols Has Been Canceled! Here’s Why

Decentralized derivatives protocols Synthetix and Derive have mutually withdrawn bids for a $27 million merger deal.

Synthetix and Derive Mutually Cancel $27 Million Merger Offer

The planned deal would see Synthetix acquire Derive (formerly Lyra) to combine the two platforms under a unified derivatives protocol on the Ethereum mainnet.

The proposal, which was floated in mid-May, involved Derive transferring its treasury, technology, and products to Synthetix via a token swap.

In this context, official proposal documents called Synthetix Improvement Proposal (SIP-415) and Derive Improvement Proposal (DIP) were published. However, in the statement made by Derive, it was said that “Following community feedback and constructive discussions, SIP-415 and DIP proposals were mutually withdrawn.”

The deal valued Derive at $27 million, with a token swap ratio of 27 DRV (Derive tokens) = 1 SNX (Synthetix token). Synthetix planned to mint 29.3 million new SNX for the acquisition.

However, this plan has received intense criticism, especially from the Derive community. It has been argued that Derive has been generating more revenue than Synthetix in recent weeks, and that the $27 million valuation is unfair to Derive and that the platform is seriously undervalued. Synthetix’s plan to mint new SNX has also been criticized for risking value dilution for existing token holders.

Synthetix had planned to use Derive’s know-how for its new derivatives product called Perps V4, which uses a centralized order book on Ethereum. However, with the deal being canceled, Synthetix will reportedly look for other strategies to strengthen its ecosystem.

In a statement made by Derive, it was stated that the development reaffirmed the platform’s independent growth path.

This development has once again demonstrated how community feedback and transparent governance can influence the fate of deals in the world of decentralized finance (DeFi).

*This is not investment advice.

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