Synthetix will become the best liquidity layer for the perpetual trading landscape
on Optimism
I. Synthetic assets
Synthetic assets are products that track the price of an underlying asset without
holding the underlaying assets yourself. Benefits of Syths include:
Reduce friction during trading.
Access to a wider range of assets
II. What is Synthetix?
#Synthetix is a liquidity layer built on top of @optimismFND and Ethereum.
Similar to #GMX , $SNX stakers provide liquidity to collateralizes synthetic
assets while the liquidity underwrites the trading of perpetual and synths at the
oracle price.
Synthetix liquidity supports 2 major synthetic assets:
Spots Synths
Perpetual futures
Meanwhile, Kwenta on Synthetix has seen significant trading volume on Optimism
since the upgrade to Perps V2.
But how does it work? To understand, let's start with the basics.
III. How Synthetix works?
Users stake $SNX to mint sUSD, with a minimum C-ratio of 500%.
Upon minting sUSD, users will be issued debt.
Active debt represents user's debt share in the global debt pool, while Issued debt is the debt that the user has during minting.
Traders loss is your gain
When a trader experiences losses his loss lowers the global debt pool's total
value in turn, reducing the average debt among all stakers.
Too complicated? let's use an example.
A mint $100sUSD, issue with 100 debts
B mint $100sUSD, issue with 100 debt
Each user has 50% of the debt pool share (100/200)
A trade sUSD for sETH, loss $50 sUSD, which lower the debt pool to 150/200.
B is issued with 75 debt (50%) now thanks to the trader losses.
Conversely, a trader's win results in staker's loss, as the total value of the global debt pool increases.
As of now, the total debt issued is $126M, with the composition: sUSD (57%) sETH (20%) sBTC (13%)
What's more,
#Synthetix V3 has taken this to the next level.
IV. Synthetix V3 and upgrades
First, Why V3?
In #Synthetix V2, the price of $SNX is unstable, which has affected the stability of the
single-collateral debt pool, and in turn, hindered the scalability of Synthetix.
To overcome the problems, Synthetix team introduced V3.
Synthetix V3 has core features:
Multi-collateral staking
Permissinless pools
Cross-chain
These upgrades are designed to enhance the liquidity, derivatives provision, and the growth of Synthetix.
Among them, multi-collateral staking is especially noteworthy.
V. Metrics
Synthetix V3 is not live yet, however, since the launch of Perps V2, the Synthetix
volume has been consistently rising.
It hit an all-time high volume of $490M on 16/3, with Perps being the most
significant contributor to the volume.
More volume = Higher Fees
Over the past 30 days, Synthetix earned > $3.8M fees from Perps + Spots on L2, and
some atomic swap on L1, reflecting the success of Perps V2.
With whales like @Rewkang joining the ecosystem recently, I'm really excited for
the upcoming V3 upgrade.
