SynLev - Synthetic Leveraged Asset Tokens

Nick Sawinyh on 09 Feb 2021

SynLev core-developer Carl, told us Synlev backstory and dipped into a decentralized synthetic assets space.

Hello! What’s your background, and what are you working on?

I’m Carl, better known to the crypto community as Icarus. I’m the core developer and creator of SynLev: Synthetic Leveraged Assets. I’ve been in and out of crypto since 2015, learning and investing but not taking it particularly seriously in the early days. My educational background is in engineering and I’ve had a passion for finance and investing my whole life. More recently, I’ve been passionate about the potential of crypto to bring equal access financial products and financial freedom to everyone.

Something that catalyzed my interest here was Obama’s speech at South by Southwest in 2016 regarding encryption and Bitcoin: “…because if in fact you can’t crack that at all, government can’t get in then everybody’s walking around with a Swiss bank account in their pocket.”

You can rather read this like so: “Normal people don’t get to have a Swiss bank account, only me and my friends can have Swiss bank accounts.” I made the decision in early 2018 to make a career and go full-time crypto, and it was the best decision I’ve ever made. Given my background in engineering and finances learning the ins and outs of Ethereum smart contracts was my first step.

SynLev works very similarly to leveraged ETFs like SQQQ, TQQQ, and SDOW. Effectively an asset that reacts 3x either with or against an underlying asset. For example a SynLev 3XBULL ETH/USD changes by +3% if ETH/USD goes +1%. SynLev is intended to be used by traders who want to trade on a medium term basis (1-3 day) and do not want to expose themselves to risks associated with debt-based leveraged trading such as liquidation and interest.

What’s SynLev backstory?

I created SynLev because I saw that crypto was missing a lot of financial products that are standard in traditional financial markets. While forex-style leveraged trading is quite developed in crypto, other popular products like options or ETFs are still very much immature. A key thing I noticed is that there seems to be surprisingly little overlap between the traditional finance/trading communities and crypto communities. Traditional investors have very little knowledge of crypto markets and vice versa.

I spent a lot of time playing with how to implement leveraged ETFs in DeFi and with the math behind it. I looked at how others implemented synthetic assets, how traditional leveraged assets function, how other DeFi products are built, and the issues they have had. Once we developed a final system the system was tested against historical Chainlink data and by deploying a fully functional beta version on the Kovan testnet.

What went into building the SynLev?

We spent roughly 3 months publicly developing SynLev and an additional 3 months prior developing the underlying math and mechanics. In this time we’ve seen an explosion in the DeFi space. Bitcoin, Ethereum and other cryptos have broken their previous all-time highs!

Aside from basic libraries all code for the SynLev exchange was built from the ground up, consisting of about 15 separate contracts. We decided to exclusively utilize Chainlink oracles as opposed to processing prices from Uniswap or other DeFi exchanges.

To verify the security of our contracts we had multiple private parties perform security reviews and have an open and ongoing bug bounty for up to 60,000 SYN. However we believe that the best proof of security is time tested on the mainnet. To date aside from the frontrunning of Chainlink oracles (which has been addressed with recent upgrades), we have had no security issues or contract exploits since our deployment to mainnet. Said contracts have held over $3 million USD which is more than enough incentive for any white or blackhat hacker.

What’s your business model?

SynLev makes money in two ways: first and foremost we stake dev fund SYN tokens in the SYN staking contract, earning fees generated by the SynLev exchange. This is the long term revenue source for the project. This aligns our business interests with that of SYN token holders: anyone who’s been watching crypto for a while has seen what happens when the business interests of the team are not aligned with the holders/community. Second in the short term we are selling 2 million SYN to bootstrap project funds (more info on token sale here).

We built our initial community by airdropping ~11 million SYN to ETH and LINK holders in Aug 2020. At the same time we started to publicly share progress of the codebase and project progress and we continued to grow our community through our mainnet launch in mid Nov. 2020. Chainlink and the community are to thank for our growth and success.

SynLev is a novel product that at the time of conception had no direct competitors. The two most comparable products are Synthetix and FTX. Synthetix similarly offers synthetic assets but not leverages. FTX offers leveraged assets but they are centralized. We aim to target traders who want to engage in leveraged trading on a daily to multi daily basis without risk of liquidation. It is very important to note that SynLev assets have their own associated risks similar to those of leveraged ETFs.

What’s your position on the regulatory landscape today?

Crypto is at a very crucial point, we are seeing major exchanges implementing region lockouts and implementing KYC/AML compliance. It is necessary for some exchanges to comply with government regulations, particularly for fiat-to-crypto on/off ramps. However we believe that it’s important for crypto financial products to be as uncensorable and permissionless as possible. Ethereum and smart contracts are very important tools to realize these goals. Any DeFi website or servers can be seized, but the Ethereum virtual machine cannot.

The recent r/wallstreetbets $GME fiasco really shows how little big companies and regulators care about everyday investors and how they’re working for themselves. Retail investors deserve something better and crypto can give it to them.

What are your goals for the future?

In the short term our main goal is to continue to grow the exchange with more trading pairs and expand our user base. We are very fortunate that the recent DeFi boom has caused Chainlink to continuously add price feeds, which allows us in turn to continuously add trading pairs. The main thing inhibiting our growth are the rising gas prices and limitations of the Ethererum network. We like everyone else in the DeFi space are eagerly awaiting the advance of Eth2 and L2s.

The long term goal of SynLev is to expand into offering novel financial products that further the greater DeFi ecosystem. We truly believe that DeFi can replace traditional finance and investing. And we intend to be a part of it.

Where can we go to learn more?

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About the author
Nick Sawinyh
Nick Sawinyh is an LA-based crypto entrepreneur. After having spent over four years in the blockchain industry, Nick founded DeFiprime in 2019, with the idea to provide information about emerging DeFi ecosystem. He owns modest amounts of various cryptocurrencies.

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