SYNTHR is an omnichain synthetic asset protocol that aims to solve inherent problems in the synthetic asset market to enable end users with creating and moving assets on-chain seamlessly. It seeks to address the existing problems in the industry such as high transaction fees, slippages, loss of funds, MEV, and lack of scalability/composability through its partnership with Shardeum. SYNTHR is further looking to transform the synthetic asset market in the blockchain ecosystem which lacks the depth of its peers in Web2 or traditional finance. But what exactly is a synthetic asset? Ok, this is going to be interesting. Keep reading 🙂
What are Synthetic Assets?
In the context of blockchain and decentralized finance (DeFi), synthetic assets are tokens that represent the value of an underlying asset, such as a stock, bond, debt, commodity or cryptocurrency. They are typically created by using atomic swaps, oracles, bridges etc. to essentially lock up an asset on one blockchain and then minting a synthetic asset on another blockchain. This allows investors to gain exposure to a particular asset or asset class without actually owning it. They further provide increased liquidity to markets that would otherwise be illiquid. This is because synthetic assets can be traded on a variety of exchanges, regardless of the underlying asset. Synthetic assets ultimately help to drive innovation in the financial markets as they can be used to create new financial products and services for the average person in Web3.
Here’s the central use case of synthetic assets though. Ethereum is a popular blockchain network for DeFi applications, but it can be slow and expensive as a result of the first-generation blockchains’ prioritizing decentralization and security (by giving up on scalability). Shardeum is an innovative L1 blockchain that will be fast with low transaction fees permanently while retaining decentralization and security. But Shardeum’s DeFi ecosystem is smaller to start with. By using bridges, swaps or oracles, DeFi users can access the best of both worlds.
SYNTHR is a decentralized protocol that enables the creation and trading of synthetic assets on various blockchain networks. It will provide users with exposure to a wide range of traditional and digital assets, such as stocks, commodities, and cryptocurrencies, through the issuance of syAssets on-chain (blockchain).
SYNTHR uses features like customizable vaults, cross-chain communication, atomic swaps, and a governance model to foster interoperability, liquidity, and capital efficiency within the DeFi ecosystem.
How is SYNTHR Scaling Up Decentralization?
Following are the solutions and services that SYNTHR has lined up to scale the DeFi ecosystem at scale.
- Global Debt Pool and syAssets:
SYNTHR’s Global Debt Pool aims to allow users to mint highly solvent syAssets and promote DeFi composability along with capital efficiency.
- Synthetic options marketplace:
SYNTHR aims to offer a highly liquid synthetic options marketplace for hedging and speculation through European-style options without exercise obligations.
- Atomic swaps and high liquidity:
SYNTHR aims to enable seamless and cost-effective cross-chain transactions through Atomic Swaps and incentivizes high liquidity on DEXs.
- NuclearPort and Cross-Chain Communication:
SYNTHR’s NuclearPort module aims to allow collateralized debt positions (CDPs) and trustless cross-chain communication, thus eliminating the need for conventional bridging solutions used in Web3 which are prone to hacks and other security attacks.
- Governance and Fee Distribution:
SYNTHR’s veSYNTH token aims to empower holders with governance power to propose and vote on adding new asset classes, supporting protocol development, and potential rewards.
How Does SYNTHR Solve Problems of Today’s Bridges and Swaps?
Bridges are a critical part of the blockchain ecosystem, but they are also a target for hackers. This is because bridges are still a new technology, and they often handle large amounts of assets. Additionally, many bridges are not sufficiently decentralized, which makes them more vulnerable to attack. Often the bad actors target the bugs in smart contract codes of bridges and drain their funds as much as possible. Asides from bridges, there are other notable issues like front-running, de-pegging, and slippages when it comes to today’s cross-chain protocols.
This is where SYNTHR would like to step in and revolutionize interoperability in the blockchain industry and minimize the risks/trade-offs associated with cross chain protocols. In its whitepaper, SYNTHR details how it will address these prevailing risks. Some of the key ones are listed below
- The protocol will be supported by modules powered by omnichain architecture that includes cross chain communication systems. The architecture will unify collateral across all its deployments, which will in turn, allow it to mint a fully backed syAsset on any chain
- SYNTHR will aggregate price feeds from oracles, TWAP feeds from large DEXs, and direct price feeds from CEXs
- syAssets will be backed only by ETH, USDC, or USDT as collateral, thus ensuring high solvency
- It will run external DEX operations to ensure that the DEX prices of syAssets remain pegged to their oracle prices with barely any slippages
- SYNTHR will offer instant finality and it will use an independent and trustless oracle as its consensus layer
- SYNTHR will be a fully insured protocol. This will ensure that the entire amount of staked collateral is insured up to its full value
- The protocol’s atomic swap implementation will empower users with capital-efficient asset swaps, low network fees, and a reduced possibility of MEV and front-running attack vectors by leveraging high throughput and low-latency blockchain networks like Shardeum
What is Shardeum?
