Synthetix is a financial primitive that allows for the production of synthetic assets on the blockchain, as well as derivatives and exposure to real-world assets. A synthetic asset, on the other hand, is nothing more than a tokenized derivative that mimics the value of another asset. A spot exchange-traded fund, or ETF, is a common type of synthetic asset that may represent gold, oil, or bitcoin.
According to a blog post from the Synthetix team, Synthetix will launch its perpetual futures product on the Ethereum layer-2 scaling solution Optimism later this week. In terms of scaling solutions, this implies that consumers will benefit from larger transaction throughputs and lower network expenses.
A perpetual futures contract, also known as a perpetual swap, is an agreement to purchase or sell an asset at an undefined future date. Perpetual futures are cash-settled contracts that, unlike conventional futures, do not have a pre-specified delivery date and may therefore be held eternally without the requirement to roll over contracts as they approach expiry.
The Kwenta protocol, a decentralised and composable protocol with an allegedly simple trading user interface, is the first partner to incorporate Synthetix’s perpetuals. The Synthetix everlasting markets will be available through a special Kwenta user interface.
According to the announcement, the present design of Synth, which are derivative tokens that allow exposure to a variety of assets, does not simply provide traders with a mechanism for leveraged trading or shorting assets with leverage. According to Synthetix’s website, synths are assets created by the community and may take the form of fiat currencies, cryptocurrencies, equities, commodities, or anything else having a price.
Due to exchange and financing rate fees, futures will offer an extra revenue stream and eliminate the need to hedge the increased debt due to intrinsic self-hedging and market size restrictions for SNX stakers, the native token of the Synthetix protocol.
The first futures beta launch will include bitcoin (BTC), ether (ETH), and Chainlink’s LINK tokens for the first two weeks following its debut. The open interest cap for bitcoin and ether will be $20 million sUSD (synthetic US dollars), with a $2 million maximum for LINK tokens.
Furthermore, the Spartan Council may make relatively regular market parameter modifications throughout the first time to optimise the optimum trader UX, protocol, and debt-pool safety. These parameter modifications will not require any user intervention.