Synthetix takes on counterparty risks with Infinex derivatives exchange

Decentralized finance protocol Synthetix is preparing to expand its range of affiliated products.

Synthetix founder Kain Warwick revealed intentions to introduce a new derivatives front-end called Infinex to the decentralized trading infrastructure of Synthetix. The upcoming exchange will cater to novice and experienced traders by offering features similar to centralized exchanges (CEX), such as a noncustodial central limit order book.

While Synthetix already operates Kwenta, a derivatives decentralized exchange (DEX) on Optimism, Warwick highlighted key issues with the current platform. For instance, traders are required to bridge assets to the layer-2 rollup and exchange them for sUSD, Synthetix’s stablecoin used as margin collateral, before they can begin trading.

Adding to the inconvenience, each order or cancellation on the existing platform necessitates the trader’s wallet signature, incurring a small fee. In the blog post, Warwick emphasized that the goal is to eliminate any skepticism surrounding the ability of decentralized perpetuals (Perps) to directly rival centralized exchanges.

Being on a noncustodial decentralized exchange offers advantages, and Warwick playfully mocked the now-defunct FTX and other centralized exchanges in the blog post for their distinctive counterparty risks. Warwick highlighted FTX’s dramatic collapse in 2022.

“It’s become increasingly clear that the impediments to Synthetix Perps growth can be resolved, but this will require a new approach.”

The planned DEX will cater to traders familiar with platforms like Binance, offering access through a simple username and password, all while maintaining a noncustodial setup. Warwick explained that Infinex would generate a unique public-private key pair for each user, stored locally in the browser, solely used for signing trade orders and not for fund withdrawals.

Related: Cardano price turns bullish, but is there substance to the ADA rally?

The technical implementation specifics of the DEX were not revealed, with Warwick mentioning in a Synthetix Discord ask me anything session that they were entrusted to the core developers.

The introduction of the new project is expected to align with the release of Synthetix’s version three of its perpetual futures trading system, which is anticipated in the coming months.

Magazine: Ethereum is ‘woefully undervalued’ but growing more powerful: DeFi Dad, Hall of Flame