SNXweave Weekly Recap 166
January 29, 2025
The following post contains a recap of news, projects, and important updates from the Spartan Council and Core Contributors from last week.
👉TLDR
- Gasless 1-click-trading on Optimism
- Overview of incentives programs and promos running on Synthetix
- Leveraged Token Rally
- Decembrrr Base LP incentives extended
- Rewards for sUSD depositors on Infinex
- Overtime Markets free bets
- TLX has become Synthetix Leverage
- Leveraged token explainer article summary
- Leveraged tokens vs. perpetual futures explainer article summary
- CyberDEX V3 Account creation and collateral deposit phase is live on Base mainnet
- $TRUMP, $MELANIA, $S (Sonic) Perps are now available to trade on Synthetix Exchange
Spartan Council and SIP updates
While there was no meeting last week, we’ve still got a lot of updates for you guys today — so let’s dive right in. ICYMI, Synthetix released gasless 1-click trading on Optimism! You can now trade any market on the Optimism network with no wallet confirmations, and no gas fees. This release comes alongside some responsiveness improvements and fixes on Base, so if you reported abnormal response times your feedback is appreciated. Head over to Synthetix Exchange and start your 1-Click trading session today to experience seamless, zero-cost trading on both Optimism and Base!
Synthetix also has some incentive programs and promos that are ongoing, including the Leverage Tokens Rally, Decembrrr base LP incentives, Infinex sUSD depositor rewards, and Overtime free bets. Let’s review what’s left of each of these:
Leveraged Token Rally: Rewarding everyone who tries out Synthetix Leveraged Tokens, which are a user-friendly way to get leveraged exposure to crypto assets featuring auto-rebalancing, no margin management, no liquidations, and the ability to be transferable.
- This is a 5-week rewards campaign, with 4 weeks remaining, for traders who mint Leveraged Tokens
- 15,000 OP and 30,000 USDC are up for grabs weekly
- Starting this week, rewards are distributed pro rata based on generated volume, rather than fees.
Decembrrr incentives for LPs on Base have been extended for staking $USDC and stataUSDC on Base
- 2 weeks left
- 15,000 SNX and 20,000 USDC distributed weekly
$sUSD holders can farm extra rewards by depositing sUSD on Infinex
- 5 weeks left
- 5,000 OP and 5,000 SNX distributed weekly
- This past week, there were 148 users who deposited 1000 or more sUSD and qualified for the random Patron NFT drawing — the winner was Bitloin1!
- To enter for next week, make sure to deposit 1000 or more $sUSD into your Infinex account. Deposits will also be earning ~28% APR at today’s rates.
Overtime Markets is giving away free bets of 10 OP to eligible Synthetix Exchange traders and SNX stakers
- 1,639 wallets that interacted with Synthetix in last 30 days are eligible
- Check if you’re one of them here
And to revisit the topic of leveraged tokens, Synthetix released an explainer article on how Synthetix Leveraged Tokens works, while also giving some context on the release. For some quick background, Synthetix recently acquired TLX and has since relaunched it as Synthetix Leverage, the protocol’s very own permissionless, non-custodial leveraged token platform built on Optimism. It enables users to mint and redeem leveraged tokens (LTs) for over 70 assets with up to 10x leverage, where all LTs are backed by Synthetix perpetual futures contracts.
Now in summary of the explainer article, Synthetix launched leveraged tokens on Optimism as part of a broader shift to offer user-friendly tokenized vaults and strategies. These tokens represent leveraged positions in assets like ETH or BTC, aiming to multiply price movements by a set factor — such as 3x for ETH3x. The main advantage of these tokens is their ease of use compared to manually managing leveraged positions, as they offer transferability, fungibility, composability, and automatic protection from liquidation.
Leveraged tokens have been around in traditional finance and centralized crypto exchanges, but Synthetix aims to enhance them in DeFi. These tokens can be customized based on factors like the underlying asset, leverage level, and how leverage is achieved (e.g., through derivatives or margin positions).
The most important considerations to consider for leveraged tokens are
- Leverage level and asset (e.g., BTC3X, DOGE5X)
- Source of leverage (derivatives, margin trading)
- Rebalancing mechanics (to maintain the target leverage ratio)
- Minting and redeeming processes, including potential fees and trading costs
However, financial performance can be impacted by:
- Tracking errors: due to fees, cost of leverage (borrowing capital), and trading costs.
- Volatility decay: where leveraged tokens may underperform in a volatile market, as constant rebalancing may cause buying at highs and selling at lows.
Overall, the goal is to provide a safe, transparent, and efficient way for users to gain leveraged exposure in DeFi, with careful attention to the challenges of leverage management, volatility decay, and fees. Users can try out the current tokens at leverage.synthetix.io and follow the latest updates via Synthetix’s Telegram channel.
And while we’re on the topic, Synthetix released an additional article comparing leveraged tokens to perpetual futures to help users decide which is a better strategy for them. While both instruments amplify exposure to underlying assets, they behave differently depending on market conditions due to their distinct mechanisms.
So let’s briefly recap this article and the difference between the two:
- Leveraged Tokens: maintain a fixed leverage through automatic rebalancing, adjusting the position whenever the leverage threshold is hit. This mechanism helps prevent liquidation during adverse price movements but can result in volatility decay in flat or volatile markets.
- Perpetual Futures: contracts allow users to take leveraged positions, but unlike leveraged tokens, the leverage factor fluctuates with the price of the underlying asset. They don’t have an automatic rebalancing mechanism, which means they can face liquidation if the market moves too far against the position.
The article also goes over various market scenarios, including:
- Trending Markets: Leveraged tokens outperform perpetual futures because their rebalancing increases exposure as prices rise, amplifying returns. Perpetual futures see their leverage decrease, leading to lower returns.
- Price Movements Leading to Liquidation: Leveraged tokens reduce exposure through rebalancing when prices move against the position, protecting against liquidation. Perpetual futures lack this protection and can be liquidated.
- Flat or Volatile Markets: Leveraged tokens suffer from volatility decay due to frequent rebalancing, underperforming compared to perpetual futures, which don’t face this issue.
- Continuous Adverse Price Movements: In prolonged adverse trends, leveraged tokens experience margin decay despite rebalancing, though they may last longer than perpetual futures, which are more likely to get liquidated.
In summary:
- Use leveraged tokens in trending markets to benefit from their rebalancing mechanism.
- Use perpetual futures in volatile or sideways markets to avoid volatility decay.
Next, the CyberDEX V3 Account creation and collateral deposit phase has gone LIVE on Base mainnet! V3 is being rolled out in two phases, with this being the first, and V3 markets going live with more than 90+ perpetuals pairs being the second. Phase 2 will happen on February 5th, along with Phase 1’s airdrop’s snapshot. Check out CyberDEX’s step-by-step guide on how to open a V3 account and deposit collateral.
Lastly, $S (the native token of Sonic Labs), $TRUMP, and $MELANIA Perps are now available to trade — find each of these markets on Synthetix Exchange and get trading!