quantitative trading

Derivatives liquidity protocol Synthetix seals new partnership with DWF Labs, landing a $20 million investment from the quantitative trading firm.

Tokenized asset issuance platform Synthetix has secured a $20 million investment through a new partnership with Web3 investment and quantitative trading firm DWF Labs.

The market making and algorithmic trading company acquired $15 million worth of Synthetix’ native token SNX paid for with USD Coin (USDC) in March 2023. DWF Labs will be tasked with increasing SNX token liquidity and market making across centralized and decentralized exchanges.

Synthetix’ perpetual futures will be integrated into DWF Labs’ trading business as part of the deal. DWF Labs has also committed to purchase another $5 million worth of SNX tokens once the integration of Synthetix’ services has been completed.

Synthetix allows users to tokenize a variety of real-world assets into derivatives called Synths, which provide exposure to a range of different assets. Holding SNX tokens allows users to create Synths by locking tokens into a smart contract and minting Synths against the corresponding value.

Users can trade Synths using Synthetix’ pooled collateral model, with trades between Synths generating fees for SNX collateral providers.

The creation of on-chain synthetic assets tracks the value of real-world assets, which includes synthetic fiat currencies or commodities like Gold and financial instruments like equity indices.

DWF Labs managing partner Andrei Grachev highlighted the partnership’s provision of streamlined trading mechanisms in the Decentralized Finance (DeFi) space:

"By leveraging Synthetix's deep liquidity and composability, platforms can now deliver better trades with lower slippage, allowing for innovative hedging strategies and unique use cases.”

Synthetix’ V2 platform surpassed $400 million in perpetual swap daily trade volume in March 2023 according to data from Dune Analytics.

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The derivatives liquidity protocol saw a surge in daily fees in June 2022 after a collaboration with liquidity provider Curve Finance to create Curve pools for Synthetic Ether (sETH)/Ether (ETH), Synthetic Bitcoin (sBTC)/Bitcoin (BTC) and Synthetic U.S. dollar (sUSD)/3CRV.

The partnership allowed users to convert Synths like sETH to ETH seamlessly and saw the SNX token value increase by over 100% during the depths of the prolonged cryptocurrency bear market.