Synthetix to launch perpetual futures on Ethereum scaling solution Optimism

Synthetix is ​​a financial primitive that enables the creation of synthetic assets, providing derivatives and providing exposure to real-world assets on the blockchain. A synthetic asset is a tokenized derivative that mimics the value of another asset. Spot Exchange Traded Funds (ETFs) are a classic example of synthetic assets that can represent gold, oil, Bitcoin, and more.

According to a blog post from the Synthetix team, Synthetix will launch a lasting future product with Optimism, an Ethereum Layer 2 scaling solution later this week. As scaling solutions progress, this means that users can benefit from higher transaction throughput and lower network charges.

“Anyone with internet access will be able to leverage Synthetix’s infrastructure to gain up to 10x leverage on an ever-growing list of Synthetic assets,” the post said.

Quenta’s first partner with integrated perpetual

Permanent futures contracts, also known as perpetual swaps, are contracts that buy or sell assets without options at unspecified points in the future. Permanent futures differ from regular futures in that they are settled in cash and do not have a pre-specified delivery date. Therefore, as it approaches maturity, it can be held indefinitely without the need to roll over the contract.

The first partner to integrate Synthetix’s perpetual is the Kwenta protocol. This is a decentralized and configurable protocol with a trading user interface that is considered easy to use. The Synthetix Perpetual Market is accessible via a dedicated Kwenta UI.

According to the announcement, the current design of synths, derivative tokens that provide exposure to various assets, and exchanges do not easily provide traders with a mechanism for leveraged trading or shorting assets with leverage. According to the Synthetix website, Synths are assets voted to exist by the community and are offered in the form of fiat currencies, cryptocurrencies, stocks, commodities and other prices.

“The lasting future of Synthetix enables a much expanded and capital-efficient trading experience by enabling both long and short leverage for a wide range of assets,” the announcement said.

Additional sources of revenue for SNX stackers

In the case of SNX Stacker, the native token of the Synthetix protocol, futures provide an additional source of revenue through foreign exchange and funding fees, and hedge additional debt with controlled exposure due to their own self-hedging and market size limitations. Reduce the need to do.

In the first few weeks after launch, the first futures beta launch will feature Bitcoin (BTC), Ethereum (ETH) and Chainlink LINK tokens. The open interest cap for trading will be $ 20 million (US $ synthetic) for Bitcoin and Ether and $ 2 million for LINK tokens. According to the post, the reason is “to optimize futures market parameters under real-world conditions.”

“The current futures market design is experimental and may need to be upgraded in a future release. To change the core contract, users close their position in the old market and the upgraded market. We need to move to, “said the post.

Frequent market parameter updates to optimize for UX

In addition, the Spartan Council may update market parameters relatively frequently during the initial period to optimize the UX and protocol of the best traders, as well as the security of the debt pool. No user action is required to update these parameters.

The Sparta Council is Synthetix’s governance body, which went live in December 2020 and is responsible for approving proposed changes to the Synthetix protocol.

According to the announcement, once the actual trading data is accumulated, the optimization will be quick and the open position will be significantly increased to support more trading volume. A major upgrade to Synthetic Futures will require a move to a new smart contract.