Synthetix takes on counterparty risks with Infinex derivatives exchange

Synthetix, a DeFi project in the crypto space, is preparing to expand its range of affiliated products.

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

While Synthetix already operates Kwenta, a derivatives decentralized exchange (DEX) on Optimism, Warwick has highlighted three 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 non-custodial decentralized exchange offers advantages, and Warwick playfully mocks the now-defunct FTX and other centralized exchanges in the blog post for their distinctive counterparty risks. Warwick highlights FTX’s dramatic collapse last autumn.

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

The planned DEX will cater to traders familiar with platforms like Binance, offering access through a simple username and password, all while maintaining a non-custodial setup. Warwick explained that Infinex will 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.

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The technical implementation specifics of the DEX were not revealed, with Warwick mentioning in a Synthetix Discord ‘Ask Me Anything’, 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 3 of its perpetual futures trading system, which is anticipated to occur in the upcoming months.

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