SYN token liquidity is currently fragmented across a variety of liquidity pools on multiple blockchains, as well as centralized exchanges. With both Coinbase and Huobi recently listing SYN, we believe that efforts to improve SYN liquidity on centralized exchanges should be explored.
Low liquidity on centralized exchanges make it difficult for investors to transact in size without incurring large slippage, which reduces the health of markets. A stronger presence on centralized exchanges will help expand the SYN user base and attract additional users to onboard into DeFi. We believe that improving SYN’s liquidity across both decentralized and centralized venues is a net benefit to all holders, specifically as the protocol evolves.
For context, the SYN/USD pair on Coinbase is currently doing approx. 250k SYN/day in volume, accounting for only 4% of global volume.
In order to bolster liquidity, we’ve reached out to a number of top tier market makers to understand how they could provide SYN liquidity across a variety of exchanges.
After careful consideration, we are putting forward this proposal for the Synapse DAO to approve Amber as our market making partner. Amber is one of the most well regarded market making firms in the crypto space. They provide exchange liquidity for some of the most successful crypto protocols and are backed by some of the most well-regarded investors.
- The Synapse DAO would extend a 12-month loan of 3m SYN to Amber for market-making purposes.
- In order to allow Amber to hedge its inventory, especially if the price of SYN significantly increases during the duration of the loan, they have the ability to exercise different call options allowing themselves to partly return the loan in the form of stables. Such a mechanism is standard for market markers.
- Amber will provide liquidity on the following exchanges if/when Synapse is listed on them: Binance, Coinbase, Gate, Huobi, Kucoin, Okex. Amber will also cover Uniswap and Sushiswap, but their priority will be to maintain deep CEX liquidity.
- Amber’s mandate of market making is also subject to 95% uptime
Partnering with Amber is expected to lead to the following benefits for Synapse:
- Significantly improves SYN liquidity on CEXs
- Allows larger amounts of SYN to be traded, with a lower slippage and price impact.
- Ensures prices between CEX and DEX are more closely aligned, via arbitrage, thus increasing trading fees for Dex LPs & POL
- Facilitates the on-boarding of a new user base (which mainly operates on CEX rather than on DEX)
A vote “For” of this proposal approves the loan to Amber.
A vote “Against” this proposal rejects the loan to Amber.