Key Points: Synthetix cleverly employs the non-slip mechanism of sUSD to tell the story about a new “atomic Swap.”
Synthetix wanted to offer better transaction depth and higher fees income, but it was limited to SNX-based transactions so its V3 was created.
There are several V3-related optimizations currently being voted on.
Synthetix placed V3 on the agenda after the atomic swap was launched in 2022. It achieved good results. Synthetix, as one of the oldest DeFi protocols, is the absolute leader in Synthetix’s asset track at the start of 2021. It has also sparked a lot discussion in the industry about synthetic asset protocols. On February 14, 2021, the price for SNX hit an all-time high at $29, while neither Bitcoin or Ethereum had reached their all time highs. SNX didn’t perform well after that. It is partly because Synthetix’s mechanism design is too complex. On the other hand, it may be because traders of synthetic assets sETH or sBTC via a high mortgage rate are not as profitable as trading Bitcoin directly. Synthetix’s yield is less attractive due to the rise in emerging assets and Ethereum. Synthetix was initially created to be a platform for synthetic assets and has since set up a unique “debt pool” system. Users can borrow sUSD by staking SNX. This is different than MakerDAO staking assets in order to cast DAI. However, Synthetix shares a “debt Pool”. This means that when you mint sUSD, your share of all sUSD is the entire debt pool. The entire system’s debt is represented by the minted USD. Everyone shares a debt pool. If other users increase their assets’ value through operations (such sUSD to purchase sBTC and sBTC rises), then the total liabilities of the system will increase. If your asset appreciation rate is lower than the average system, it will result in a loss. However, if users lose money, even though you have sUSD, your debt will be reduced. But, just because it is new does not mean that everyone will accept it. If the benefits of interacting other DeFi protocols, holding tokens, and NFT itself have high potential rewards, Synthetix is insufficient. There are restrictions on the investment target. The income generated by investment can be diluted by other users who also generate income. Synthetix offers stakers SNX inflation and transaction fee incentives. However, in a bullish market, users will choose to invest their principal directly rather than using tokens that can easily double.Atomic SwapAlthough Synthetix has a shadow of MakerDAO-like stablecoins, its mechanism is more complex, requires more strategies, and is not user-friendly. Synthetix has everything. The team realized that the narrative of synthetic assets being held on to may be abandoned by market forces. They cleverly used the mechanism of exchanging sUSD for other tokens and then directly feed the price exchange without considering depth. The function of Atomic Swap was first proposed jointly by Synthetix founder Kain Warswick and Yearn founder Andre Cronje in SIP-120. The proposal was originally intended as a trading model within the Synthetix ecosystem but was later found to be an excellent liquidity tool due to the gradual increase in the externalities of the Synthetix ecosystem.In August 2022, with the Tiaki version update, the atomic swap function was officially integrated into 1inch and began to provide a zero-slip trading path for on-chain transactions (mainly focused on large transactions).Therefore, the Synthetix team is no longer obsessed with hitting the south wall on the narrative of synthetic assets but regards atomic swap as one of the most important functions of Synthetix. The deep binding between Synthetix ecology, Optimism, and the expansions of options (Lyra), contracts, and other ecology are important parts of Synthetix’s strategy. However, atomic swaps have not only increased liquidity but also made it more difficult to expand their influence. Synthetix currently has a c-ratio of 400%, which can be described as the excess mortgage rate for SNX. The total amount of SNX tokens remains slightly below 300 million. The total staking SNX tokens is slightly over 300 million. This is because it is used to provide the liquid sUSD and the percentage of sUSD being traded in other tokens. sUSD (including L1 & L2) is approximately 36.9 million, 19,180 and 576.7 respectively. According to the price of SNX and Ethereum, at the time of writing, the total staking rate of L1 and L2 is about 67.37%, while sUSD, sETH, and sBTC (including L1 and L2) are approximately 36.9 million, 19,180, and 576.7 respectively. Synthetix can only increase the sTokens available to atomic swaps if it wants to provide better transaction detail and higher fee income. Synthetix V3 was born. On the premise of retaining futures, contracts, and other markets, it has greatly optimized the narrative of atomic swaps.V3-related optimizations that have currently been voted on include:SIP-255SIP-255 adjusts the distribution path of the fees generated through atomic swaps that were originally rewarded to SNX stakers so that these fees are automatically destroyed to repay the stakers’ debts, thereby reducing debt and possible liquidation risks. The user gets sUSD from the reward for atomic swaps. Then, the pledger’s debt is automatically reduced by the automatic destruction of the portion of the sUSD the user had to claim manually. To get this reward, pledgers can choose to reclaim the SNX they have redeemed. In addition, this solution can also increase the utilization rate of SNX and sUSD, and reduce the sensitivity of pledgers to the mortgage rate, thereby stimulating more pledges by pledgers, effectively reducing the overall debt of the agreement, and minting more sTokens.SIP-301SIP-301 aims to create account token NFTs in ERC-721 format for users, enabling users to transfer their SNX pledged positions between different wallet addresses. This proposal removes the absolute binding of “account” and “address” and allows for the maximum compatibility of smart contracts and existing user interfaces. It allows for secondary markets for account tokens. Additionally, it has a stronger delegation function that improves operational security. A hardware wallet might have an account that is entitled to claim rewards that were entrusted by a software wallet. The attacker cannot claim unpaid rewards if the software wallet is compromised. Simply put, each market can create custom parameters according to assets when minting sUSD with other voted Mortgage Assets (such as Ethereum) in the V3 Version. The new market in V3 will not follow the debt pool model but a CDP model similar MakerDAO. However, each market can set custom parameters according to asset attributes. As we have seen, only using SNX to mint sUSD will restrict its actual circulation due to the project’s mechanism. The project’s own mechanism will limit the actual circulation of sUSD. This limitation has been solved by the new version. It allows for multiple collaterals to mint the sUSD. There is a 0.35% handling charge (the current data could change in the future). The direct transaction mode based upon the price of an oracle can increase transaction depth to a significant extent and may be used to create richer superstructure designs around the sUSD. It also has its own unique atomic Swaps (such the permissionless spot market mentioned above). This will allow Synthetix to earn more fees than the current one. SNX stakes will be able to focus more on generating income using sUSD. Synthetix’s synthetic assets attributes allow it to include assets like sETH, sBTC and so forth. The launch of Synthetix V3 will take place at the end of the first quarter or the beginning of second quarter. Synthetix V3 will be a new market that focuses on synthetic assets. It will also become a decentralized brokerage. This transformation has been a success for Synthetix. It will also be beneficial to the DeFi market as it offers another option to increase liquidity and transaction depth, in addition to using mathematical formulas that consume large amounts of Gas. We encourage you to do your own research before investing.Join us to keep track of news: https://linktr.ee/coincuHaroldCoincu NewsTags: #BitcoinAtomic SwapDeFiEthereumsBTCSNXsUSDSynthetix V3