Kwenta is a decentralized derivatives trading platform built on top of Synthetix.

Risk Rating
Protocol Code Quality
Protocol Maturity
Protocol Design
What we like
Kwenta is a decentralized derivatives trading platform built on Synthetix that enables traders to leverage up to 25x on synthetic assets.
What we like less
The protocol's treasury is controlled by three anonymous community members. Further, SNX stakers bear the counterparty risk as they assume a proportion of the debt pool when they mint sUSD.
What it means for you
Offers you a platform to trade synthetic assets with deep liquidity (up to the total available collateral in Synthetix), high leverage, and advanced market orders.
  • Website
  • Token: KWENTA
  • Tags: Derivatives
Key Metrics
Risk Assessment
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; iosiro audited in September 2022
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • This protocol is susceptible to risks related to decentralized derivatives, such as LPs serving as the counterparty for all platform traders
Things to know about Kwenta

How Kwenta works

Kwenta is a decentralized derivatives trading platform that is built on Synthetix. Synthetic assets created on the Synthetix platform are known as "synths". It is minted against the value of the native SNX token which acts as the primary form of collateral backing synthetic assets available on Synthetix. All Synths are currently backed by a 400% collateralization ratio, though this can change through future governance proposals. SNX stakers incur debt when they mint Synths and burn Synths to exit the system. SNX holders are incentivized to stake their SNX token to earn their proportional fees each week, as well as inflationary rewards. Stakers are unable to claim fees if the value of their collateralization ratio falls below 400%, which ensures Synths are backed by sufficient collateral to absorb large price movements. Synths can be traded on Kwenta, Synthetix's decentralized exchange (DEX) with zero slippage.

How Kwenta makes money

Synthetix charges an exchange fee whenever a user exchanges one synth for another through Kwenta. The fees typically average around 30bps but can range anywhere between 10-100bps. The generated fees are automatically sent to the fee pool which can be claimed proportionally by SNX stakers each week as long as they maintain at least a 400% collateralization ratio. In addition the exchange fee, there is a dynamic fee that kicks in during periods of high market volatility in order to prevent front-running and protect stakers.

How you make money on Kwenta

You can deposit SNX as collateral to get exposure to synthetic assets and realize profits through longing and shorting the underlying asset on the Kwenta exchange. SNX holders can also stake their tokens and earn protocol fees and inflationary SNX emission over time. You can also stake KWENTA to gain voting power and earn inflationary rewards.