On-chain derivatives need more capital efficiency to rival centralized exchanges: SynFutures CEO

On-chain
derivatives
trading
volume
registered
an
all-time
high
in
March
when
it
reached
nearly
$317
billion.
Rachel
Lin,
co-founder
and
CEO
of
the
decentralized
exchange
for
perpetuals
trading
(perp
DEX)
SynFutures,
highlighted
to
Crypto
Briefing
that
there
are
still
capital
efficiency
problems
hindering
perp
DEXs’
growth
despite
recent
developments.

Lin
explained
that
the
current
AMM
models
struggle
to
compete
with
centralized
exchanges’
order
books:
despite
offering
better
transparency,
they
struggle
to
address
high
slippage
when
liquidity
is
low,
which
is
a
big
concern
for
investors.

“Like
the
previous
versions,
SynFutures
V3
introduces
an
upgrade
that
majorly
impacts
liquidity
providers
(LPs)
and
traders.
The
new
version
comes
with
a
new
AMM
model
called
Oyster
AMM
(or
oAMM),
allowing
LPs
to
provide
concentrated
liquidity
for
any
derivative
pair
listed
on
the
platform.
In
SynFutures’
V1
&
V2,
LPs
can
already
provide
single-token
liquidity,
but
with
the
new
AMM,
LPs
will
also
be
able
to
provide
single-token
concentrated
liquidity,
ie.
liquidity
that
is
concentrated
within
specific
price
ranges.” 

This
new
feature
could
improve
capital
efficiency
for
liquidity
providers
and
get
them
higher
returns
while
decreasing
slippage
for
traders,
Lin
added.

Increasing
regulatory
scrutiny
is
crashing
volumes

Although
on-chain
derivatives
trading
volumes
showed
a
solid
performance
in
March,
this
momentum
seems
to
be
cooling
down,
as
trading
volumes
in
May
just
surpassed
$175
billion.
This
movement
could
be
tied
to
increased
scrutiny
from
government
organizations,
highlighted
Lin,
mentioning
the
SEC’s
recent
movements
against
Coinbase
and
Uniswap. 

“In
early
March,
we
saw
Bitcoin
break
above
the
heights
that
it
made
more
than
2
years
ago.
Ethereum
inflows
sustained
that
upward
trend
and
altcoins
were
seeing
big
gains
as
well.
All
of
that
momentum
no
doubt
snowballed
and
carried
over
into
the
on-chain
derivatives
market,
among
other
sectors,”
shared
Lin.

Blast
plays
a
key
role
in
on-chain
trading

Ethereum
layer-2
(L2)
blockchain
Blast
has
been
a
key
ecosystem
for
on-chain
derivatives
trading
in
the
past
weeks,
dominating
the
volume
for
most
of
April
and
now
fighting
toe-to-toe
with
Arbitrum
for
such
dominance.

Lin
is
optimistic
about
Blast’s
landscape,
underscoring
SynFutures’
being
one
of
the
founding
projects
on
“what
could
become
one
of
the
biggest
L2s.”
Nevertheless,
the
perp
DEX’s
CEO
stated
that
they
plan
to
deploy
their
platform
on
different
chains,
in
an
effort
to
keep
their
significant
share
of
on-chain
trading
volume.

“New
DEXs
are
entering
the
space
and
deploying
on
new
chains
on
a
biweekly
if
not
weekly
basis,
so
volume
numbers
are
in
constant
flux.
One
chain
will
be
on
top
one
day
and
the
other
may
be
on
top
the
next.
SynFutures
is
a
multichain
DEX,
so
while
V3
launched
on
Blast,
we’re
exploring
deployment
on
other
L2s
in
the
near
future.”