Crypto Great | Bitcoin | DeFi

Synthetix (SNX)

Synthetix is a derivatives liquidity protocol on Ethereum that lets users mint synthetic assets that mimic real world assets, using SNX as collateral.

The Synthetix ecosystem has been expanding rapidly. In recent months, the protocol has undergone major updates to its network including reducing the time for Atomic Swaps, which we covered last month. Synthetix is currently undergoing additional upgrades to its network. To start, the Synthetix team announced that it’s redesigning the Synthetix protocol built on top of new smart contract architecture.

The proposed design will support more features like multi-collateral staking, customizable debt positions, and permissionless synths.

Synthetix V3 aims to implement:
- Permissionless asset creation - Any financial derivative can be built on top of Synthetix V3.
- Better control of credit - Stakers can pick and choose which assets they'd like to collateralize.
- Liquidity as a Service (LaaS) - Synthetix will not just be a protocol to route trading
through. It will be a protocol users build on top of if they're looking to increase liquidity
for any financial derivative on-chain rapidly.

The LaaS model simplifies the provisioning of liquidity for early markets. We first learned about LaaS in January’s portfolio’s update, as Balancer was integrating ways to achieve deep liquidity for its markets.

Elsewhere, Synthetix is working with Socket Tech to allow users to quickly bridge assets to and from Optimistic Ethereum. Synthetix recently passed a proposal to burn fees collected by the fee pool instead of allowing stakers to claim them. By burning these fees, the user's debt will decrease without the user needing to claim rewards.

Balancer (BAL)

Balancer has been focusing on helping to build a multi-chain crypto ecosystem that allows protocols to benefit each other.

To fast track the goal, Balancer deposited 40,000 BAL towards the Ethereum–Optimism bridge liquidity on Multichain. Multichain, previously known as Anyswap, is a cross blockchain router protocol designed to allow users to swap and exchange digital tokens.

With the liquidity now deposited, users are able to bridge, buy and sell the BAL token on the Optimism network.

On August 4, the community reached out to Multichain to add Polygon & Arbitrum support to its router, which is now operational. It just needs to be seeded with BAL liquidity, and users can start bridging.

With Multichain’s support, a proposal was immediately put together and passed on August 7. Balancer will allocate 20,000 BAL for both the Polygon bridge and Arbitrum bridge. This will drive more adoption for Polygon & Arbitrum, and is expected to increase demand in bridging BAL between networks.

Rook

Rook, formally known as KeeperDao, is a protocol that aims to make transactions on Ethereum safer, cheaper, and more dependable.

One of the biggest problems Rook is solving is miner extractable value (MEV). Remember, miners on Ethereum process transactions by organizing them within blocks, and in return they charge users gas fees. However, automated bots can manipulate this system by front running trades and profiting off price discrepancies, which costs human users.

It’s a serious problem. According to MEV-Explore, MEV has cost users across all blockchains over $600 million.

Thanks to the public nature of blockchains, we can see how the Rook protocol helps protect traders from MEV by looking at the transactions of a “whale” trader – an anonymous user who was trading millions of dollars’ worth of crypto.

On May 1, this whale was looking to convert a large amount of ETH into BTC. They first used a protocol called 1inch, which taps into multiple DEXs to find its users the best prices on trades.

The whale attempted to swap 4,300 ETH (about $12 million) in exchange for BTC on 1inch. However, this investor soon fell prey to MEV, thanks to automated bots. These bots offered the miner higher gas fees to process their transactions before the whale’s. And in that time, the token prices changed drastically enough that the bots profited while the whale lost value. As a result, the whale lost $250,000 of their $12 million order to price discrepancies.

A couple hours later, this whale submitted similar trades on Rook that yielded much better results. In total, it swapped about $80 million worth of ETH for BTC and didn’t lose any of it to MEV bots. That’s because Rook veils pending transactions, which means bots can’t see them and can’t front-run the trades.

The whale also received rebates in the form of ROOK tokens that equaled about $60,000. By protecting its users from the pitfalls of blockchains such as MEV, and offering benefits for using its platform, Rook will continue attracting the attention of large traders looking to get the best deals on their orders. This will massively benefit the protocol, and its ROOK token, over time.

Lido (LDO)

Since going live in 2020, Lido’s goal has been to simplify the staking experience by mitigating the challenges associated with it.

As the Ethereum network adopts more scaling solutions it’s important that Lido is following suit. On July 18, Lido unveiled its expansion plans to provide stETH across the growing L2 DeFi ecosystem.

For Ethereum stakers, this means staking with lower fees and access to a new suite of DeFi applications to amplify yields.

Lido is not limited to a particular network, and is committed to making Lido’s staked-asset tokens widely available.

Initially, Lido will support a wrapped version of stETH with bridging and staking on L2. Support for staking ETH held by users on L2 directly without the need to bridge assets will follow.

The bridging contracts for Optimism and Arbitrum have been developed by the Lido core development team and audited externally.

Both Arbitrum and Optimism bridges have been deployed in the ‘paused’ state. A Snapshot proposal will be available for DAO approval of bridging plans, following a successful public audit.

Ethereum has reached the network's current capacity with over 1 million transactions per day. The success of Ethereum and the demand to use it has caused gas prices to rise substantially, causing the need for stETH to be available on L2 scaling solutions to increase in tandem.

Demand for the Lido’s native utility token is surging as well. Since last month, LDO has been listed on FTX, KuCoin, and Binance.US – providing over 55 million users around the globe with easily accessible liquidity.