Current risks

There are several risks in the current architecture, as Syde is still an experimental system and complex systems require both empirical observations and theoretical analysis. Empirical observation and theoretical analysis ensure the mechanism design aligns incentives for all players.

One risk involves the debt TON holders issue when they stake their TON and mint Synths. As previously explained, this debt can fluctuate due to exchange rate shifts within the system. This means that to exit the system and unlock their staked TON; they may need to burn more Synths than they originally minted.

Most people in the cryptocurrency space are aware of this risk, but the prices of most crypto assets are highly correlated to Bitcoin and/or Ethereum. This means it’s possible for major price fluctuations in the TON token to occur for reasons that have little to do with TON or the Synthetix system.

Finally, there are a number of aspects of the system that are currently centralized. This decision has been made to ensure the efficient implementation of the project. One example of centralization is the use of proxy contracts across much of the architecture. This is to ensure the system can be upgraded easily but confers a level of control to the engineering team which requires trust from users. While these aspects will be phased out over time, it is important to understand the risks inherent in the current system architecture.