Research Summary
The report discusses the upcoming Synthetix v3 upgrade, which is expected to revolutionize the decentralized finance (DeFi) sector. The upgrade will transform Synthetix from a product into a platform, providing infrastructure for more than just liquidity. The report also highlights the potential of Synthetix v3 to compete with major centralized exchanges (CEXs) and decentralized exchanges (DEXs) like DYDX.
Key Takeaways
Synthetix v3: A New Era for DeFi
- Significance of v3 upgrade: The v3 upgrade is expected to significantly increase volume and revenues for Synthetix over the next 12 months. It will transform Synthetix into a platform, providing infrastructure for more than just liquidity.
- Role of Synthetix v3: Synthetix v3 will serve as the base layer for future DeFi applications through the integration and availability of Markets and Pools. This will open the door to endless possibilities of DeFi applications.
- Advantages of Synthetix v3: Synthetix v3 offers a streamlined process for building DeFi applications, reducing build time and operational output. It also provides a high level of flexibility in creating new verticals of markets.
Competitive Landscape
- Competition in the DeFi sector: Despite the aggressive competition in the perpetual dex arena, Synthetix has continually gained a larger slice of the fee revenue, currently second in place to GMX.
- Comparison with DYDX: While DYDX dominates the user acquisition and volume game, its order books and matching system remain centralized. Synthetix v3, on the other hand, offers a decentralized solution.
- Market share: Synthetix currently holds a small market share of ~0.21% of total CEX volume. However, with the launch of v3, it aims to penetrate the existing/total derivatives market further.
Future Prospects
- Launch of Infinex: Infinex, a front-end perp market built on Synthetix v3, is expected to launch in late 2023. It aims to streamline the onboarding and user experience to a point where the user is almost unaware that they are trading on a decentralized exchange.
- SNX Market Share of DEX Derivatives: By 2025, it is expected that total DEX derivatives will exceed 150b per month, with SNX related markets conservatively commanding a 20% market share.
- Price prediction: The report predicts a target range for SNX between $13 and $22 by 2025.
Actionable Insights
- Investigate the Potential of Synthetix v3: The upcoming Synthetix v3 upgrade presents a significant opportunity in the DeFi sector. Investors should explore the potential of this platform as it aims to revolutionize the DeFi landscape.
- Monitor the Competitive Landscape: With the aggressive competition in the DeFi sector, it is crucial to keep an eye on the competitive landscape and the strategies adopted by major players like Synthetix and DYDX.
- Consider the Future Prospects: The launch of Infinex and the expected increase in SNX’s market share of DEX derivatives present promising future prospects. Investors should consider these factors when making investment decisions.
