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Explore SynFutures V3 and the Oyster AMM

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SynFutures, a decentralized people exchange, has been making waves in DeFi in recent years. It has high-profile investors, a large user base, and an impressive trading volume, meaning it has all the factors that could make it a project to watch in 2024 and beyond. In this article, let’s dive into SynFutures to understand the project and take a look at what’s so special about its recent product releases and campaigns.

Early stage

SynFutures is a multi-chain decentralized derivatives exchange. The project has the support of many major venture capital firms, including Pantera, Polychain Capital, DragonFly and Standard Crypto, and recently DEX. raised more than $22 million in a Series B funding round. SynFutures V1, the first iteration of the platform, launched in June 2021 and introduced the concept of single-token liquidity via the Synthetic Automated Market Maker (sAMM) model. This allowed LPs to fund any pool in the protocol with a single token, typically a stablecoin.

Single token liquidity generated a lot of attention and interest in the project, which quickly followed its success with the launch of SynFutures V2. V2 introduced permissionless listing, allowing LPs to list all crypto tokens, coins, NFTs and indices in 30 seconds without prior approval. With permissionless listing and single-token liquidity, the project aims to become the leading derivatives destination for small and large assets.

According to Messari reports, V1 and V2 have a cumulative volume of over $23 billion, with over 10,000 users and nearly 250 pairs listed for trading. The achievement is impressive, considering the project has yet to announce a token. Once this announcement is made, we can expect increased trading activity from new users and airdrop farmers, which will likely increase its trading parameters, and the fees earned from these activities will also increase.

Launch of V3

The protocol has just launched SynFutures V3 on the Blast mainnet. Like previous versions, V3 introduces an upgrade that will have a major impact on liquidity providers (LPs) and traders. The new version comes with a new AMM model called Oyster AMM (or oAMM), allowing LPs to provide concentrated liquidity for any derivatives pair listed on the platform. LPs can already provide single-token liquidity, but with the new AMM, LPs will also be able to provide concentrated single-token liquidity. This new feature could improve capital efficiency for liquidity providers and provide them with higher returns while reducing slippage for traders; it’s a win-win solution for all parties involved.

How V3 works

According to SynFutures V3 White Paper DraftThe Oyster AMM model was inspired by the synthetic Automated Market Maker (sAMM) model from SynFutures V1 and the Concentrated Liquidity Market Maker (CLMM) model from Uniswap V3.

In the order book model, liquidity is normally concentrated around the current price of the asset, while the AMM model spreads it across the entire price range. This makes AMMs less effective for LPs and leads to more slippage for traders. To avoid this, Oyster introduces concentrated liquidity which allows LPs to choose a range around the current price in which their liquidity would be active. Additionally, Oyster will also allow traders to place limit orders using the order book model. These orders are then placed on the AMM curve as another source of liquidity.

While Oyster AMM is not the first time a project has attempted to combine AMM with an order book, previous attempts have mostly followed a hybrid system in which some parts of the transaction take place off-chain while others take place in a chain. Such a system ultimately depends on centralized administrators who control the off-chain part of the transaction, thus making it neither decentralized nor trustless. Such systems are also exposed to possible backdoors and other vulnerabilities. Oyster, on the other hand, is entirely on-chain, ensuring transparency and increased security.

Combining AMM and Orderbook on-chain is a complex task. Therefore, to ensure that the two types of liquidity complement each other, Oyster uses a structure called “Pearl”, which is a collection of all concentrated liquidity covering a price level and all open limit orders at the same price. The image and explanation below provide a step-by-step account of how the model works and how an order is executed in Oyster AMM.

Image from SynFutures blog
  1. When a market taker places a new order, Oyster first checks the pearl at that price.
  2. It then takes liquidity from the limit orders present on this Pearl. The trade is completed if the liquidity of the limit orders is sufficient to execute the market taker’s order.
  3. Otherwise, Oyster AMM then withdraws cash from the AMM. This increases the price and moves it along the AMM curve.
  4. If the order is executed on the curve, the transaction ends. Otherwise, the price continues to increase until the next Pearl is reached.
  5. The same process is followed again, where the liquidity from the limit order is first fulfilled and then the liquidity from the AMM is taken.
  6. This process continues until the entire order is fulfilled.

This dual approach allows SynFutures V3 to have significantly higher capital efficiency than most of its peers in the derivatives space. It even offers better capital efficiency than a spot Dex like Uniswap V3. The table below from their white paper shows the capital efficiency comparison between UniSwap V3 and SynFutures V3 in a specific range.

Model Range Increased capital efficiency
AMM oyster 99.99% to 100.01% 39,997.0x
UniSwapv3 99.99% to 100.01% 20,000.5x

SynFutures and Oyster Odyssey

To celebrate the launch of V3 and Oyster AMM, SynFutures announced the “Oyster Odyssey” campaign which rewards users with points for providing liquidity on the protocol. The system is designed to reward user engagement and contribution to the SynFutures ecosystem.

The points system is designed to reward users who provide liquidity and bring new users to the platform. There is also a mystery box mechanic and a wheel spinning system which adds an element of luck and fun to the campaign.

Trade on SynFutures V3 to learn more.

Conclusion

Efficient use of capital is essential in DeFi, especially in the early stages, where total available liquidity is limited. Even though AMM models have democratized the provision of liquidity, they suffer from lower capital efficiency. Improving it is a crucial step in making DeFi mainstream. SynFutures’ Oyster AMM is one such enhancement that allows a trader to theoretically execute a zero-slippage trade while remaining fully on-chain; This is a welcome development.

The post Exploring SynFutures V3 and Oyster AMM appeared first on CryptoSlate.

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