What is Kwenta? Everything you need to know about the leading Synthetix Perps integrator
TLDR;
- Kwenta, which spun out of Synthetix, is the leading integrator for Synthetix Perps by trading volume. It offers an efficient, flexible, and cost-effective trading experience for users.
- Synthetix Perps enable traders to hedge, speculate, leverage trading strategies, capitalize on arbitrage, and diversify portfolios using on-chain perpetual futures.
- Kwenta integrates with Synthetix Perps to provide an intuitive interface, advanced charting tools, and a user-friendly platform for trading and managing portfolios.
- The KWENTA token serves for staking and governance, with a four-year distribution plan and incentives to drive growth within the Kwenta DAO.
- Kwenta's 2023 roadmap focuses on expanding capabilities, enhancing user experience, upgrading infrastructure, and empowering the community.
- Upcoming features include Kwenta SDK, TWAP perps and Synthetix V3 integration.
- Unique advantages include support for Synthetix Perps, smart-margin upgrades, a broader asset range, Lyra integration, and a dedicated SDK.
DeFi has seen a surge in demand for permissionless and low-fee trading protocols. Synthetix Perps emerged as the most popular choice amongst DeFi users, offering an efficient, flexible, and cost-effective trading experience. Kwenta is a user-friendly and feature-rich integrator that harnesses the power of Synthetix Perps, making it accessible to everyday traders.
By integrating with Synthetix Perps, Kwenta provides traders access to various assets, including more than 40 trading pairs. With over $10 Billion in cumulative volume and thousands unique traders, Synthetix Perps is quickly becoming the go-to trading protocol for many traders. To date, Kwenta has facilitated 98% of the total trading volume compared to other integrators, solidifying its position as the preferred derivative platform.
How do traders use Synthetix Perps?
Synthetix Perps is growing to be one of the go-to derivative products traders use. Synthetix Perps offer an efficient trading experience, allowing traders to implement various trading strategies such as:
Synthetix Perps enable traders to hedge their positions against market volatility by taking long or short positions on various assets. For instance, if a trader believes a particular asset's price is about to decline, they can open a short position using Synthetix Perps to protect their holdings.
- Taking positions on assets without holding them:
One of the primary benefits of Synthetix Perps is the ability to gain exposure to an asset's price movement without holding the asset. This enables traders to speculate on the price movements of cryptocurrencies, commodities, and forex markets without the need to own or manage them directly with immense capital efficiency, allowing traders to use up to 50x leverage.
- Leverage trading strategies:
Synthetix Perps allows traders to employ leverage in their trading strategies. Using leverage, traders can open positions larger than their available capital, potentially amplifying their gains or losses. This feature is helpful for experienced traders who understand the risks involved and wish to maximize their potential returns.
Traders can utilize Synthetix Perps to capitalize on arbitrage opportunities. Arbitrage involves exploiting price discrepancies between different platforms for profit. A trader identifies an asset trading at a lower price on one platform and a higher price on another, profiting from the difference.
- Portfolio diversification:
Traders can use Synthetix Perps to diversify their portfolios by gaining exposure to a wide range of assets. By trading various perpetual contracts, traders can spread their risk across multiple assets, potentially reducing the impact of adverse market movements on their overall portfolio.
Synthetix Perps provide traders with a flexible and powerful tool to navigate the complexities of the DeFi ecosystem. Whether hedging against market volatility, taking positions without holding assets or leveraging sophisticated trading strategies, Synthetix Perps offer a versatile solution for traders looking to capitalize on the opportunities presented by the ever-evolving world of decentralized finance.
What is Kwenta?
Kwenta, originally developed as part of the Synthetix ecosystem, later spun off into its own distinct entity to better focus on providing a powerful integrator for Synthetix Perps. Kwenta aims to provide a user-friendly and feature-rich interface for traders, ensuring seamless access to the Synthetix Perps platform. The creation and distribution of the Kwenta token ($KWENTA) play a vital role in this process, supporting the growth and development of the Kwenta DAO.
