Who is carrying the weight for Synthetix?
Original title: "Who is carrying the weight for Synthetix?" "
Original author: @0xTodd, partner of Nothing Research
I have a feeling that many DeFi Being able to cast magic is because someone is "carrying forward" behind the back. The recent performance and data of SNX are very good. In fact, the same is true for SNX. There must be some people behind SNX carrying heavy loads, but who are these people?
SNX recent trends< p>
As we all know, in traditional trading platforms, slippage exists naturally.
Assume that you buy 1 BTC and only spend 20,000 USD;
But if you want to buy 10,000, your average cost will never exceed 20K, because you will increase the BTC.
Now, SNX can cancel out slippage. What does it mean, it means that even if you want to buy 21 million bitcoins, as long as you can afford sUSD, it will be traded at the market price for you. However, wealth does not come out of thin air, so who is carrying the burden?
Let’s start with the mechanism of SNX:
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A basic mechanism, mortgage to generate Stablecoin;
Two special mechanisms, namely "0 slippage transaction ” and “Global Debt”.
The basic mechanism is that you can mint $sUSD by staking $SNX, and these sUSD can be spent as 1 dollar (this also depends on Curve sUSD pool depth), but it is also your liability. So far, it is similar to how MakerDAO can mint out $DAI.
The difference is. SNX also has sBTC, sETH, and even stocks and oil before. All these assets are not borrowed, but traded with zero slippage. Of course, this trading platform can only use sUSD as an admission ticket.
So, If the current BTC is 20,000 U.S. dollars, then you can buy sBTC unlimitedly with sUSD, without slippage, and all transactions are based on 20,000 dollars. This is "0 slippage transaction".
However, in fact, there is no BTC collateral behind sBTC, how does it anchor the price with BTC? The answer is that the sBTC you hold can also be sold at the market price forever, and there is also no slippage.
Frankly come In other words, even if I operate on Binance and Coinbase at the same time, I can easily make a big hole by selling 100 BTC at the market price, let alone DeFi?
At this time, friends with a certain foundation may ask: No, if someone buys a large amount of BTC at a price of 20K, and then sells all of them at 69K, then Who will bear the money earned? Good question, which leads to a second mechanism called global debt.
If there are only 2 people in this system, me and you. We both deposited SNX and lent 100,000 sUSD each.
You have lent sUSD but are holding on to it.
I bought a large amount of Bitcoin after lending sUSD, and sold it at the highest point, and I made a profit of 400,000 sUSD.
At this time, you are surprised to find that the money you owe the system has become 300,000 sUSD, not just the 100,000 that was borrowed at that time.
The reason is simple, you are in debt for my profit.
This is global debt. Every SNX staker works together. The total amount of money owed to others by the system is repaid by everyone in the world in proportion.
In other words, if you borrow sUSD, if someone in the system makes money through trading, your debt will increase. Of course, if, say, someone in the system loses a lot of money, you owe less because of it.
In other words, if your sUSD is loaned to the system, then you need to trade crazily, and then strive to outperform others in the system. What do you mean, it's like a trading contest, the money earned by the top players - (almost) all are provided by the bottom players. It means: Even if the tail players achieve positive profits, as long as the profits are not more than others, they will become "prizes" instead.
Therefore, when it comes to trading with 0 slippage, it is very clear for those who move forward with heavy burdens——those who take SNX to borrow sUSD. However, this article would be completely unnecessary if it was just about that.
Know it, but also know why.
So why are some people willing to carry forward? The answer is simple, because Stake SNX lends sUSD, and you can dig out the handling fee + SNX inflation reward. Recently, it has risen to 300%+ annualized, which is quite high now.
Friends who have followed me for a long time will subconsciously ask the next question, where does this 300% APR come from?
Looking at the audience, there must be someone to carry the weight for this 300%, right? I think it is inwardly rolled, rolled in.
The key point is here, how did it come about?
After the recent update of SNX, 1inch has been connected. Large transactions, such as an ETH sell order of 2 million US dollars, would have gone through Uni V3, but that would cause a lot of slippage, and at the same time, the slippage of SNX was 0.
So, at some point, there is:
SNX Medium Rate (0.3%+ Curve) + 0 slippage > Uni low rate (0.05%) + slippage
Then, the 1inch router will use SNX+Curve.
The user’s ETH was first exchanged for sETH through Curve, then sETH was exchanged for sUSD through 0 slippage transactions, and finally sUSD was exchanged for USDC through Curve.
Skipping Uniswap entirely!
It was originally the money that Uniswap V3 LP wanted to make, but now because of the lower SNX rate, under the operation of these routes such as 1inch, the procedures for large transactions The fee is directly earned by SNX, not Uniswap.
This is actually a good case of the project transitioning from the Ponzi model to implementation (join back to my ponzi methodology). It is equivalent to saying that it uses a near-suicidal method (using LP money to subsidize 0 slippage transactions), but it takes other people's business and then earns it back through handling fees.
Those who "carry forward" have become the LPs of ETH-USDC or WBTC-USDC on Uni V3. Originally, the impermanence of the V3 LP was very scary, and I lived on those fees. Now, the cake of these fees is divided by SNX, and the life of Uni LP is actually even more difficult.
Of course, to be honest, Uniswap was actually the winner of the last involution competition. The 0.05% fluctuation pool and the 0.01% stable pool it launched actually involved the V2 series DEX, the long-term 50,000 rate Curve, and the vast number of CEXs respectively.
CEX really needs to be prepared for danger in times of peace. If I remember correctly, many CEXs may still charge 2,000 yuan. To be honest, under the current GAS rate, if the funds are slightly larger, one hundred thousand US dollars, it may be possible to use DeFi to easily outperform the CEX fee. Therefore, in addition to Uni V3 LP, those who move forward with heavy loads also have a trading platform boss.
Speaking of this, some friends may laugh—the boss of the trading platform only earns more and earns less, so how can it be their turn to lose? So who is the one who will carry the weight forward in the end? That's all for now, if I talk too much, I will cry.
The transaction fee cake in the market is so big, and with the crypto secondary market trading deserted, it is even gradually shrinking. Any cash flow does not fall from the sky, or the moat exists forever. As DeFi innovation continues, its experience will only get better. And if CEX has been standing still without continuous innovation, it will also become dangerous.
Finally, I am always optimistic about the development of DeFi, although it has many immature places and is full of all kinds of magic. But I still believe that on such a fervently innovative soil, there will be forbidden fruits that cannot grow in the traditional environment. Although most of them are poisonous, you don’t know when it will become the new holy grail.
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