Sythetix betting on new 'multi-collateral' perps ahead of Arbitrum rollout

Synthetix is betting that its ability to accept a variety of tokens as collateral will differentiate its V3 derivatives platform as it launches in Arbitrum’s competitive decentralized finance (DeFi) ecosystem, Matt Losquadro, a Synthetix core contributor, told Cointelegraph. 

“Arbitrum is the home of DeFi derivatives. There's no doubt about that. There’s a large number of protocols there, [and] the competition is fierce,” Losquadro said. “The big question has been ‘why would you use Synthetix perps in a crowded marketplace like Arbitrum?’”

“We're going to be launching an Arbitrum-exclusive product feature… [and] that feature is multi-collateral,” Losquadro said. “No one currently has this on Arbitrum, and it's going to be an extremely large unlock.”

Synthetix launched on Arbitrum in July. Source: Synthetix

Related: Synthetix to add Chainlink when v3 exchange launches on Arbitrum

Synthetix is a DeFi protocol specializing in providing “liquidity for permissionless derivatives like perpetual futures, options,” and more on blockchain networks including Ethereum, Optimism, and Base. The protocol launched on Arbitrum in July. 

Perpetual futures, or “perps,” are a type of derivative that allows traders to buy or sell an asset at a future date with no expiration. On Arbitrum, DeFi protocol GMX currently dominates the decentralized perps market with upwards of $430 million in total value locked (TVL), according to data from DefiLlama. 

Several applications built on Synthetix specialize in perps trading, but others focus on yield strategies, such as basis trades, Losquadro said. Enabling users to deposit multiple token types as margin collateral opens up even more possibilities, he added.

“Instead of just margining perps with [U.S. Dollar Coin (USDC)], or whatever stablecoin it may be, when you use Synthetix perps on Arbitrum, we're going to be able to margin with [Ethereum] and Bitcoin as well,” Losquadro said. 

Synthetix also plans to integrate Chainlink Data Streams to its upcoming v3 deployment on the Arbitrum. 

“So yes, initially, I think this multi-collateral feature will be a way to compete with” incumbent Arbitrum DeFi protocols such as GMX, Losquadro said. But “it's not just about perpetual futures. It's really about allowing people to build on top of this system in a composable, permissionless way,”

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