Back in 2018, we supported Synthetix to launch a stablecoin. Today, Synthetix is one of the most prominent DeFi protocol offering different synthetic assets. Recently, cryptecon was asked to support Synthetix again to develop a decentralized futures contract.

The original concept is based on a dual-token system. Demand fluctuations for the stablecoin, named sUSD, are absorbed by a collateral coin, called SNX. Our previous analysis showed that under reasonable assumptions and parameters, SNX holders’ incentives are aligned with the system’s goal of exchange rate stability. Thus, SNX holders sell or buy sUSD depending on the prevailing valuation pressure in order to keep its value close to USD 1. The past three years have proven that the incentives are aligned, and synthetics can create coins that are stable in value.

Today, Synthetix plans to add perpetual futures to the ecosystem. Traders receive or pay a funding rate depending on whether there are more short or long positions open. This funding rate incentives traders and arbitrageurs to balance positions. In addition, some of the funds will be added to the debt pool to ensure the system's stability. Cryptecon supports Synthetix using mechanism design and simulation techniques to find the optimal design.

See also our previous report for Synthetix (former Havven).