Synapse
Synapse is a cross-chain messaging system that lets anyone move assets across chains or provide liquidity (to earn bridging fees).
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Invest- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: SYN
- Tags: Bridging
- TVL: $40M (Rank #144)
- TVL Ranking by Bridging: #0
- Blockchain: Ethereum, Arbitrum, Avalanche, Binance, Polygon, Blast, Optimism, Metis, Base, Aurora, Boba, Fantom, Klaytn, Moonriver, Terra, Cronos, Harmony, Canto, Moonbeam
- Chain TVL
- Ethereum: $27.33M
- Arbitrum: $9.51M
- Avalanche: $1.29M
- Binance: $559.4K
- Polygon: $366.69K
- Others: $921.97K
- Code reviewed by at least one experienced auditor; CertiK audited in April 2021
- Public team promotes accountability
- No documented protocol hacks since launch
- Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
- Top 5% by total value locked reduces risk
- Multisig wallet controls protocol upgrades
- Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
- Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
- Moderate voting power concentration
- No death spiral concerns
- Locally verified bridge that uses liquidity networks on each chain to enable cross-chain swaps; this system typically uses a lock/unlock mechanism to ensure the safety of user funds
- Bridge messages are validated by an external third-party that usually comprises a limited multisig
How Synapse works
At its core, Synapse is a cross-chain messaging system that operates as an application layer. This serves as a base layer that seamlessly connects decentralized applicatoins (dApps) across blockchain networks. Synapse currently facilitates two methods of bridging: liquidity pools based on the automated market maker (AMM) model and canonical token briding with xAssets. The first dApp built on Synapse is the cross-chain AMM based on Curve's Stableswap model. For stablecoins, Synapse leverages its nUSD asset, which is a cross-chain stablecoin that is fully collateralized by assets (USDC, USDT and DAI) on Ethereum. The nUSD is paired with native assets on each chain to enable low slippage and fast settlement. When a user wants to bridge a stablecoin from one chain to another, the native stablecoin is swapped for nUSD on the source chain. The nUSD is then burned on the source chain while the same amount of nUSD is minted on the destination chain. Lastly, the nUSD on the destination chain is swapped for the native stablecoin. There are nUSD liquidity pools on both chains to enable these transfers; the users are incentivized to deposit stablecoins into these pools to earn bridging fees and protocol rewards. Synapse also uses xAssets for other assets which uses a more traditional lock-and-mint model. With xAssets, tokens are sent to a Synapse bridge contact on the source chain and a wrapped asset is minted on the destination chain.
How Synapse makes money
Synapse charges an admin fee on each asset swap. This fee can range from 0% to 100%, and is only applied on the fee paid for the swap, and impacts how much liqudity providers (LPs) earn from swaps in that particular pool. The Synapse bridge also charges a default bridge fee of 0.05% when assets are bridged across chains.
How you make money on Synapse
You can make money by depositing liquidity into nUSD and nETH pools to earn swap fees. In the future, you can also stake SYN to earn a portion of protocol rewards from swap and bridge fees.
