Synthetix Expands: $USDx Fuels New Multi-Collateral Perps on Kwenta

Synthetix recently unveiled USDx, a stablecoin and collateral instrument for Synthetix on the Layer-2 Ethereum scaling solution called Arbitrum. USDx is the stablecoin in the Arbitrum ecosystem that is supposed to provide better liquidity and collateral for the platform.

Multi-collateral Perps is live on @Kwenta_io, featuring $USDx as our Arbitrum-native stablecoin collateral option

How does USDx play a key role in the Synthetix ecosystem?

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— Synthetix ⚔️ (@synthetix_io) November 1, 2024

Synthetix’s liquidity providers, popularly called LPs, can mint USDx by their deposits in Arbitrum pools on zero-interest loans. This setup enables LPs to access more DeFi opportunities on Arbitrum, making USDx a strategic instrument in the Synthetix universe.

Ensuring Stability Through Over-Collateralization

For price stability, USDx is over-collateralized by staking the deposited funds to Synthetix liquidity pools. When the collateral for a position declines to the minimum required ratio, that position is closed out. This mechanism guarantees that USDx stays safely collateralized at all times, thus preventing its value from suffering the effect of shifting market situation. The over-collateralization mechanism is supposed to make the USDx a stable asset for its users and mitigate the fluctuations within the ecosystem.

USDx Powers Synthetix Perps on Kwenta

In addition to this, USDx has been assigned as the reference currency for Synthetix perpetual futures (Perps) on Kwenta, one of the most used decentralized derivatives. PnL for traders is separated in USDx to help make trading more seamless on Arbitrum. The 1inch aggregator allows users to trade USDx for any other asset on the Arbitrum blockchain. Also, LPs offering liquidity to the USDx/USDe pool on Curve Finance earn fees on 1inch trade routing, with the claimed variable annual percentage rate (vAPR) for the USDe+USDx pool on Convex Finance above 16%.

Expanding Options with 81 Perp Markets

This rollout includes USDx but also 81 new Perp markets and four collateral choices to improve trading on Kwenta. Besides USDx, the available collaterals include Wrapped Bitcoin (tBTC), Ethereum (ETH), and Ethena USD (USDe), which would ensure more convenience and variety for users. In this manner, working on these new assets has allowed the derivatives liquidity protocol to expand its target audience and help improve the general depth of Arbitrum’s DeFi market.

For instance, the public can try these offerings on Kwenta through the App and see the future of USDx in the Synthetix Arbitrum ecosystem. This growth is an achievement that puts the derivatives liquidity protocol on the list of players in the decentralized finance on Layer-2 solutions.

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