In an Unchained interview today with Laura Shin, Kain Warwick, Founder of Synthetix, had an interesting answer about new features on the exchange. He described upcoming Synthetix futures products as being comparable to BitMEX leveraged perpetual swaps.
“Essentially it (Synthetix) will be a decentralized BitMEX or Derebit or any futures exchange. You’ll be able to take a leveraged position on something like Bitcoin or Eth and open that position and it will be a perpetual future,” said Warwick.
Synthetix has already gained huge traction in the decentralized finance (DeFi) world, with the second most Ethereum locked right next to Maker. Warwick said that people were attracted to Synthetix because it’s the only place where you can exchange Bitcoin for gold, and then back to USD with no slippage.
They aren’t the only decentralized platform hoping to take on BitMEX though. A BitDEX whitepaper was released a few months ago that uses priceless contracts and no centralized oracle. Synthetix still uses a centralized oracle, which determines prices of assets, but has been manipulated by a trader before who created 2 million dollars of debt in the system and had to be bribed to revert the trade.
Warwick mentioned that they are working with Chainlink to resolve some issues that they have had with oracles, but it still will have lag compared to live price, which people will always be able to take advantage of.
DeFi’s biggest disadvantage when it comes to trading features and liquidity. With Synthetix having infinite liquidity, they could be at a huge advantage against competition as long as users are able to short, set stop losses and limit orders. Decentralized exchanges also benefit from having less regulations to comply with because FinCen sees them as a forum to match orders as they don’t hold users funds. This means that they might not need to enforce KYC in the United States.
“If a CVC trading platform only provides a forum where buyers and sellers of CVC post their bids and offers (with or without automatic matching of counterparties), and the parties themselves settle any matched transactions through an outside venue (either through individual wallets or other wallets not hosted by the trading platform), the trading platform does not qualify as a money transmitter under FinCEN regulations.” – FinCen
There is no literature that explains how Synthetix will go about implementing their leveraged perpetual swaps. After we inquired on their Discord, it seems like other people are anxious to read the technicals as well. This may be the first time Synthetix has made a direct comparison and provided a description of plans.