DeFi options platform uses social logins, margin trading to draw in liquidity

Synquote Launches DeFi Options Platform with Social Logins and Undercollateralized Trading

A new DeFi options platform that utilizes social logins and undercollateralized trading to attract liquidity providers has just been released, as announced on June 15. The protocol, named “Synquote,” is said to be able to process large trades with much less slippage than other options platforms, according to the team.

As per the announcement, Synquote achieved more than $25 million in notional volume during its beta period that began on March 17. The largest trade during this time was for a notional volume of $1 million, and was executed without any noticeable slippage, the developers informed Cointelegraph.

In an interview with Cointelegraph, Ahmed Attia, the founder of Synquote, elucidated the strategy the protocol uses to draw in liquidity. Rather than utilizing an automated market maker to set prices, the off-chain, peer-to-peer request-for-quote protocol matches buyers and sellers, which facilitates greater versatility in the orders that can be placed by market makers.

Secondly, the protocol enables liquidity providers to make trades with less than the necessary collateral. For instance, they can issue or market options with “as little USDC [USD Coin] as one-tenth of the underlying asset’s worth if [they’re] selling a short-dated naked call.” According to Attia, permitting undercollateralized trades is the sole way to draw in big organizations to the DeFi space, declaring:

At the public launch, it was announced by the Synquote founder that social logins were also incorporated. Both market makers and traders can now sign in with their Google credentials without requiring the download of a wallet or memorizing seed words. This is made achievable due to the Web3Auth platform, a form of new wallet technology that permits seedless wallets.

Synquote Risk-Management Measures Aim to Prevent Liquidity Issues

Premia, a DeFi platform powered by anonymous sources, has gone live.

In the past, some platforms with inadequate collateral have experienced liquidity issues during substantial market volatility. As an example, the Vires.Finance lending application on Waves encountered frozen withdrawals in April 2022, due to its liquidation system being unable to handle the sudden drop in cryptocurrency values during that time. The app was later restored through a “revival plan.”

Attia asserted that the Synquote team is cognizant of this potential danger and has adopted very prudent risk-management measures to assist in averting a crisis on Synquote.

He stated that their margin requirements are still quite cautious. After running many simulations with past data, they have discovered that even in times of extreme market fluctuations, such as on the day FTX went bankrupt and the market plummeted, the system is safe and the liquidation system responds in a timely manner.

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