Author: Sha
One, when DeFi becomes the focus again
Bitcoin finally welcomed its long-awaited new high in November, not far from the $100,000 mark, while the long-silent altcoin market also experienced an explosion, with DeFi leaders like UniSwap, AAVE, Compound, and MakerDAO recently gaining good increases. Looking back at the DeFi explosion of 2020 to now, even with constant bearish voices, the DeFi world is still developing and expanding steadily and gradually eating into the market share of centralized exchanges. This remains a track full of innovation and immense potential, with many possibilities still waiting for us to explore. Today, I want to talk about one of the projects in the recent DeFi ecosystem that I believe is worth paying attention to - the leading SynFutures in derivatives on Base. We will explore how it combines its advantages to lead a new round of DeFi innovation, how it stirs the entire decentralized derivatives track, and the reasons for its rapid growth and future growth space.
Two, the performance of SynFutures after going live on Base: occupying 50% of the market share, fee income ranking third in the protocol
Let's first look at the data performance of SynFutures in the Base derivatives track:
Launched on Base on July 1, trading volume exceeded $100 million just 10 days after launch
In the most recent day, on November 12, trading volume exceeded $910 million
Cumulative trading volume is close to $30 billion, with an average daily trading volume of $210 million.
In Q3, trading volume accounted for nearly 50% of the Base network.
In the past 24 hours, the trading volume accounted for 72% of the Base network, nearly five times the second place.
And if we shift our perspective to the entire industry, we can see the growth of SynFutures V3 since its launch, which is not inferior to projects such as Hyperliquid, dYdX, and Jupiter. According to DefiLlama data, the on-chain perpetual contract trading volume in Q2 and Q3 reached $1.1857 trillion, with the top three accounting for over 45% of the trading volume, namely Hyperliquid (16.94%), dYdX V3 & V4 (14.37%), and SynFutures (14.11%).
These impressive achievements make one curious, why SynFutures, and what unique aspects does it have compared to other derivatives platforms?
Three, the breaker in the derivatives track: SynFutures: Concentrated Liquidity + Pure On-Chain Order Book Model
Looking back at the derivatives track over the past few years, the mainstream derivatives models can be categorized into three types:
The Vault model represented by GMX - LP acts as a counterparty to traders and uses oracle pricing. The current representative products in this track are GMX and Jupiter. GMX supports more assets, while Jupiter benefits from the popularity of SOL, maintaining a high yield and high TVL status, becoming one of the industry's hot projects. However, the oracle risk of this type of model remains a non-negligible hidden danger, plus the fact that it cannot serve as a price discovery venue due to the use of oracles for pricing, making it difficult to bear the challenge of centralized exchanges.
The derivatives application chain represented by dYdX and Hyperliquid - favored by market makers for its high performance and experience comparable to centralized exchanges, occupies a place in the market. However, its off-chain order book is too centralized, and the liquidity fragmentation issue remains a significant challenge for traders and project parties.
Another relatively low-profile but already achieving good market share model is the on-chain AMM model represented by SynFutures. This model references the concentrated liquidity model of UniSwap V3 and introduces an on-chain order book on this basis, further improving the overall matching efficiency of the system's capital. As seen from the previous Q2 and Q3 derivatives trading volume rankings and market shares, in the past six months, the representative of this type of model, SynFutures, has more than doubled its trading volume compared to Jupiter, which uses the Vault model. Even this momentum has not stopped; based on recent data, surpassing the trading volume of the established decentralized derivatives exchange dYdX is just a matter of time.
So, why has the on-chain AMM model represented by SynFutures been able to achieve such a huge breakthrough in a short time? What advantages does this model have compared to the other two mainstream models?
3.1 Concentrated Liquidity - Improving Capital Efficiency
SynFutures' oAMM greatly enhances the liquidity depth and capital utilization efficiency of AMM by allowing LPs to add liquidity to specified price ranges, creating more fee income for LPs while supporting larger and more trades. From its documentation, it can be seen that its capital efficiency can reach up to 26,666.6 times the original.
3.2 Pure On-Chain Order Book - Maintaining Efficiency While Ensuring Transparency
The liquidity of oAMM is distributed across specified price ranges, which are composed of several price points. For example, if an LP provides liquidity in the price range of [80000, 90000] for BTC-USDC-PERP, this price range can be divided into several price points, each allocated an equal amount of liquidity. You might immediately think, isn't this an order book? That's right!
oAMM achieves on-chain limit orders by allowing users to provide liquidity at specified price points, thus simulating order book trading behavior and further improving capital efficiency. Compared to the market-making approach of traditional AMMs, centralized exchange market makers are more familiar with this market-making method involving limit orders, have a higher understanding, and are more willing to participate. Therefore, the oAMM that supports limit orders can better attract market makers to actively participate, further improving the trading efficiency and depth of oAMM, achieving a trading experience comparable to centralized trading platforms.
Unlike off-chain order books such as dYdX, oAMM is deployed on the blockchain as a smart contract, with all data stored on-chain, allowing anyone to verify it, completely decentralized, and users do not have to worry about dark operations or fake trades on the trading platform.
If we compare several projects together, it can be found that SynFutures has effectively filled the gaps of the Vault model represented by GMX and the application chain represented by dYdX, while retaining high efficiency and high performance. At the same time, it can naturally integrate with various assets of the underlying public chain, blending into the entire DeFi ecosystem, and holds a natural advantage. As the underlying public chain undergoes technological upgrades in the future, this advantage will become even more apparent.