Kwenta's user experience is tailored to provide traders with an intuitive interface to access Synthetix Perps. The platform design ensures that novice and experienced traders can easily navigate and utilize its features.
Kwenta's trading interface is designed to streamline the trading process. Users can easily select the desired trading pair, input trade size, select leverage and execute the trade with just a few clicks. Kwenta displays essential information for each pair, such as available balance, and current fees, ensuring traders have all the necessary information before executing a trade.
Kwenta allows traders to monitor and manage their portfolios within the platform. The bottom section displays the user's current holdings, including the value of each synthetic asset, the overall portfolio value, and the historical performance. This feature allows traders to track their investments and close any positions as they see fit.
Kwenta’s Tokenomics
The KWENTA token incentivizes coordination and growth within the Kwenta DAO. It has two primary functions, staking and governance. With an initial supply of 313,373 tokens, KWENTA has a four-year distribution plan, starting with weekly emissions of 14,463.37 KWENTA in the first week and gradually decreasing to 200 KWENTA by the end of the fourth year. The total supply at the end of four years will be 1,009,409.43 KWENTA.
Token Distribution
The KWENTA token distribution is as follows:
- 30% - Synthetix Stakers via Aelin (Complete)
- 5% - Early Synth Traders (Complete)
- 5% - Investment via Aelin (Complete)
- 25% - Community Growth Fund
- 15% - Core Contributors
- 20% - Kwenta Treasury
Inflation and Fee Allocation
- 20% of inflation goes to the treasury
- 20% is dedicated to trading rewards (with 15% reserved for future trading incentives)
- The remaining 60% is allocated to stakers.
Inflation is minted once a week by a keeper, although anyone can call the mint function if the Kwenta DAO keeper cannot mint rewards. Minting rewards stand at 1 KWENTA per mint.
Vesting Mechanism
KWENTA printed via inflation will undergo a 1-year lock-up period. The lock-up mechanism will begin with an 90% fee for vesting KWENTA early which will decay linearly. If tokens are vested early, the percentage of tokens that are still applicable to the fee will be split evenly between the treasury and stakers. After one year, the fee would reach 0% and no tokens would be burned when vesting KWENTA.
Exploring Rewards and Incentives: $KWENTA and $OP Rewards
Kwenta offers a variety of incentives for its users, including both $KWENTA and $OP rewards, with the latter being common to all Synthetix Perps front-end integrations, with some front-end providers providing further incentives to trade. These incentives aim to encourage user participation and growth within the platform.
With the launch of Kwenta's v2 Perps engine, stakers now earn $KWENTA token rewards for staking and trading. Holders of liquid $KWENTA tokens may also have the opportunity to earn incentives as liquidity providers. All these opportunities are accessible from the Kwenta dashboard, alongside other features available on the Kwenta exchange.
To help bootstrap an active market beneficial for the network, the Synthetix Treasury Council has proposed allocating OP held by the Treasury Council to a rewards program for users. OP rewards will be distributed weekly across integration UIs via a Merkle drop on Optimism. It is worth noting that Kwenta provides additional rewards in the form of $KWENTA tokens, setting it apart from other front-end integrations.
The total $OP rewards will be distributed weekly over the course of 20 weekly trading epochs:
- Week 1: 10,000 OP
- Weeks 2-3: 100,000 OP
- Weeks 4-20: 300,000 OP
Users are assigned a trader score based on their total fees paid and time-averaged open interest (raw score). The trader score, including a multiplier, is then calculated, with multipliers defined by tiers based on the total debt shares value outstanding at snapshot.
- 0-$1,500: 1.00
- $1,501 - $3,000: 1.05
- $3,001 - $6,000: 1.075
- $6,001 - $12,000: 1.1
- >$12,000: 1.15
OP Incentive Program Mechanics
1. At the end of each trading epoch, Kwenta will send a list of trader addresses to smart contract (SC) wallet mappings.
2. Synthetix Core Contributors will perform the necessary calculations (see above), checking trader addresses for SDS balance to confirm the estimated staked SNX multiplier.
