Decentralized derivatives protocol Synthetix is the latest project aiming to close the usability gap between centralized and decentralized exchanges, with plans to launch the Synthetix v3 protocol and its decentralized exchange front-end, called Infinex.
Synthetix founder Kain Warwick told Cointelegraph that Infinex — a decentralized perpetual futures exchange front-end that enables trades on Optimism (OP) — is the “missing component” that could bring more users to DeFi once it launches in Q4.
We are entering DeFi’s greatest chance to take on centralised finance.
Let’s start talking plans:https://t.co/lGWMD7WZdj
— Infinex (@infinex_app) August 13, 2023
“From a trading perspective, DeFi is pretty close to feature parity with CeFi. We’ve got the liquidity, we’ve got the markets, we’ve got the depth, we’ve got the execution time. But we’re still missing a key component.
“Right now, you still need to go jump through the hoops of self custody and all of these other little things that add serious friction. For the everyday user that’s used to trading on a CEX this is a level of friction that makes it really hard to use.”
Infinex will be among a growing roster of projects aimed at increasing the adoption and usability of DeFi protocols. On Sept. 7, a new protocol called Bumper launched with the goal of protecting users’ assets from crashes by pricing contract premiums based on actual volatility rather than past volatility.
On Sept. 6, DyDx Foundation CEO Charles d’Haussy told Cointelegraph that the exchange will soon offer a “purely decentralized” order book as it seeks to address the slow performance that comes with on-chain order books.
DeFi’s friction points
Giving more detail about the upcoming launch, Kain explained that Infinex’s primary focus would be to make it easier for traders to access decentralized perpetuals by removing friction points such as convoluted accounts controls and having to sign off on every transaction.
“Essentially, it’s the features and experience of a centralized exchange powered by decentralized infrastructure.”
In March, Maple Finance co-founder Sid Powell argued that institutional adoption of DeFi could only be achieved by reducing the friction for them. That month saw Maple Finance launch downloadable monthly interest statements that lenders can take to auditors or accountants.
If we want more institutional adoption of DeFi then we have to reduce friction for them. @maplefinance interest statements which a Lender can take to an auditor, accountant or fund admin. https://t.co/JqlW4CJlfp
— Sid Powell (v2) (@syrupsid) March 28, 2023
Meanwhile, Kain noted that due to Infinex just being a “front-end” to the underlying derivatives protocol, it would not initially impose any geoblocking restrictions or Know Your Customer limits on users.
While many other decentralized exchanges such as DyDx and Uniswap have imposed such measures, Kain said that the control of Infinex would be relegated to a mode of decentralized governance.
“It’s the SNX token holders that can decide whether they want to geo block or geo fence or KYC or whatever. They can decide and vote on whatever they want.”
Infinex will be rolled out alongside Synthetix v3, the project’s newest forthcoming decentralized derivatives protocol. Kain explained that Synthetix v3 forms the underlying architecture of the Infinex front-end and will include a “bunch of upgrades” to how traders are able to provide and access liquidity.
Curious about Synthetix Perps V3?
Dive in with @snxambassadors on Spartan Spaces, Thursday, 6 pm UTC.
Explore new features, integrator possibilities, and benefits of building on V3 infrastructure.
— Synthetix ⚔️ (@synthetix_io) September 5, 2023
“The biggest change with Synthetix v3 is permissionless markets. These permissionless markets will allow for someone to do whatever kind of financial engineering they want, come up with a new market and deploy it and attract liquidity.”
“It’s a lot like a Uniswap style permissionless pool,” he added.
Decentralized derivatives have grown in popularity among fund managers and traders in recent months, with Apollo Capital Chief Investment Officer Henrik Andersson telling Cointelegraph that the nascent sector looks poised to eventually become the next major boon for DeFi as a whole.