What is Synapse?
DeFi, has taken the world by storm with its promise of transparency, security, and accessibility. But there's a catch – in order to truly live up to its potential, DeFi needs to be able to communicate seamlessly across different blockchains. That's where cross-chain communication comes in.
Think of it like a game of telephone, but instead of just passing a message from person to person, the message has to traverse multiple blockchains with different rules and protocols. It's a bit like trying to speak French to someone who only speaks Japanese – without a translator, you're both going to be pretty confused.
That's why protocols like Synapse exist. By allowing different blockchains to communicate with each other, Synapse can help DeFi become truly decentralized and interoperable, creating new opportunities for innovation and growth.
At its core, Synapse provides an extensible set of smart contracts that can be deployed on any blockchain which developers can leverage to build truly native cross-chain applications. But how can you be sure the messages are sent correctly?
Before we explain the security model of Synapse, let's revise the three most popular security models for bridges:
Locally verified, where only parties involved in a given cross-chain interaction verify transactions
Natively verified, where all validators of the two blockchains involved in a transaction verify the message
Externally verified, where an external validator set is used to verify transactions between chains
The one thing these 3 models have in common is the use of multisig to secure them. In a multisig setup, each participant has its own public key which he uses to approve transactions. Each multisig participant must sign the transaction in order to approve the bridge transfer. Although multisig creates a faster user experience, reality has proven that signers can be individually hacked – see Harmony and Axie Infinity.
Synapse implements Optimistic verification in a similar way optimistic rollups do – by assuming the transactions are honest by default. Similarly to optimistic rollups, Synapse relies on four main actors to verify transactions and submit fraud proofs.
These four actors are: notaries, broadcasters, guards, and executors.
Notaries are responsible for signing merkle root on each supported chain and bonding SYN behind attestations. By bonding SYN, notaries have an economic incentive to reach consensus on the validity of cross-chain transactions
Broadcaster — responsible for forwarding updates from home contracts to replica contracts
Guard — responsible for observing cross-chain messages and submitting fraud proofs when detecting malicious state updates. Guards also have to stake SYN as a guarantee for their honest behavior.
Executor — responsible for posting the final transaction once the latency window is completed
Like other rollups, the Synapse protocol will be initially managed by sequencer, which will be responsible for state updates and submitting transactions to the Ethereum blockchain. Transaction fees will be paid in ETH, while SYN stands as the governance token.
How does Synapse work?
Synapse works as a cross-chain messaging framework, enabling developers to build truly native cross-chain dapps. Simplistically, it can be envisioned as a trustless bridge. As we are about to find out, Synapse is actually a rollup on Ethereum that enables secure cross-chain transactions!
One of the hurdles in creating a secure cross-chain bridge is the inherent difference in how blockchains are designed. In other words, cross-chain bridges must account for the different type of consensus that blockchains use, and their functionalities.
Traditional cross-chain bridges have created a compromise solution, where bridged assets are locked on the bridge smart contract and a synthetic version is minted on the destination chain. Such bridges are typically secured by a threshold multisig in order to create a faster user experience. Multisig owners (usually between 7-10 signers) are responsible for securing billions in users' funds. Trading security for speed has resulted in a multitude of bridge hacks totaling well over $500M in cumulative funds lost.
Synapse is taking no compromises when it comes to users' safety. The team uses the same principles of traditional cross-chain bridges, with an innovative twist.
At the core of their service is Optimistic Verification, an adaptation of the popular optimistic rollups. Transactions are assumed to be honest by default with a network of off-chain actors responsible for submitting fraud proofs during the course of an optimistic window to disallow any fraudulent transactions. This mechanism adds a significant layer of security to the network, making it far more costly for a bad actor to conduct an attack.
Optimistic verification just needs one honest guard to behave honestly for the system to remain secure. Rather than a bad actor needing to co-opt a majority of validators, that actor would need to co-opt all actors, and the cost to attack the network scales as the number of fraud watchers increases. The chances of corrupting all actors are virtually impossible, hence the improved security.
