Synapse to Roll Out Blockchain as Part of Major Upgrade
Synapse plans to launch an optimistic rollup network that will serve as an execution layer for smart contract-enabled transactions
By: Owen Fernau •DeFi News
There’s long been a debate in crypto about when a token is needed for a project to flourish.
Now, more projects are asking themselves when a blockchain is needed, and the answer increasingly appears to be yes.
Enter Synapse, which bills itself as a universal interoperability protocol that enables secure cross-chain communication. Synapse introduced a plan to deploy its own blockchain on July 28, saying that the testnet would come within a few weeks with a mainnet launch “shortly after.”
The chain is part of an overhaul of the protocol, which Synapse is calling its V2.
The blockchain will be an optimistic rollup, like Arbitrum and Optimism, serving as an execution layer for smart contract-enabled transactions. Transactions will settle on Ethereum and as such transaction fees will be paid in ETH.
A new class of protocols may emerge, as not just assets, but smart contract logic, start to tie different blockchains together. “The most obvious use cases are cross-chain DeFi, gaming, and governance,” Max Bronstein, who stepped into the COO role at Synapse in March after working on Coinbase’s venture team, told The Defiant.
The Synapse team sees the new chain as increasing efficiency by allowing projects to deploy their smart contracts on the Synapse chain, rather than having to make individual deployments to each blockchain.
In addition to efficiency, money markets like Aave and Compound would theoretically be able to access deeper liquidity as a Synapse Chain deployment would mean the availability of assets across all 16 of the blockchains to which Synapse connects.
It’s not the first time a project has tried to develop infrastructure which enables cross-chain applications — Axelar, which raised a $25M Series A led by Polychain Capital in June 2021, has wooed the leading decentralized exchange (DEX) of the Cosmos ecosystem, Osmosis, to build a cross-chain DEX using their solution.
Regardless of the competition, the market reacted favorably to Synapse’s announcement — the protocol’s SYN token is up 32.4% in the past 24 hours after spiking dramatically when the news broke.
SYN Price. Source: CoinGecko
While SYN won’t be used to pay transaction fees, at least initially, it will be used for staking to incentivize valid transactions as a part of what Synapse calls its “optimistic verification model,” which is part of V2.
Bridges have been the most vulnerable piece of crypto infrastructure to date — an Into The Block report in April estimated that well over a billion dollars have been lost in hacks targeting bridges. Synapse isn’t immune to the high-risk environment — according to a Synapse Medium post, the bridge protocol suffered a hack which could have resulted in an $8.2M loss last November, though no funds were lost.
Synapse has seen its monthly volume drop off since peaking at $2.6B in January. The bridge protocol has processed $185.9M in July with three days left in the month, according to Synapse’s analytics page.
The announcement of a chain comes on the heels of derivatives protocol dYdX’s announcement to launch its own chain. Synapse’s chain differs in that it settles on Ethereum as a rollup, instead of being a standalone chain like dYdX’s.
Still, with DeFi Kingdoms Kingdom launching its own chain in April on Avalanche Subnets, it’s evident that more and more projects are considering launching bespoke chains as the infrastructure to do so is built out.