On December 18, 2022, the decentralized finance (DeFi) protocol Synthetix announced that it has begun accepting multiple token types as collateral for leveraged perpetuals trading on Coinbase’s Base network. This expansion is part of a broader revamp of the DeFi protocol following a governance shakeup in October.
What are Multicollateral Perps?
Synthetix is launching so-called ‘multicollateral perps’ on Base, one of Ethereum’s most popular layer 2 (L2) scaling networks. This means that users can now post tokens such as Coinbase Wrapped BTC (cbBTC) and Coinbase Wrapped ETH (cbETH) as trading collateral.
Benefits of Multicollateral Perps
The addition of multi-collateral perps will allow traders to maintain direct exposure to popular crypto assets like BTC and staked ETH, giving them more control over margin positions and easier access to hedging. This expansion is expected to provide several benefits to users, including:
- Increased flexibility: Traders can now use a variety of tokens as collateral, providing more options for margin trading.
- Improved liquidity: The addition of multicollateral perps will increase the liquidity available for traders, making it easier to enter and exit positions.
- Enhanced security: By using multiple token types as collateral, traders can reduce their reliance on a single asset, making their trades more secure.
Coinbase’s cbBTC and cbETH
Coinbase’s cbBTC has emerged as one of the most popular Bitcoin wrappers, with a market capitalization of over $2 billion as of December 18, according to CoinMarketCap. This popularity is due in part to its stability and ease of use.
Similarly, Coinbase Wrapped ETH (cbETH) has gained traction among traders, providing a convenient way to access staked ETH without the need for complex technical setups.
Synthetix’s Revamp
The launch of multicollateral perps on Base is part of Synthetix’s broader revamp following a governance shakeup in October. The protocol has been working to improve its governance and day-to-day operations, with a focus on delivering more innovative products and features.
New Perpetuals Exchange
On December 18, Synthetix also launched its own perpetuals exchange application, providing users with a new platform for trading derivatives. This move marks a significant shift in the protocol’s strategy, as it previously provided smart contract infrastructure for other exchanges to build on but lacked an in-house trading app.
Synthetix Exchange
The Synthetix Exchange app interface is designed to provide traders with a seamless and intuitive experience, making it easier to buy and sell derivatives. The platform will continue to support the development of new derivatives products and exchanges, providing users with access to a wide range of trading options.
Synthetix’s Acquisition of Kwenta
In October, Synthetix acquired perps platform Kwenta, expanding its offerings in the derivatives space. This acquisition was part of the protocol’s efforts to improve its governance and day-to-day operations, providing users with more innovative products and features.
Synthetix’s Reorganization as a Foundation
The reorganization of Synthetix as a foundation is expected to streamline and improve its capabilities regarding business activities that require signing contracts with partners. This move will enable the protocol to focus on delivering more innovative products and features, while also improving its governance and day-to-day operations.
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Conclusion
The launch of multicollateral perps on Base is a significant development for Synthetix, providing traders with more options for margin trading and increasing liquidity in the derivatives market. The protocol’s revamp following a governance shakeup in October has led to a series of innovative developments, including the acquisition of Kwenta and the reorganization as a foundation.
As the DeFi space continues to evolve, it will be interesting to see how Synthetix and other protocols adapt to changing market conditions and regulatory environments. With its focus on delivering more innovative products and features, Synthetix is well-positioned to remain a leading player in the decentralized finance space.