Synthetix is an OG DeFi protocol that launched on Ethereum Mainnet in 2018. Since inception, Synthetix has frequently reinvented itself according to altering know-how and market circumstances. This has included transitioning from a stablecoin to a Perps trade and main the Defi migration to L2’s…
It’s time for our subsequent large transfer – Synthetix is coming residence to Ethereum Mainnet, the place our story started.
By early This autumn, Synthetix may have launched the primary Ethereum Mainnet settled CLOB perp trade. Its hybrid onchain-offchain structure mitigates Ethereum’s block latency and excessive fuel prices, permitting for a HFT system to dwell on Mainnet. Developed from years of expertise working perpetual futures, this structure allows Synthetix to implement a novel set of trade-offs optimized for an L1 perpetual futures trade.
Actual Ethereum L1 Asset safety: Absolutely onchain custody, deposits and withdrawals. No Bridging. No rehypothecation.Composable with all Mainnet belongings and DeFi apps, which have the deepest liquidity and probably the most TVL by far.Neighborhood market-making and liquidation vault. No insiders. No again room offers.An institutional-grade Centralised Restrict Order E-book (CLOB) – CEX stage throughput and latency.Multi-collateral and cross-margin with subaccount help.Account knowledge privateness – your orders and trades is not going to be publicly displayed.
Ethereum Mainnet Perps are a sport changer
Ethereum Mainnet delivers unparalleled safety, credible neutrality, and seamless composability, establishing it as probably the most trusted blockchain for custody and settlement. As such, it’s been capable of keep nearly all of DeFi exercise over time. This function which can allow Synthetix Perps on Mainnet to handle a key problem that even profitable Layer 2 options face: liquidity fragmentation.
Regardless of the low charges and sooner block occasions of L2s, Ethereum Mainnet continues to keep up over 50% of DeFi’s complete worth locked (TVL). The Synthetix CLOB on Ethereum Mainnet will likely be co-located with the most important and most liquid DeFi protocols (e.g., Uniswap, Curve, Aave), making integration for collateral conversions and hedging methods easy. A perp on Mainnet will enhance the capital effectivity throughout DeFi and is already garnering the curiosity of institutional gamers.
First some preamble
SR-2 in late 2024 marked the beginning of the subsequent large Synthetix pivot. After meandering for two years down a fruitless path (decentralisation maxi’s and AMMs all over the place), SR-2 catalysed a major departure from Synthetix norms. Make no mistake, the Synthetix of as we speak is wildly totally different to the Synthetix class of 2022-24:
A brand new crack crew – 16/20 crew members have joined within the final 12 months.OG leaders Kain and Jordan have returned – including key strategic oversight and trade experience.Full stack protocol – proudly owning the patron going through product massively empowers Synthetix by eradicating vital dependencies and bettering model positioning out there.Recreation altering new technique – CLOB not AMM, delegated not discretionary staking/minting, Ethereum Mainnet not L2s.
Over the approaching weeks/months as we get nearer to launch, we’ll be sharing way more frequent updates, together with releasing info and rationale on our key architectural choices, core matching engine efficiency exams (exhibiting 100k tps throughput and sub-50ms commerce latency), deployments on testnest, our launch function set and so on. Make no mistake – this new and pushed crew are COOKING.
One fascinating statement from ETHcc was that so many individuals the crew met talked about how a lot they needed Synthetix to win. Synthetix has a particular place within the hearts of the DeFi group, however it hasn’t delivered on an inspiring imaginative and prescient for the previous couple of years, leaving many to largely cease paying consideration. We’ve acknowledged this and accomplished a dramatic overhaul. We at the moment are quickly iterating, innovating and driving to launch merchandise that can as soon as once more convey Synthetix into the forefront and mobilise our passionate group once more.
Raging CLOB wars
Hyperliquid’s success in constructing a $13B onchain enterprise that could be a income producing machine was inevitably going to lead to what’s now dubbed ‘CLOB wars’. Hyperliquid’s main success got here from utilizing extra centralised belief assumptions, which is precisely what’s required to really ship a excessive frequency buying and selling system onchain… They simply have been the primary to acknowledge delivering a CEX-like buying and selling expertise onchain far supersedes the significance of decentralising the whole structure.
This has spawned various opponents together with Bullet, Hibachi, Ambient, Lighter, GTE, Paradex, Kuru, Gas Community, Injective, dYdX and Vertex, every of which merely gives nuanced variations and slight differentiation as they compete for market share over the subsequent yr.
Every of those opponents have consciously decided to function with an offchain matching engine, or on a blockchain with a centralised sequencer. Every of those CLOB operators have staked their declare as to what issues on the subject of the spectrum of how decentralised their chain is and the way a lot of their operations are on / offchain.
Synthetix has taken every little thing that it’s realized constructing perps engines during the last 5 years to optimise the tradeoffs required to launch a L1 Perp within the more and more aggressive CLOB wars.
Enter Synthetix
Synthetix is as soon as once more constructing the primary perp market on Ethereum – We’re laser targeted on growing a high-performance, non-custodial perpetual futures platform the place it’s wanted probably the most, and the place everybody has now realised they really need it – on Ethereum Mainnet.
Synthetix has lengthy battled the trade-offs between product efficiency and poisonous stream minimisation within the 4 years it’s operated a perp AMM. While this proved to be the flawed battle, working a perp for therefore lengthy resulted in lots of essential learnings that place us uniquely to ship a sturdy perp CLOB, and intimately perceive the spectrum of trade-offs and what’s essential to ship an important blockchain primarily based software.
