Synthetix nets $20M from Web3 quant trading firm

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

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

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

Users can trade Synths using Synthetix's pooled collateral model, and transactions between Synths generate fees for SNX collateral providers.

On-chain synthetic asset creation tracks the value of real-world assets, which includes synthetic fiat currencies or commodities like gold, and financial instruments like stock indices.

DWF Labs Managing Partner Andrei Grachev highlighted the association's provision of optimized trading mechanisms in the Decentralized Finance (DeFi) space:

"By leveraging Synthetix's high liquidity and composability, platforms can now offer better trades with less slippage, enabling innovative hedging strategies and unique use cases."

Synthetix's V2 platform surpassed $400 million in daily perpetual swap trading volume in March 2023, according to data from Dune analysis.

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The derivatives liquidity protocol saw a increase in daily rates in June 2022 following a collaboration with liquidity provider Curve Finance to create Curve pools for Synthetic Ether (sETH)/Ether (ETH), Synthetic Bitcoin (sBTC)/Bitcoin (BTC) and Synthetic US Dollar (sUSD)/3CRV.

The partnership allowed users to convert Synths like sETH to ETH without a hitch and saw the value of the SNX token rise by more than 100% during the depths of the prolonged cryptocurrency bear market.