Synthetix has officially scrapped its proposed $27 million acquisition of crypto options platform Derive, following intense community backlash and lack of support from stakeholders on both sides.
Community Backlash Halts Acquisition
The now-canceled proposal, first announced in a May 14 blog post, involved a token swap deal priced at 1 SNX for 27 DRV tokens. The plan aimed to merge Synthetix’s on-chain trading infrastructure with Derive’s off-chain matching engine, in hopes of building a powerful, decentralized derivatives platform.
However, the acquisition—outlined in SIP-415—required approval from both communities, and the response was overwhelmingly negative.
“Synthetix has withdrawn SIP-415, the proposal to acquire Derive, after reviewing community and stakeholder feedback,” the protocol announced.
Key Concerns: Token Valuation and Dilution Risk
Much of the criticism centered around unfavorable token exchange terms and a questionable valuation of Derive. On Derive’s community forum, users expressed concern that the deal undervalued DRV and posed financial risks for existing holders.
One user, Ramjo, slammed the exchange rate as the “equivalent of selling the bottom,” while another, AlvaroHK, called it a “terrible proposal” that could potentially damage Derive’s future prospects. He noted that Derive reportedly generates more revenue than Synthetix and flagged the depegging of sUSD—Synthetix’s stablecoin—as a major red flag.
Additional concerns arose over Synthetix’s token supply strategy, with community members pointing out that the circulating SNX supply could grow from 330 million to 500 million, diluting the deal’s value by up to 60%—a fact many argued was not clearly disclosed.
From Partners to Competitors
Originally launched as part of Synthetix under the name Lyra in 2021, Derive later rebranded and became an independent platform. It also moved away from using sUSD and Synthetix’s liquidity infrastructure.
Had the deal gone through, Derive would have received up to 29.3 million SNX tokens, with a three-month lockup followed by a nine-month linear vesting period. However, with SNX trading nearly 97% below its all-time high, dilution concerns and reduced incentive likely further discouraged community support.
What’s Next for Synthetix?
Despite walking away from the Derive deal, Synthetix stated it remains committed to exploring strategic opportunities to advance its goal of becoming a leading decentralized derivatives protocol on Ethereum.
The failed merger highlights the growing competition in the space, with major players like dYdX, Binance, Hyperliquid, and most recently, Coinbase, which just announced a $2.9 billion acquisition of Deribit, the largest crypto options exchange.
