Synthetix Perps: Powering decentralized perpetual futures markets


Synthetix Perps on Optimism boasts low fees and 23 new markets

By: Synthetix Loading...

The case for decentralization continues to strengthen asSynthetix Perps goes live on Optimism, with users already seeing the benefits of historically low fees (as low as 5-10bps) trading on frontends Kwenta and Decentrex.

Synthetix Perps are fully decentralized and on-chain, so users have complete control of their collateral and can trade on the front end of their choice. As of this month, there are 23 new Synthetix Perps markets available for trading including legacy perps markets (ETH, BTC, LINK, SOL, AVAX, AAVE, UNI, MATIC, XAU, XAG, EUR/USD, APE, DYDX, BNB, OP, and DOGE) as well as seven brand new markets (ATOM, AXS, FLOW, FTM, NEAR, AUD/USD, and GBP/USD).

First released in March 2022, Synthetix Perps has generated more than $5.2b in volume and $18m in exchange fees. Building on lessons learned from V1, today’s Synthetix Perps on Optimism bring a hundred-fold improvement in capital efficiency for SNX stakers, while also supporting extremely competitive fees thanks to Pyth Network.

Users have access to best-in-class on-chain liquidity and a high performance on-chain trading experience thanks to Synthetix Perps. Learn more about the key features below.

1) State-of-the-art perps AMM

At the core of Synthetix Perps is a novel exchange engine that efficiently matches buyers and sellers, with SNX stakers serving as a temporary counterparty as needed. The resulting markets are able to facilitate extremely deep liquidity, while passing minimal LP risk to stakers.

2) Off-chain oracles enable fast on-chain prices with competitive fees

Off-chain oracles are key in enabling significantly reduced trading fees (as low as 5-10bps). Pyth’s on-demand price update model also shrinks latency to just a few seconds while also significantly improving the economics of on-chain oracles.

3) Innovative risk management features to minimize risk for LPs (stakers)

Synthetix has also made significant strides to minimize the risk that perps LPs take on, through two new innovative risk management features.

Price Impact: This feature simulates an orderbook, by making traders pay a premium/discount when they increase the skew (long/short.) Arbitrage traders are incentivized to receive this discount by returning markets back to neutral.

Dynamic Funding Rates: This feature introduces velocity into funding rate calculations to allow funding rates to drift upwards in the presence of continued imbalance – incentivizing arbitrage traders to step in and bring markets back to neutral.

Both functions will introduce arbitrage opportunities for traders to keep markets neutral over the long term and limit counterparty exposure for stakers. This innovative path to risk management will help increase scalability and capital efficiency while supporting a wider range of markets.

Synthetix Perps Core Contributor David Vuong says, “Synthetix has become known for innovation since pathing the way for DeFi back in 2020, with significant innovations forked across the industry. Today we continue to lead as Synthetix Perps sparks a new era of on-chain decentralized perpetual futures. We’re excited for what this means for traders and investors who agree the future is on-chain.”

Mike Cahill, Director of the Pyth Data Association says, “Synthetix shares our goal in helping DeFi mature by bringing non-blockchain-based asset exposure to the crypto ecosystem. We are proud to partner with them to deliver reduced trading fees and deep liquidity to traders.”

Synthetix Perps has initially integrated into Kwenta and Decentrex, with ecosystem partners Polynomial (structured product vaults) and Lyra Finance (options) to follow.

Synthetix will continue to use Chainlink oracles alongside Pyth. In 2022 alone, Chainlink price feeds helped facilitate over $50B+ billion in transaction value on Synthetix.

Learn more on the Synthetix blog here and Synthetix tweet thread here.