Bitcoin reached a new high, energizing the DeFi market, and SynFutures has become the focus of the derivatives track on the Base network.
Author: Sha
I. When DeFi becomes popular again
Bitcoin finally reached the long-awaited new high in November, nearing the $100,000 mark, while the long-dormant altcoin market has also erupted, with DeFi leaders like UniSwap, AAVE, Compound, and MakerDAO gaining significant increases recently. Looking back at the DeFi explosion of 2020 to now, despite constant bearish voices, the DeFi world is still developing and expanding steadily, gradually eating away at the market share of centralized exchanges. This remains a track full of innovation and great potential, with many possibilities waiting for us to explore. Today, I want to talk about one of the projects in the recent DeFi ecosystem that I think is worth paying attention to - the leading derivatives project SynFutures on Base. Let's discuss how it combines its advantages to lead a new round of DeFi innovation, how it stirs the entire decentralized derivatives track, and the reasons behind its rapid growth and future growth potential.
II. SynFutures' performance after launching on Base: occupying 50% of the market share, fee income ranks third in the protocol.
Let's first take a look at SynFutures' performance data in the Base derivatives track:
Launched on July 1, trading volume exceeded $100 million just 10 days after launch.
In the last day, on November 12, trading volume exceeded $910 million.
Cumulative trading volume approaches $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 5 times that of the second place.
If we expand our view to the entire industry, we can see the growth of SynFutures V3 since its launch, which is not inferior to projects like 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 results make people curious why it is SynFutures and what is unique about it compared to other derivatives platforms.
III. The disruptor of 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 the following three types:
The Vault model represented by GMX - LPs serve as counterparties for traders and use oracles for pricing, currently represented by GMX and Jupiter. GMX supports more assets, while Jupiter benefits from the popularity of SOL, maintaining high yields and high TVL, becoming one of the industry's popular projects; yet the oracle risks associated with this model remain a significant concern, coupled with the inability to serve as a price discovery venue due to oracle pricing, making it difficult to challenge centralized exchanges;
The derivatives application chains represented by dYdX and Hyperliquid - favored by market makers for their high performance and experiences comparable to centralized exchanges, occupying a place in the market. However, the overly centralized nature of off-chain order books and the issue of liquidity fragmentation remain significant challenges for traders and project parties;
Another relatively low-profile yet 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 further improves the overall system's capital matching efficiency by introducing an on-chain order book. From the earlier Q2 and Q3 derivatives trading volume rankings, it can be seen that in the past six months, the trading volume of SynFutures, the representative of this type of model, has exceeded that of Jupiter, which adopts the Vault model, by more than double. This momentum hasn’t stopped; based on recent data, surpassing the long-established decentralized derivatives exchange dYdX in total trading volume is just a matter of time.
So, why can the on-chain AMM model represented by SynFutures 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 significantly improves the liquidity depth and capital utilization efficiency of AMMs by allowing LPs to add liquidity to specified price ranges, supporting larger and more transactions while creating more fee income for LPs. According to its documentation, its capital efficiency can reach up to 26,666.6 times the original.
3.2 Pure on-chain order book - maintaining efficiency while being public and transparent
The liquidity of oAMM is distributed within specified price ranges, which are composed of several price points. For example, if LP provides liquidity in the [80000, 90000] range 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? Yes!
oAMM achieves on-chain limit orders by allowing users to provide liquidity at specified price points, simulating order book trading behavior and further improving capital efficiency. Compared to the market-making method of traditional AMMs, market makers on centralized trading platforms are more familiar with this type of market-making through limit orders, have a higher awareness, and are more willing to participate. Therefore, supporting limit orders with oAMM can better attract market makers to participate actively, further improving the trading efficiency and depth of oAMM, achieving a trading experience comparable to that of centralized trading platforms.
Unlike off-chain order books like dYdX, oAMM is a smart contract deployed on the blockchain, with all data stored on-chain, allowing anyone to verify it, making it completely decentralized. Users do not have to worry about issues like manipulation or false transactions by the trading platform.
When comparing several projects together, it is found that SynFutures effectively compensates for the shortcomings of the Vault model represented by GMX and the application chain represented by dYdX, while retaining high efficiency and performance. At the same time, it can naturally integrate with various assets on the underlying public chain, becoming part of the entire DeFi ecosystem, thereby having a natural advantage. As the technology upgrades in the underlying public chain in the future, this advantage will become even more pronounced.
