Synapse Network: Connecting Multiple Chains Together

The Synapse Bridge, which leverages AMMs deployed across 15+ EVM and non-EVM blockchains to allow users effortlessly move assets between all chains, is the first application built using this cross-chain protocol. Users can now utilize Synapse to transfer assets between the most popular EVM compatible blockchains. Out of all the interoperability options, Synapse presently provides the deepest liquidity.

How does Synapse Work?

Cross-chain multi-party computation (MPC) validators protect the Synapse network by using threshold signature techniques (TSS). The network has no leaders, and each validator maintains security by running the exact process when receiving on-chain events on the many chains that the MPC validator group monitors. 

The network reaches consensus and issues a transaction to the target chain once two-thirds of all validators have collectively signed the same transaction using their key.

They also receive SYN as a rebate for gas expenses on the Ethereum network, which can be a costly part of running a validator otherwise. Validators' staked SYN balances are slashed if they participate in irresponsible or malicious behaviour that affects the network to maintain their honesty.

What is nUSD?

The nexus stablecoin liquidity pool on Ethereum, which includes DAI, USDC, and USDT, fully backs the nUSD, or "nexus" USD, a cross-chain bridge asset. The nUSD currency is used to facilitate asset trading between blockchains.

What is nETH?

nETH, or "nexus" ETH, is a cross-chain asset pegged to ETH and entirely backed by the ETH-only nexus ETH on Ethereum. nETH is a protocol that allows ETH to be quickly bridged to and from L2 networks like Arbitrum.

Bridge Fees

By default, the Synapse bridge charges. 0.05 percent every bridge transaction, with a chain-specific minimum cost based on average gas fees on that chain.

Tokenomics of Synapse

Synapse has its own SYN is used as a reward for liquidity providers, voting on community governance choices that affect smart contract upgrades or DAO treasury spending, and the Synapse network's native token for transaction fees.

Uses of SYN Token

Governance

SYN is also Synapse Protocol's governance token, allowing early adopters and future investors to have a say (and a share) in the protocol's evolution.

Any SYN token holder with more than 50k tokens can submit a snapshot proposal to the Synapse DAO. As a result, SYN is used to gain community approval for protocol-level changes to smart contracts and actions paid for with DAO treasury funds. This includes a regular re-evaluation of the SYN emissions rate, as well as, if necessary, adjustments to the supply cap.

Protocol Fees

Protocol fees are divided between liquidity providers and the DAO treasury, from which they can be directed for community governance actions that promote SYN. This allows the treasury to collect non-SYN assets (mainly stables) while also allowing the protocol to generate demand to build the price floor required for flexible regulation of SYN emissions and supply.

Validator Economics

Validators, who provide the most critical job by safeguarding the network, are not the only integral protocol adopters who must be encouraged to benefit from the protocol. SYN may also be used as a subsidy to reimburse validators for gas spent on Ethereum to assist them to operate within the Synapse network.

Synapse Chain

Validators will be required to stake SYN when the protocol reaches its Archean, Proterozoic phases and the Synapse Chain is deployed, and validators will earn network fees. Because the Synapse Chain will be secured by Proof of Stake consensus, anyone can help secure the chain by delegating SYN to validators (and earn a portion of block rewards). SYN can be used to pay for internal network transactions and bridge to other chains.

Providing SYN with Liquidity

On Sushiswap, Synapse holders can give liquidity to SYN. SYN or SUSHI emissions are used to incentivize this. Third-party DEXes have also placed SYN on their platforms to incentivize holders to offer liquidity in exchange for a piece of the SYN trading volume.

This was the situation with Trader Joe's on Avalanche (SYN/AVAX) in the past, and it continues to be the case with Solidly on Fantom (SYN/USDC and SYN/FTM) and IDEX on Polygon (SYN/ETH) in the present. Without Synapse Protocol's approval, any DEX can list and create incentives for SYN (DYOR).

Furthermore, on February 23, 2022, Synapse used its voting power on Solidly to incentivize an SYN/USDC pool.

Token Supply

The maximum supply of SYN tokens is 250,000,000. Emissions of SYN to liquidity providers boost circulation supply. SYN emissions are currently around 296k per week (down close to 75 percent since the launch of Synapse in September 2021)

Upon the launch of the Synapse Protocol, SYN was distributed. Synapse took its current shape due to community governance and an airdrop to NRV holders: NRV holders were rewarded 2.5 SYN for every NRV they had at the time of the snapshot on 22-Sep-2021, whether as NRV, staked as xNRV, or in an NRV-BUSD or NRB-BNB LP.

This indicates that at the time of Synapse Protocol's debut, all SYN holders were also NRV holders. Holders of unvested NRV were also given 2.5 unvested SYN. The Synapse DAO will decide how to deal with the unvested SYN through future governance activities.

 Conclusion

The stated purpose of Synapse is to attract a developer ecosystem to build on top of its cross-chain liquidity. Ecosystem developers can focus on developing unique use cases like cross-chain collateral, intelligent yield aggregation, and deeper, more efficient lending markets by solving the cross-chain liquidity problem natively.

Furthermore, ecosystem developers can concentrate on creating more elegant user experiences that allow users to engage smoothly between layer 1s while maintaining governance in a single location. Synapse offers actual value by solving the cross-chain liquidity problem and will be rewarded for doing so by native L1 dApps that want Synapse to route through them.