A perp DEX, relative to a perp CEX, is foundationally fascinating on account of three core attributes they obtain from being onchain:
Permissionless – Blockchain purposes have low limitations to entry. Any dealer with possession of a blockchain deal with can entry the DEX and begin buying and selling inside seconds/minutes.Composability – The power for a number of monetary and non-financial purposes to take a seat aspect by aspect on the identical infrastructure creates alternatives and reduces friction.Non-custodial – customers retain management of their funds through self-custodial wallets, decreasing the chance of mismanagement of belongings.
BUT, let’s not faux CEXs are dangerous or basically flawed. Perp CEXs are extremely performant markets that supply a number of the greatest UX in all of crypto. That’s why it’s been so troublesome for DEXs to take market share. Key attributes which have resulted in CEX dominance embody:
Quick execution – centralised servers allow fast order matching and execution, which is essential for a excessive frequency buying and selling system.Privateness – There’s a fairly good motive that each one of Tradfi solely provide stage 2 order e book knowledge, it’s as a result of NO ONE WANTS THEIR FINANCIAL DATA OR TRADING PERFORMANCE PUBLICLY AVAILABLE.
How is Synthetix bringing all these options collectively?
Excessive-volume merchants’ priorities are well-defined – they search a swift and environment friendly buying and selling expertise, minimisation of bridge-related dangers, entry to capital quickly, safety in opposition to being hunted, and assurance that their monetary knowledge stays confidential.
To realize this expertise, Synthetix’s CLOB will:
Function on Ethereum Mainnet, probably the most liquid and safe blockchain.Settle for deposits in a permissionless and non-custodial method. Property will stay in decentralised custody (e.g. good contracts) till settlement.Function an offchain matching engine to offer CEX stage execution (latency and throughput).Provide gas-less buying and selling and free withdrawals (with limits).Solely show Stage 2 order e book knowledge (i.e. amount of asset out there at every worth stage).
However providing this isn’t ample with out a sexy function set to again all of it up. Synthetix is driving to launch a perp trade from day 1 that has all the usual options (e.g. order varieties, funding charges, leverage, and so on), however in a DEX first will uniquely provide:
Ethereum deposit and withdrawal contracts – no bridging, no time delays to mainnet and composability with the most important DeFi purposes.Multi-collateral help, together with:sUSDe – Think about capturing Ethena’s returns (presently 12% APY) while utilizing stablecoins as collateral for perp buying and selling.cbBTC – By no means promote your Bitcoin!wstETH – ETH collateralised buying and selling while incomes yield, the place are my foundation tradooors?!Subaccount help to allow organised portfolio administration, danger isolation, technique diversification, and shopper fund dealing with into distinct accounts.Dealer privateness to stop the world seeing your PnL, positions, liquidation costs and conditional order limits.
These are simply a number of the options, the remainder we’ll be sharing in additional element within the leadup to launch.
Why an offchain matching engine
Having a centralised sequencer is presently THE ONLY solution to develop a excessive frequency buying and selling system that meets dealer efficiency expectations. It might probably both be an trade’s sequencer (the matching engine) or the blockchain’s sequencer.
It’s our perception that working a excessive performing offchain matching engine on probably the most safe and highest TVL blockchain (Ethereum Mainnet) far outweigh the downsides of working a completely onchain matching engine on a decentralised blockchain.
This isn’t to say that there aren’t methods we will decrease the belief assumptions required of an offchain system. The enhancements to ZK know-how, led by firms like Succinct and their zkVM SP1, have performed a key function in expediting the flexibility to trustlessly confirm giant offchain computations with small quick proofs. Know-how like this could play a job in the way forward for Synthetix to allow us to additional decrease the ‘belief’ a dealer wants to position on us with out sacrificing our means to function a excessive frequency buying and selling system on Ethereum Mainnet.
The worst half of the present perp expertise is having to bridge. Being on Ethereum eliminates this friction. There aren’t any bridge dangers and no ready for one more chain to obtain your deposits (on and off an alternate chain). There’s simply an Ethereum Mainnet deposit contract, co-located the place nearly all of DeFi exercise takes place. Relative to constructing your personal chain, the place you find yourself requiring bridges to a brand new / your personal island the place it’s essential to incentivise an ecosystem of exercise.
Along with this, while it’s cool to say how clear every little thing is when working a completely onchain matching engine, this introduces options that NO ONE ACTUALLY WANTS – totally clear account stage knowledge. Merchants are prepared to present away their monetary privateness to keep away from CEX custody, however what in the event you might keep privateness with out doing so? Internet hosting an identical engine onchain voids an trade’s alternative to do that as all buying and selling knowledge finally ends up being posted publicly.
There have been many feedback since our announcement that providing a excessive frequency buying and selling system on Ethereum is just not believable, primarily as a result of PTSD from DeFi summer time the place a easy ship would usually value over $50. While Ethereum has come a great distance since, and is now dedicated greater than ever to scaling the L1, by working an offchain matching engine, Synthetix can and can provide gasless order placement, and summary away settlement prices.
Synthetix is Again and Higher than Ever!
Synthetix is returning residence to Ethereum Mainnet, the place our story started, to launch a excessive performing perp market. We’re mission pushed to convey a perp market to Ethereum Mainnet, the house of DeFi. This can allow merchants to handle asset publicity, hedge danger, entry leverage, construct structured merchandise (e.g. foundation commerce vaults) and execute complicated buying and selling methods ON ETHEREUM MAINNET. We’ve made very deliberate trade-offs in our designs and structure that can provide a novel and market main buying and selling expertise. We’ve mixed the permissionless and non-custodial advantages of constructing on a blockchain, with excessive efficiency necessities and dealer privateness that an offchain matching engine permits us to supply.
Synthetix may have its comeback arc. And for these paying consideration it’s already in movement.
>> Ethereum Mainnet Perp quickly <<
Observe Synthetix as we speedrun to mainnet:
