AD Derivatives Podcast | Matthew Liu, Co-Founder & CSO of SynFutures

Welcome to the AD Derivatives podcast led by Director of Derivatives; Greg Magadini.

Featuring: Matthew Liu, Co-Founder and CSO of SynFutures!

SynFutures is a decentralized derivatives exchange platform that allows users to trade futures contracts based on various assets, including cryptocurrencies, altcoins, indices, NFTs, and real-world assets. The platform offers features such as 30-second asset listings, single-token liquidity provision and trading, and rigid risk management. SynFutures has strategic investors and aims to provide accessible DeFi services to retail investors.

Introduction

Welcome to the Amberdata Derivatives Podcast! Today, we have Matthew Liu, Co-Founder and Chief Strategy Officer at SynFutures, a rapidly growing DeFi protocol for trading perpetual and futures contracts on a variety of cryptocurrencies. We’ll dive into the successes and technical aspects of SynFutures and learn about Matthew’s journey to becoming a founder.

Background

Matthew Liu started his career as a trader, managing Deutsche Bank’s Asia rates desk. Despite initial success, he decided to expand his knowledge through an MBA at Northwestern. This led him to roles in managing funds for large companies, fintech, risk management, and eventually blockchain. At Ant Financial, he led the establishment of their global treasury and later spearheaded their financial blockchain business, focusing on tokenization of credit and secondary market trading.

SynFutures: Genesis and Evolution

SynFutures was founded by Matthew and two other partners with an initial idea to offer on-chain term structures for every crypto asset using DeFi. However, they soon realized the scarcity of liquidity and shifted focus to perpetual contracts, which concentrate liquidity and act as leveraged spot products. The platform emphasizes permissionless listing, allowing for a wide range of assets to be traded.

Technical Details and Innovations

• Automated Market Making (AMM): Inspired by Uniswap, SynFutures employs AMM for liquidity and permissionless listing. This structure allows for the creation of perpetual markets for any asset with an on-chain price feed.
• Asset Variety: Initially focused on crypto assets, SynFutures expanded to commodities, FX, and equities through collaborations with large data providers. A notable innovation was the introduction of NFT futures, allowing users to leverage and trade their NFT collections.
• Permissionless Listing: This feature enables a wide variety of assets to be listed and traded, supported by community votes and sponsorships.

Market Making and Liquidity

SynFutures combines passive LPs providing base layer liquidity and active market makers using limit orders. This hybrid model ensures liquidity for both major and long-tail assets. For passive LPs, SynFutures simplifies participation by requiring only one token as margin, unlike spot markets that require two tokens.

Risk Management

• Funding Rate Calculation: For assets without a broad market, funding rates are calculated using price feeds from on-chain or off-chain sources. An EMA mechanism smooths out price feeds for fair value calculation.
• Liquidation Process: Both traders and passive LPs face liquidation if their positions become too risky. A unique feature is the integration of AMM to handle liquidation, ensuring liquidity even when third-party traders do not take over risky positions.

Performance and Growth

SynFutures has achieved significant success with $202 billion in cumulative volume and $200 million in open interest.

Key factors include:

• Network Support: Launching on Blast and Bas networks provided substantial initial traffic and liquidity through incentive programs like the Big Bang competition.
• Incentive Programs: Airdrops and other incentives have been crucial in bootstrapping user growth and liquidity.

Future Plans

• Token Launch: SynFutures plans to launch a token in Q3, which will provide platform-level functions such as fee discounts and staking incentives.
• Expanding to Non-linear Derivatives: While currently focused on linear products, SynFutures is exploring options for offering non-linear derivatives like options, contingent on the growth of on-chain liquidity.

Conclusion

Matthew Liu’s journey from traditional finance to DeFi highlights the innovative spirit driving SynFutures. The platform’s success is built on a robust technical foundation, strategic market-making mechanisms, and strong community and network support. As SynFutures continues to grow and innovate, it is poised to play a significant role in the evolving DeFi landscape.

SynFutures Website: https://www.synfutures.com/

AMBERDATA DISCLAIMER: The information provided in this research is for educational purposes only and is not investment or financial advice. Please do your own research before making any investment decisions. None of the information in this report constitutes, or should be relied on as a suggestion, offer, or other solicitation to engage in, or refrain from engaging, in any purchase, sale, or any other investment-related activity. Cryptocurrency investments are volatile and high risk in nature. Don't invest more than what you can afford to lose.