Synthetix hedges counterparty risk with Infinex derivatives exchange

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

Ken Warwick, Founder, revealed Synthetix intends to introduce a new derivatives front-end called Infinex to its decentralized trading infrastructure. The upcoming exchange, Infinex, will cater to both novice and experienced traders by offering features similar to centralized exchanges (CEXs), such as a non-custodial centralized limit order book.

While Synthetix already operates Quanta, a derivatives decentralized exchange (DEX), on Optimism, Warwick highlighted three major issues with the existing platform. For example, before traders can start trading, assets need to be bridged to Layer-2 rollup and exchanged for SUSD, Synthetix’s stablecoin, to be used as margin collateral.

Adding to the inconvenience, the existing platform requires a merchant’s wallet signature for each order or cancellation, which incurs a small fee. In the blog post, Warwick emphasized that the goal is to eliminate any doubt surrounding the ability of Decentralized Perpetuals (PERPS) to directly rival centralized exchanges.

Being on a non-custodial decentralized exchange offers benefits, and Warwick mocks the now-defunct FTX and other centralized exchanges in a blog post for their specific counterparty risks. Warwick highlighted the dramatic collapse of FTX last autumn.

“It has become clear that the barriers to the development of Synthetix Perps can be resolved, but it will require a new approach,” he said.

The planned DEX will give traders familiar with platforms such as Binance access through a simple username and password, 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, that will be used only for signing trade orders and not for withdrawing funds.

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The specifics of the technical implementation of the DEX were not disclosed, with Warwick mentioning in the Synthetix Discord ‘Ask Me Anything’ that he was assigned to the core developers.

The launch of the new project is expected to align with the release of version 3 of Synthetix’s perpetual futures trading system, which is expected in the coming months.

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