3. A list of addresses and OP amounts to send will be generated.
4. Kwenta will receive OP to distribute to its smart margin mappings.
The $KWENTA rewards come directly from the Kwenta platform and are earned through staking and trading. On the other hand, $OP rewards are allocated by the Synthetix Treasury Council as part of a rewards program for Perps on Optimism. While both incentives aim to encourage user engagement and growth, they stem from separate sources and reward different aspects of user participation.
Kwenta's Roadmap and Upcoming Features
Q3-4 2023: Upgrading Infrastructure and Empowering the Community
Kwenta is planning to make significant updates to its platform in the coming quarters, focusing on various aspects of the system to improve its efficiency and performance.
The first major update revolves around the introduction of Staking V2. In this improved system, KWENTA staking will begin to share early-vest penalties 50/50 with the treasury. Furthermore, it will include a new method for transferring escrow, providing more flexibility and efficiency in staking operations.
Alongside this, Kwenta is setting sights on implementing TWAP Perps. These Perpetual Futures, utilizing Uniswap liquidity, are modeled after Synthetix Perps V2. The introduction of TWAP Perps is aimed at putting pressure on fees and expanding asset availability. In addition, new features such as quanto positions and atomicity will be offered. As part of this effort, a testnet competition is set to launch on Arbitrum soon.
In terms of infrastructure, Kwenta is preparing to adopt Synthetix V3. This new solution will provide a more balanced liquidity management system, benefiting any entity engaged in developing derivatives liquidity. It will serve as a powerful infrastructure to help bootstrap operations.
The introduction of Delegated Trading is another significant step forward. This trading mechanism will enable profit sharing for copy trading or script trading, working in tandem with the Kwenta SDK. This new mechanism is set to open up fresh opportunities for traders to leverage successful strategies.
Finally, the platform focuses on governance improvements with the design of DAO 2.0. This updated DAO framework will enhance the autonomy of the DAO system while retaining the agility offered by a council-centric model. Although still in the research and development phase, DAO 2.0 holds great promise for advancing Kwenta's decentralized governance.
A complete list of upcoming Kwenta features can be found here.
Kwenta's Unique Advantages
Kwenta has quickly gained attention and traction in the DeFi ecosystem by offering advanced trading features, diverse assets, and a user-friendly interface. Kwenta aims to further distinguish itself from other Synthetix Perps integrators by enhancing its platform and offerings. Kwenta has upgraded its smart-margin implementation to support Synthetix Perps V2 integration.
Kwenta is committed to working with Synthetix to expand the markets available for trading on its platform. Advanced features such as traditional smart-margin optionality, new order types, and strategies will be introduced, allowing traders to use their collateral more efficiently and have greater control over their trading experience. This means that users can expect access to more popular assets in the coming months, providing them with a wide range of trading opportunities.
Furthermore, Kwenta's collaboration with Lyra aims to integrate Lyra's options trading experience into Kwenta's suite of spot and derivatives trading tools. This allows traders to combine various perps/options strategies in just a few clicks. This integration puts Kwenta in an ideal position to become the one-stop shop for all derivatives in DeFi.
Kwenta has established itself as a leading integrator for Synthetix Perps, providing a powerful and user-friendly trading platform for the DeFi ecosystem. The continuous development of advanced trading features, an expanding range of assets, enhanced user experience, and a strong commitment to community involvement sets Kwenta apart from other Synthetix Perps integrators. With an ambitious roadmap for 2023, Kwenta aims to improve its offerings further and establish its position as the go-to platform for traders seeking crypto Perps. As the DeFi landscape continues to evolve, Kwenta is well-positioned to play a vital role in shaping the future of decentralized trading by offering cutting-edge tools and services to empower traders to succeed in this dynamic and ever-changing environment.