Four, the flywheel effect brought by Perp Launchpad
In addition to the characteristics of the model itself, SynFutures also references the model of Pump.fun, launching the industry's first derivative perpetual contract issuance platform. Over the past year, it can be said that the most profitable track has been asset issuance, from runes to inscriptions, from Pump.Fun to DAO.FUN, all of which have been continuously creating wealth effects, attracting more users to enter the market, which inevitably makes some friends who firmly believe in the value of blockchain feel a sense of emptiness. But this is the reality of the current stage of this industry; whoever can issue assets, attract market attention, and create wealth effects can ride the wave and become a trendsetter. Whether it is Solana's success in this phase or Pump.Fun's hundreds of millions of dollars in revenue, they are the best proof of this model. The recently launched Perp Launchpad by SynFutures is built on its own model innovation and new asset issuance method, which can open up more innovative products for more on-chain Degen players.
Imagine a MEME token that just reached $100 million, which can provide liquidity using its own project token and open the corresponding contract market. Wouldn't this token be more fun? If truth of terminals could autonomously open a contract market with the $GOAT it holds in the early stages, for more aggressive traders, they could choose to gain higher returns by using leverage, whether to bottom fish or to escape the peak. When a contract market exists, trading often becomes more complex and also presents more trading opportunities. At the same time, in a high-volatility market, with the price differences between spot and contract prices, arbitrageurs will also act, all of which further expand the visibility and number of holders of this token.
Still referring to the previous example, if truth of terminals really opened a Perp Market with $GOAT, there would be a new narrative of 'AI launched its own contract market' to sustain market enthusiasm, and maybe $GOAT's market value could further climb. After all, what this market needs most is dopamine, it needs fun, it needs excitement, and contract trading is indeed the most interesting means.
Of course, some may ask, who will provide liquidity? The answer is project parties and token supporters, who can earn profits by providing liquidity - more tokens. When holders have more tokens, the project can develop in a healthier direction. More importantly, why wait for centralized exchanges to dominate whether to list the corresponding contracts and thus take most of the profits generated by contract trading? Why can't project parties and communities hold their own contract markets? This is precisely what Perp Launchpad aims to try to do, returning the dominance of the contract market to the community.
In the past few years, we have seen the dominance of on-chain listings return to the community, with on-chain liquidity pools as the starting point, especially evident in MEME trading; in the coming years, the dominance of contract listings will also return to the community. This sounds crazy, but it is already happening, and it will accelerate. From SynFutures' recent announcements, it can be seen that its Perp Launchpad broke through $100 million in trading volume just in its first week, and it is still growing rapidly.
In the future, we will see more and more project parties choose to dominate their own derivatives market after going live on the spot market, mastering the liquidity of the derivatives market, and then using the profits gained to help the project develop or reward holders, entering a more virtuous and healthy development state. 'Trading as Margin' becomes one of the utilities of the token, while 'dividends' become a standard for tokens, and all this is happening vigorously under the push of SynFutures.
When this prairie fire ignites, for now SynFutures, it provides a huge pump that is very beneficial for its TVL and trading volume's rapid growth, getting closer to the leading position in the derivatives track. Bringing the dominance of the perpetual contract market back on-chain, back to the community, represents at least a $1 billion market. Taking the Base network as an example, Aerodrome currently has a TVL of $1.4 billion, and even if only 1/10 of the funds choose to have their own derivatives market, that would still be nearly $150 million in TVL. And this is just the TVL of one protocol on the Base network. Looking at the entire market, currently only SynFutures can achieve this, and its oAMM specifically designed for contract trading will be the biggest beneficiary of this trend.
In terms of revenue, in the future, SynFutures also has the opportunity to stand alongside top protocols like AAVE and MakerDAO. In the past 30 days, without considering Launchpad, its fee income has exceeded $2 million, ranking third in the protocol (the third place is the Sequencer of the Base network).
These potential revenues can help SynFutures quickly expand its market share in the Perp Launchpad, becoming the dominant player in this track. Currently, in the first Grant phase, SynFutures has set up a $1 million funding plan aimed at providing support for new projects in terms of listing and activities, while helping projects improve their exposure and activity in the on-chain market.
Moreover, as more project parties join, it can help SynFutures gain more community support from projects, which means more users and more revenue, which can further help SynFutures expand its market influence and establish a growth flywheel. This is still without considering the incentives of its token economic model for the ecosystem, and don't forget that SynFutures is also a project that has cumulatively raised $38 million from well-known industry institutions such as Pantera, Polychain, Dragonfly, Standard Crypto, and Framework, and the potential incentives of its future tokens will drive the growth flywheel to an astonishing level.
Five, SynFutures will lead a new round of innovation in the decentralized derivatives track
If you can see this, you might feel the author's affection for SynFutures and optimism about its future development trend. Because in my view, the derivatives track in the DeFi field has not had new stories and new directions for a long time. We all know the oracle risks of the Vault model, and we are aware of the centralization issues of application chains, but where are the solutions? This track has been quiet for a long time, and it needs new forces to stir things up to further compete with centralized markets. In my opinion, SynFutures is undoubtedly the most innovative and market-driven derivatives project at this stage. From its AMM model specifically designed for derivatives to the recently launched Perp Launchpad, it is leading a new round of innovation in the decentralized derivatives track, pushing this track towards better development. In the new round of DeFi trends, SynFutures is playing the role of a breaker in the derivatives track, driving the entire track towards a new round of innovation and healthier development!
