Synapse is a cross-chain messaging system that lets anyone move assets across chains or provide liquidity (to earn bridging fees).
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.
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.
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.