SynFutures Review 2022

SynFutures is an open, decentralized derivatives platform designed to allow a wide variety of assets—including Ethereum native, cross-chain and off-chain real-world assets—to be synthesized and freely traded. The SynFutures V1 contract has been introduced: 

  • A futures contract for liquidity providers to set up a market using the large inventory of arbitrary assets and expiration dates
  • A Synthetic Automated Market Maker, called sAMM, that allows market users to provide a single digital asset of their desired training pair, and the smart contract synthesizes the other
  • Automated Liquidator (ALQ), a tool that makes the liquidation process run more smoothly for all parties and enables more liquidators to fill vital ecosystem needs

The platform prides itself in creating a user-generated market that is incredibly easy to use.  SynFutures states that anyone can list a trading pair in just 30 seconds, which is a significant improvement to many of the very complex platforms available today.  The platform also makes it possible for a project to create its own futures market margined in project tokens, helping to generate interest, distribution, and potential funding.  Users can trade and list all manner of assets, such as crypto majors, altcoins, NFTs, indices, and even real-world assets using a single token applied to the sAMM model.  The platform also offers unique elements, such as perpetuals with hard pegging to spot and rigid risk management, allowing users to support desired long tail assets with thin liquidity.

SynFuture Team and Vision

SynFuture is led by Rachel Lin, CEO and Co-founder.  She started her career at Deutsche Bank’s Global Markets Department specializing in structured derivatives, then joined Ant Financial in order to help construct their first blockchain platform.  The team has a wide range of experience from both CeFi, DeFi, and derivative-driven finance.  

In starting the project, the team set out to establish a platform that focused on several key tenets:

  • The platform should be an open and free market, empowering users to add and trade any assets.  The market itself should determine the winning assets, not any operator in the system.
  • The platform should maximize the tradable asset variety available.
  • The platform should fully implement one of blockchain’s core advantages: trustlessness.  This helps to encourage user participation, but especially opens the ability for users to participate as market makers and liquidators—positions often restricted to professional-only financial service providers.

SynFutures Review 2022:  Key Features

Synthetic AMM

Seeing the success of AMMs for spot trading, SynFutures built their sAMM as a cornerstone feature of the platform.  According to the team,  “The sAMM is a market participant with its own margin account similar to other users, but always ready to make prices based on the constant product formula and its current position. Apart from trading, the sAMM contract provides users with interfaces to add and remove liquidity to the sAMM liquidity pool and the sAMM contract also acts as the gateway for users to deposit margin to and withdraw margin from their account.”

The sAMM works by users transferring the margin token (or QUOTE asset) to add liquidity.  The sAMM creates a long position in the resulting futures contract using one half the token, which synthesizes the BASE asset of the trading pair and keeps the other half as available margin.  The sAMM simultaneously sets up a short position of the same amount to the same user, which ensures that the total risk of the liquidity provider does not change.   

Liquidation

Another key feature is the ability for liquidators to choose how they approach the role.  They can select the conventional DeFi approach where they take over the position of the liquidated account, providing initial margin at the current Mark Price (receiving the balance of the maintenance margin as a reward).  Or, the liquidator can employ the Automated Liquidator (ALQ) Approach, which solves the difficulty of finding a counterparty.  The AMM partially reduces their positions in order to meet margin requirements, which reduces the barrier of entry for liquidators because it only requires a transaction sent to the smart contract rather than providing margin or incurring additional risk. 

SynFutures Review 2022:  Ecosystem 

There are three key roles that users can play in the SynFuture ecosystem.  

Traders:  Trade various futures products that are offered on the platform.

Liquidity Providers (LP):  Create trading pairs, supply liquidity, and are ready to make prices determined by the model; LPs earn the majority of trading fees.

Liquidators:  Liquidate trader positions if margin becomes inadequate, using the traditional method or the Auto Liquidator described above.  Liquidators can earn the remainder of traders’ margin token after the penalty is deducted.

Additional roles in the ecosystem include the system maintainer, insurance fund (to balance any insolvency), the system reserve fund, and oracles.

SynFutures Review 2022:  Key Parameters 

SynFutures operates under a fixed % trading fee.  For each trade, the fee is split into a system reserve fee for trade state update, liquidation initiator, etc.) and the remainder is paid into the translation pool for the liquidity providers.  Parameters are further described in the chart below. 


Source:  SynFutures

SynFutures Review 2022:  Competitor Landscape

While there is a wide range of exchanges, both in CeFi and DeFi, the SynFutures platform is focused in the niches of futures-based and long-tail.  This creates partial competition with futures exchanges such as BitMEX, FTX, dYdX, etc., and with long-tail exchanges such as Uniswap and Sushiswap.  What makes SynFutures different is both their focus and their offering.  As they focus on futures for long-tail assets, there are few exchanges they directly compete against.  In terms of their unique value, it is their focus on developing ease of use (30-second pair creation) products for LPs, and enticing tools that lower the barrier of entry for liquidators.  In terms of traders, the simplified and intuitive interface has been cited as a draw to the platform even by a less technical audience.

Security and proactive concern for participants is always critical component for any DeFi platform.  SynFutures has made a number of steps that allow the platform to operate normally for users while triggering safeguards in case of malicious activity.  These include the Max Price Slippage Ratio, Max Initial Daily Basis, Max User Trade Open Interest Ratio, Min AMM Open Interest Ratio, and the Max Spot Index Change per Second Ratio.  All these metrics allow the platform to quickly spot and intercede if there are bad actors attempting to manipulate the market and harm other participants.

In addition to these measures, the [email protected] smart contract was audited by PeckShield in order to minimize security risk to the platform itself.

Wrapping Up

SynFutures is an open and decentralized derivatives platform that allows a variety of assets, including Ethereum native, cross-chain and off-chain real-world assets to be synthesized and freely traded. With its determination in opening opportunities and remove barriers to entry for LPs and Liquidators, it has encouraged a large number of key roles to be filled that have created a large, stable, and trustless futures market.  To learn more about the platform, visit Synfutures.com.

Please note that this is an advertorial. Do your own research.