dHedge launches as Synthetix based non-custodial asset management platform

dHedge is a new decentralized asset management platform powered by Synthetix and recently announced that it is coming out of stealth mode. Synthetix is a asset issuance protocol hosted on the Ethereum (ETH) platform blockchain that allows users to mint, hold, and trade a diverse range of derivatives based on assets including cryptocurrencies, fiat currencies, and commodities.

dHedge will launch with a trading competition run on the Etereum Ropsten testnet with Synthetix network token (SNX) and DHT available as prizes. DHT is the dHedge native governance token and is designed to bootstrap the system and enable decentralization.

125,000 DHT and 5,000 SNX in prizes up for grabs for the best performing asset managers. The competition is intended to introduce traders to the concept of non-custodial mimetic trading and begin the process of building awareness and create a community of asset managers on the dHedge platform.

dHeadge is backed by a number of crypto investment firms, including Framework Ventures, Three Arrows Capital, BlockTower Capital, DACM, and Maple Leaf Capital. dHedges states that the aim of the platform is to “democratize the investing experience by leveraging the unique capabilities of Ethereum and Synthetix.”

Kain Warwick, the founder and CEO of Synthetix, has said that dHedge is one of the first platforms to fully utilise the power of the Synthetix protocol. “I’m extremely excited for its impact not just on the Synthetix ecosystem, but for DeFi at large,” Warwick said. “I can’t wait to see what dHedge will ship in the weeks and months ahead”.

Synthetix initially began as a stablecoin project called Havven and was founded by Warwick. Defipulse currently lists it as the 4th largest protocol in DeFi with US$434 million currently staked. Its native token, the Synthetix network token (SNT), currently has a listed market capitalization of US$378.1 Million on Bravenewcoin.com, with the value of the token rising ~155% in the last month.

The protocol utilizes synthetic assets, known as synths, that are collateralized by the Synthetix Network Token. The system is similar to the MakerDAO model, in which Ethereum (ETH) is locked up to create the US dollar stablecoin Dai (DAI).

The most recent version of the Synthetix litepaper suggests that this pooled collateral model enables users to perform conversions between Synths directly with the smart contract, avoiding the need for counterparties.

In the Synthetix protocol, SNX is locked up to create assets like synthetic USD (sUSD) or synthetic BTC (sBTC). The sUSD or sBTC acts as debt, while SNX acts as the collateral. SNX can be staked as collateral to potentially create a variety of synthetic assets or synths. Synths are currently backed by an 800% collateralization ratio. Creators of synths must manage debt positions that change based on the value of the underlying asset their synth is based on.

The Synthetix network token holders can also stake their SNX in return for a share of fees from the Synthetix exchange, and rewards from the system’s inflationary monetary policy. The token is designed so that the more SNX that is staked and locked as collateral, the less becomes available in the market, and the more valuable the token becomes.

The Synthetix system has a requirement to report accurate pricing information for digital assets like Bitcoin and Ethereum as well as assets from external markets like the Euro and Japanese Yen.

Initially, to get this price information, Synthetix used centralized price feeds or oracles. More recently, the project partnered with ChainLink (LINK) and takes advantage of its decentralized oracle system. This brings pricing information to its blockchain without needing to trust a centralized party.

In March 2020, the Synthetix team reported that it was working to support the trading of traditional asset classes including equities, ETFs, indices, and more. As part of this announcement the Synthetix team also mentioned that they are working on creating capabilities for leveraged synths, advanced order types on the native Synthetix exchange, alternative collateral types for synth contracts including Ether, DAI and BTC, and Synthetic futures.

On June 30th, Synthetix released native Binary options as part of the protocol’s Acrux upgrade. Binary options are a type of options contract that provides a fixed return based on a binary, yes or no, outcome in the future. The contracts payout on a certain date if the price of a chosen asset is above or below a level specified at the creation of the option.