Shardeum is the world’s first EVM-based L1 blockchain that uses dynamic state sharding to scale linearly and infinitely while maintaining low transaction costs forever.
Unlike other platforms, Shardeum makes sure that every transaction is processed separately (instead of processing done at the block level) to reduce processing time and ensure atomicity. Shardeum further supports smart contract development in Solidity and Vyper, with a user interface similar to EtherScan.io.
Why did SYNTHR partner with Shardeum?
Shardeum unlocks a world of breakthrough technology that addresses the limitations that you find not just in DeFi space but in the entire Web3 ecosystem. For example, Shardeum’s linear scalability helps SYNTHR handle more transactions as well as integrate with existing smart contracts and tools through EVM compatibility. Shardeum’s low fees, improved performance, solid security, and the massive community adds value to any dapp including SYNTHR. Together, both of them seek to provide a secure and scalable platform for the synthetic assets market and their users.
How Will SYNTHR Benefit from Partnership with Shardeum?
1. Enhanced Scalability:
Shardeum’s dynamic state sharding breaks down the blockchain network into multiple shards, each capable of processing transactions independently. If SYNTHR faces limitations in handling a growing user base and increasing transaction volume, Shardeum’s dynamic state sharding and linear scalability offers the perfect solution.
2. Atomic & Cross Shard Composability
Atomicity refers to the property of a transaction where it either fully succeeds or fully fails, with no partial changes.
To understand how this works, let’s consider a multi-step swap transaction on SYNTHR involving two different shards. Each shard has nodes responsible for processing transactions within that shard. When a multi-step swap transaction is initiated, it involves executing some steps across multiple shards simultaneously, such as validating the availability of assets, updating ownership records, and executing asset transfers.
With Shardeum’s transaction-level consensus, these steps can be grouped into a single atomic transaction, ensuring that either all the steps succeed or none of them takes effect. And because transactions are processed individually on Shardeum, transactions that affect multiple shards do not risk the possibility of being confirmed in one shard, but getting rolled back in another shard retaining composability while achieving parallel transaction execution. The network, in essence, will achieve instant finality and low latency.
3. EVM Compatibility:
SYNTHR, being built on the Ethereum Virtual Machine (EVM), can seamlessly integrate with Shardeum as it is EVM compatible. The compatibility enables SYNTHR to use its existing smart contracts, tools, and developer ecosystem without the need for major modifications to speed up the integration process.
4. Robust Security:
Shardeum provides a secure and permissionless environment for transaction validation and node participation using solid consensus mechanisms – Proof of Quorum (PoQ) and Proof of Stake (PoS), which will also help the network to auto-rotate the leaderless validators on the network regularly.
This security framework can help SYNTHR safeguard syAssets and ensure the integrity of its platform.
5. Explorer Interface:
Shardeum’s plan to adopt an explorer with a similar interface to EtherScan.io offers a seamless user experience for SYNTHR users as the familiarity of the interface ensures a smooth transition by reducing their learning curve.
How will Shardeum’s Users Benefit from SYNTHR?
Following are some of the great opportunities awaiting users of Shardeum and SYNTHR in the times ahead.
1. Access to Synth Assets:
SYNTHR specializes in synthetic assets, allowing Shardeum to leverage its large ecosystem and integrate a wide range of synthetic assets into its ecosystem. This partnership can enhance the utility and diversity of dapps deployed on Shardeum while attracting individuals/institutions to take advantage of this synergic collaboration.
2. Deeper Liquidity Pools:
Through the partnership, Shardeum can tap into SYNTHR’s liquidity pools, allowing for deeper liquidity and increased trading volumes within the Shardeum ecosystem.
3. Cross-Chain Interoperability:
Through the partnership, Shardeum can collaborate with SYNTHR to develop cross-chain interoperable solutions, enabling Shardeum users with seamless asset transfers and transactions between multiple blockchain networks..
SYNTHR is shooting to reach the mainnet in Q3 of 2023 – around the same time when Shardeum launches its mainnet based on the current roadmaps of both the projects. We would like to wish and see SYNTHR take the synthetic asset industry to a whole new level in the years ahead to help decentralize and secure the world of finance!
- Website: https://synthr.io/
- Discord: https://discord.gg/KkUzFPanf5
- Twitter: https://twitter.com/synthr_defi
Disclaimer: In no event shall Shardeum Foundation, “licensor,” its associates, its employees, its contractors, its board members, and its partners be liable for any special, direct, indirect, incidental, exemplary, or consequential damages, expenses, lost profits, lost savings, business interruption, lost information, or any other damages arising out of the use or inability to use the Shardeum blockchain, its layer one technology, its derived or compiled software, or its source code, even if such party has been advised of the possibility of such damages and notwithstanding the failure of essential purpose of any remedy. In no event shall the licensor be liable under any theory of liability, whether in an equitable, legal, or common law action arising hereunder for contract, strict liability, indemnity, tort (including negligence), or otherwise, for damages which exceed $1,000 and notwithstanding the failure of essential purpose of any remedy.
Last Updated on October 26, 2023