IV. The flywheel effect brought by the Perp Launchpad
In addition to the characteristics of the model itself, SynFutures also references the model of Pump.fun to launch the industry's first derivatives perpetual contract issuance platform. Over the past year, the most profitable track has undoubtedly been asset issuance, from runes to inscriptions, from Pump.Fun to DAO.FUN, all continuously creating wealth effects and attracting more users to the market. This unavoidably makes some friends who firmly believe in blockchain value feel a sense of emptiness. But this is the reality of the current stage of this industry. Whoever can engage in asset issuance, attract market attention, and create wealth effects will rise and become a trendsetter. Whether it’s the recent success of Solana or the hundreds of millions in revenue from Pump.Fun, these are the best proof of this model. The Perp Launchpad recently launched by SynFutures is built on its model innovation and new asset issuance methods, capable of opening up more innovative products for more on-chain Degen players.
Imagine a MEME token that has just reached $100 million, which can provide liquidity using its own project token to launch the corresponding contract market; wouldn't that be more fun? If truth of terminals could have independently opened a contract market with the $GOAT it holds early on, for more aggressive traders, they could choose to leverage for higher returns, whether to bottom fish or to escape the peak. When a contract market exists, trading often becomes more complex and presents more trading opportunities. Also, in a highly volatile market, with the price differences between spot and contract prices, arbitrageurs will also come into play, further expanding the token's visibility and holder count.
Still using the above example, if truth of terminals really opened a Perp Market with $GOAT, then there would be a new narrative 'AI launched its own contract market' to continue the market heat, and perhaps the market value of $GOAT could further climb. After all, what this market needs most is dopamine, it needs fun, it needs stimulation, and contract trading is the most interesting means.
Of course, some may ask, who will provide liquidity? The answer is project parties and token supporters, who can earn rewards by providing liquidity - more tokens. When holders have more tokens, the project can develop in a healthier direction. And more importantly, why wait for centralized exchanges to dominate whether to list corresponding contracts, thereby taking most of the profits generated from contract trading? Why can’t project parties and communities hold their own contract markets? This is exactly what the Perp Launchpad aims to do, restoring the dominance of the contract market to the community.
In the past few years, we have seen the dominance of spot token listings return to the community, with on-chain liquidity pools as the starting point, even more so in MEME trading; while in the coming years, the dominance of contract listings will return to the community. This sounds crazy, but it is already happening and will accelerate. From SynFutures' recent announcements, we can see that its Perp Launchpad broke $100 million in trading volume in just the first week after launch, and it is still growing rapidly.
In the future, we will see more project parties choose to lead their own derivatives markets after launching on the spot market, controlling the liquidity of the derivatives market, and then using the profits obtained to help project parties develop or return to holders, entering a more virtuous and healthy development state. 'Trading as Margin' has become one of the utilities of tokens, 'dividends' have become the standard for tokens, and all this is happening vigorously under the push of SynFutures.
When this fire ignites, for SynFutures now, it is like providing a huge pump, which is very beneficial for its rapid growth in TVL and trading volume, bringing it closer to the leading position in the derivatives track. Restoring the dominance of perpetual contract markets to the on-chain and to the community is a market worth at least $1 billion. 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 close to $150 million in TVL. And this is just the TVL of one protocol on one network. Looking across the entire market, currently only SynFutures can achieve this, and its oAMM designed specifically for contract trading will be the biggest beneficiary of this trend.
In terms of revenue, SynFutures also has the opportunity to stand shoulder to shoulder with top protocols like AAVE and MakerDAO in the future. Currently, without considering the Launchpad, its fee income over the past 30 days 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 a leader in this track. Currently, in the first phase of the Grant, SynFutures has established a funding plan of $1 million, aimed at providing support for new projects in terms of token listing, event support, etc., while helping projects enhance their exposure and activity in the on-chain market.
Moreover, more projects joining can help SynFutures gain more support from various project communities, which means more users and more revenue, further helping SynFutures to expand its market influence and establish a growth flywheel. This is without considering the incentive of its token economic model for the ecosystem, and don't forget that SynFutures is a project that has accumulated $38 million in financing from well-known industry institutions like Pantera, Polychain, Dragonfly, Standard Crypto, and Framework. The potential incentives of its future tokens and their impact on the growth flywheel will reach an astonishing level.
V. SynFutures will lead a new round of innovation in the decentralized derivatives track
If you can see this, you might feel the author's fondness for SynFutures and optimism about its future development trend. Because in my opinion, the derivatives track in the DeFi field hasn't had new stories and directions for a long time. We all know the oracle risks of the Vault model, and we also know the centralization issues of application chains, but what are the solutions? This track has been quiet for too long and needs new forces to stir it up to compete further with centralized markets. In my view, SynFutures is undoubtedly the most innovative and market-demand-adaptive 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, promoting this track to develop in a better direction. In the new round of DeFi trends, SynFutures plays the role of the disruptor in the derivatives track, pushing the entire track towards a new round of innovation and healthier development!