The implementation of an optimistic verification comes with one major tradeoff, latency. The security window acts as a security guarantee, but it also slows down the settlement of the transactions. On the other hand, users can be sure that once the challenge period finishes, the transaction is final.
Taking on the optimistic rollup model, Synapse is using its native token SYN as a guarantee that the watchers will act honestly in submitting the fraud proofs. In the event that either the notary (the one who signs transactions) or guard (aka the watcher) behave dishonestly, they will see their stake slashed.
All holders of SYN can back guards through a delegated Proof of Stake (DPoS) mechanism. This system creates a profit window for SYN holders, while also placing responsibility on the holders to delegate to honest guards.
"Hol' up. So you are saying Synapse is a rollup within a rollup?" Synapse in itself is an optimistic rollup on Ethereum. You can envision Synapse as the first rollup on Ethereum specialized in cross-chain messaging. Do you believe the future is multi-chain? Well, cross-chains are now literally one of those chains 🤯
Synapse chain offers developers a generalized smart contract interface for building natively cross-chain use cases by leveraging Synapse’s cross-chain messaging system. Dapps built on Synapse Chain will be able to execute their business logic across any blockchain. Instead of deploying on 10 different blockchains, developers can use Synapse to make their app cross-chain native.
If we zoom out, the whole ecosystem looks like this: Dapp –> Synapse (execution layer) –> Ethereum (settlement).
Synapse xAssets
Synapse xAssets are multi-chain enabled assets that can be sent, received, stored, and used on multiple blockchains.
The way this works is a new ERC20 token contract is created on all of the desired destination chains which will serve as the pegged token. When a user bridges their token from the source chain to any destination chain, the original token is locked in Synapse’s bridge smart contract. The Synapse protocol then transmits a cross-chain message instructing the target chain to mint the destination chain token. This newly minted token is distributed to the user's wallet address on the target chain, along with a gas airdrop.
When a user wants to redeem the token on the destination chain for their original token, the user would initiate a transaction in the opposite direction, and the bridge asset is burned on the destination chain. The network then passes a cross-chain message back to the original chain, and confirms that the destination chain transaction is valid, and the original asset is unlocked for the user.
The circulating supply of tokens remains constant because the total number of tokens can always be calculated by taking the number of tokens on the source chain along with all of the tokens in Synapse’s bridging contract on the source chain.
How to make money on Synapse?
Users can make money on Synapse by providing liquidity or staking their SYN token. Aside from its cross-chain capabilities, Synapse is also an AMM with deep liquidity. Since its inception, Synapse has consistently retained more than $100M in liquidity.
Synapse Liquidity Provision
Providing liquidity is a simple and quick method to start making passive income on your idle crypto assets.
Here's how you become an LP on Synapse:
Open the Synapse app
Go to the "Pools" tab
Select the pool you would like to deposit with
Input the amount of tokens you would like to deposit
Click Deposit and approve the transaction
Besides the APY from providing liquidity, users also receive rewards in the form of SYN tokens.
Synapse Staking
With your SYN rewards, you can go ahead and stake them in order to earn even more SYN tokens.
Here's how you stake SYN:
Open the Synapse app
Go to the "Stake" tab
Input the amount of SYN tokens you would like to stake
Click Stake and approve the transaction
Price Prediction for Synapse — Can it hit $1000?
Buying and hodling SYN — the native token of the Synapse protocol — is one way of potentially making money on Synapse.
By looking at its current price, it’s natural to think about the chance of SYN hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the SYN token by analyzing its tokenomics. SYN’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} SYN tokens being in circulation today, that means a price of {PRICE} per SYN.
How did we come to that calculation? It’s quite easy, the price of a SYN token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each SYN coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of SYN at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for SYN to hit that price.
At a price of $1000 per token, that means the current market cap of SYN would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. SYN’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} SYN which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of SYN? Taking into account the current price of a SYN token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. SYN coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a SYN token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the SYN protocol fully diluted market cap.
These are all crucial details to know when calculating if SYN can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of SYN depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some SYN to your portfolio, the most trusted places to get some are Binance and Coinbase.