Synthetix Revolutionizes Derivatives Trading with Infinex, Mitigating Counterparty Risks

Synthetix, a decentralised cryptocurrency platform, is taking a significant step to address counterparty risks with its latest initiative, the Infinex derivatives exchange. This new exchange aims to provide a solution for both new and experienced traders by offering features similar to centralised exchanges (CEX). Kain Warwick, the founder of Synthetix, shared his intentions to reform Infinex into the decentralised trading infrastructure of Synthetix, providing its users with a noncustodial central limit order book.

While Synthetix already operates Kwenta, a derivatives decentralised exchange (DEX) on Optimism, Warwick highlighted some disadvantages of the current platform. Traders currently need to link their assets to the layer-2 platform and exchange them for SUSD, Synthetix’s stablecoin,  before they can start trading. 

This process can be tedious and inconvenient. Moreover, each order or cancellation on the platform requires the trader’s wallet signature, and this requires small fees along the way. Warwick acknowledged the need to address these issues to remove any scepticism surrounding the potential of decentralised perpetuals (Perps) to compete directly with centralised exchanges.

One of the advantages of a noncustodial decentralised exchange is the ability to eliminate counterparty risks. Warwick took a playful jab at centralised exchanges like the now-defunct FTX, pointing out their disadvantages and risks and he stressed on FTX’s dramatic collapse in 2022 due to the vulnerabilities. The new Infinex DEX aims to offer a user experience similar to platforms like Binance, providing access through a simple username and password. However, it will maintain a noncustodial setup, ensuring that users retain control over their funds.

Warwick explained further that Infinex would create a unique public-private key pair for each user. The relevant keys will only be stored locally in the user’s browser and cannot be used for withdrawals. This approach increases security while maintaining user control and privacy. While specific details of the DEX were not mentioned, Warwick did speak up during a Synthetix Discord session about focusing on expert experimentation.

The Infinex derivatives exchange is expected to align with the release of Synthetix’s version three of its perpetual futures trading system as per experts. It is scheduled for the coming months. This coordinated effort is aimed at enhancing the overall trading experience within the Synthetix ecosystem. By combining the power of decentralised finance with features reminiscent of centralised exchanges, Synthetix aims to provide a platform that appeals to a wide range of traders, from newcomers to seasoned professionals.

The action to address counterparty risks and improve the user experience demonstrates Synthetix’s commitment to innovation and the evolution of decentralised finance. Through the Infinex DEX, Synthetix aims to bring the benefits of noncustodial trading to the forefront, enabling users to enjoy the advantages of decentralised finance while minimising risks associated with centralised counterparts. As the decentralised finance landscape continues to grow in terms of technology and innovation, initiatives like Infinex contribute to the growth and adoption of this transformative technology.

Synthetix is paving the way for a more secure and user-friendly trading experience with the introduction of the Infinex derivatives exchange. By combining the strengths of decentralised finance with features similar to centralised exchanges, Synthetix aims to address counterparty risks and provide a seamless platform for traders of all levels. With a focus on user control and privacy, Infinex promises to enhance the overall trading ecosystem within Synthetix and contribute to the advancement of decentralised finance as a whole.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Puskar Pande

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