Overview
Hedera is an EVM-compatible L1 with high throughput and low, fixed fees, leveraging the unique consensus algorithm hashgraph. This integration proposes the deployment of Synapse Bridge on Hedera, enabling seamless asset transfer and broader interoperability across the web3 ecosystem.
This integration offers the potential to generate significant increases in TVL and volume for Synapse Protocol, as well as create exposure of the $SYN asset to retail and institutional investors on Hedera, considering:
Hedera's Technical Advantages: Its high-performance network ensures rapid transaction finality and low-cost, fixed-fee operations, regardless of network traffic.
Accelerating DeFi Ecosystem: Although the DeFi ecosystem on Hedera has just begun, it’s showing accelerated growth with approximately $80M in TVL (a 260% increase in '23) and $8M in 24-hour volume (a 2,000% increase in '23), according to DeFi Llama.
SaucerSwap Partnership: As the premier DEX on Hedera, SaucerSwap's existing infrastructure and committed retail and institutional user base will support funding of liquidity pools and subsequent bridging activity.
Hedera Mainnet Metrics:
• 37B transactions on mainnet to date
• $425M in on-chain volume; $105M in TVL (incl. liquid staking)
• 1.39M yearly active accounts
Motivation
Expanding DeFi Reach: Leveraging Hedera's network to extend Synapse's interoperability capabilities, offering users a wider range of cross-chain transactions. Additionally, because interoperability is currently lacking on Hedera, this integration offers opportunities to capitalize on market inefficiencies.
Market Penetration: Utilizing Hedera's growing ecosystem and SaucerSwap's established presence for immediate market access and retail user engagement. Notably, Hedera retail and institutional users have requested greater interoperability with other EVM networks; this integration would unlock new liquidity, exposure for the $SYN asset, and user adoption adoption opportunities.
Innovation and Efficiency: Combining Hedera's high-performance L1 with the Synapse Protocol to offer fast, secure, and cost-effective cross-chain solutions that enable Hedeara developers to build cross-chain applications utilizing Synapse.
Implementation
It’s proposed that Synapse initiates its deployment on Hedera by integrating a network bridge. This bridge should support key assets like majors (e.g., WETH, WBTC) and stablecoins (e.g., USDT, USDC, DAI).
Bridged ERC-20 tokens are required to be wrapped as Hedera Token Service (HTS) tokens, while retaining the ERC-20 token standard, ensuring Hedera ecosystem compatibility. As with other EVM networks, Hedera offers support for MetaMask, ensuring a seamless bridging experience for both developers and retail users.
SaucerSwap Labs proposes a 5-epoch, 10-week 'LARI' incentive program to reward liquidity providers in a $SYN concentrated liquidity pool on SaucerSwap V2. The proposed allocation is 2%, representing 55,934 $SAUCE tokens.
SaucerSwap plans to shift incentives towards pools containing Synapse-bridged assets beyond $SYN. This shift will focus on supporting stablecoin pools, as well as WETH/HBAR and WBTC/HBAR pools. For context, relevant tokens possess TVL as follows:
Tokens & TVL
USDC[hts] $517k
USDT[hts] $305k
DAI[hts] $74k
WBTC[hts] $309k
WETH[hts] $180k
In the above table, the [hts] subscript denotes assets bridged through hashport, a default bridge of the Hedera network, which are currently deposited in SaucerSwap liquidity pools. Comparable TVL is expected to migrate to pools containing Synapse-bridged assets by virtue of demonstrated demand and flexible incentives.
Please note that this statement expresses an intention rather than a legally binding commitment, contingent upon the feasibility and availability of resources in the future.
Conclusion
In conclusion, the proposed deployment of Synapse on Hedera aims to expand the influence of Synapse to a currently untapped market. By combining Hedera's high-throughput, low-cost network with Synapse's interoperability solution, this integration will unlock new liquidity and users for the Synapse protocol. The role of SaucerSwap and the planned LARI incentive program are designed to catalyze this integration, positioning it to generate substantial TVL, transaction volume, and value for $SYN token holders.
