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

Decentralized derivative protocols Synthetix and Derive have mutually withdrawn their proposals regarding a $27 million merger agreement.

Synthetix and Derive mutually canceled a $27 million merger proposal.

The planned agreement anticipated Synthetix's acquisition of Derive, formerly known as Lyra, to merge the two platforms under a unified derive protocol on the Ethereum mainnet.

The proposal that came to the agenda in mid-May involved Derive transferring its treasury, technology, and products to Synthetix through a token swap.

In this context, the official proposal documents titled Synthetix Improvement Proposal (SIP-415) and Derive Improvement Proposal (DIP) have been published. However, in a statement made by Derive, it was stated that "After community feedback and constructive discussions, the SIP-415 and DIP proposals have been mutually withdrawn."

The agreement valued Derive at 27 million dollars and the token exchange rate was 27 DRV ( Derive token ) = 1 SNX ( Synthetix token ). Synthetix planned to mint 29.3 million new SNX for this purchase.

However, this plan received intense criticism, especially from the Derive community. In recent weeks, it was stated that Derive has generated higher revenue than Synthetix, arguing that the $27 million valuation is unfair for Derive and that the platform is seriously undervalued. Additionally, Synthetix's new SNX minting plan was criticized on the grounds that it poses a risk of value dilution for existing token holders.

Synthetix was planning to leverage Derive's expertise for a new derivative product called Perps V4, which uses a centralized order book on Ethereum, following the merger. However, with the cancellation of the agreement, it was reported that Synthetix would seek other strategies to strengthen its ecosystem.

In the statement made from the derive front, it was expressed that the development reaffirmed the platform's independent growth path.

This development once again highlighted how effective community feedback and transparent governance can be in determining the fate of agreements in the decentralized finance (DeFi) world.