SynFutures is an upcoming derivatives protocol, currently in Beta phase. The team is a combination of crypto natives and Wall Street top guns, with the idea to build a solid infrastructure for future DeFi derivatives on Ethereum and other L2/side chains. In June 2021, SynFutures announced $14mn Series A funding led by Polychain Capital with participation from Framework, Pantera Capital, Bybit, Wintermute, CMS, Kronos, and IOSG Ventures. Earlier in 2021, it announced a seed round backed by Dragonfly Capital and Standard Crypto.
Similar to the traditional financial markets, convergence of futures price to spot index is only guaranteed at the maturity for settlement. Prior to that, futures price follows its own price discovery of the market, although a high correlation is expected with spot price. Thus, the difference or basis between Futures price and Spot Index is an important factor in determining the fair price or Mark Price of Futures. For risk management purposes, a near real time mark price with a stable basis is desirable. The Mark Price for a Futures Contract is defined as Spot Index + Mark Basis, where the Spot Index provides the near real timeness while the Mark Basis keeps the relationship between futures price and spot index stable by applying exponential moving average on past basis.
What makes Synfutures
30-second Asset Listings
SynFuturesDefi List and trade any futures contracts based on popular cryptocurrencies, altcoins, indices, NFTs and real-world assets —you name it!
Single-token Liquidity Provision & Trading
Provide liquidity or take leveraged positions on various assets pairs with a single digital currency via our sAMM model.
Rigid Risk Management
Enter into futures contracts with hard peg to spot prices and secured by best practices in TradFi and CeFi derivatives.
Formally, all of the futures contracts are defined as linear non-deliverable contracts with 10% initial margin and 5% maintenance margin. The definition of a unique market consists of a Spot Index Oracle for a trading pair and Maturity of this contract. For the trading pair of the Spot Index Oracle can be further split into BASE and QUOTE assets, where the QUOTE asset should be an ERC20 token used as the margin for this Futures Contract and the BASE asset has no restriction as long as such oracle is available.
SynFuturesDefi Built on the idea from current constant product AMM for spot trading, Synthetic AMM is designed to provide similar trading experience for futures margin trading. In essence, the sAMM is a market participant with its own margin account similar to other users, but always ready to make prices based on the constant product formula and its current position. Apart from trading, the sAMM contract provides users with interfaces to add and remove liquidity to the sAMM liquidity pool and the sAMM contract also acts as the gateway for users to deposit margin to and withdraw margin from their account.
When the margin balance of an account is lower than its maintenance margin requirement, the account needs to be liquidated. Two approaches for liquidation are provided. Conventional DeFi Approach: Liquidator takes over the position of the liquidated account and provides the required initial margin at current Mark Price.
After successful liquidation, the liquidator will receive the balance of the maintenance margin of the liquidated account as reward. This approach has no market impact as the only change to the system as a whole is the extra margin provided by the liquidator. However, a liquidator willing to provide such margin and take over a risky position might not always be available. Thus full liquidation is desired when such a liquidator appears.
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One of Coinworldstory's longest-tenured contributors, and now one of our news,ico,hyip editors, Verna has authored over 6900+ stories for the site. When not writing or editing, He likes to play basketball, play guitar or visit remote places. Verna, to his regret, holds a very small amount of digital currencies.