Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned or future tokens by SyncSwap or zkSync. This tutorial is for informational purposes only and should not be the basis for any investment decisions. DeFi Dad is not an investor in SyncSwap.
Having recently launched, zkSync Era, the world’s first ever zkEVM, is quickly attracting a new class of DeFi dApps and builders with over $119M of liquidity deposited. We know from the launch of Optimism and Arbitrum, DEXs are critical infrastructure for a thriving Ethereum L2. One protocol leading the pack in terms of trade volume and liquidity is the decentralized exchange SyncSwap. SyncSwap has impressively dominated liquidity on zkSync Era with ~30% or more of total TVL on zkSync Era on any given day.
Like other AMMs, SyncSwap relies on 2 major products: Swaps (traders) vs Pools (liquidity providers). SyncSwap supports 2 styles of pools–Classic which is a 50/50 ratio of 2 tokens, similar to Uniswap V2, and Stable, which is optimized for stablecoin trading and utilizes a hybrid algorithm of both the constant product and the constant sum. SyncSwap docs indicate they will offer “Concentrated” Pools soon, which will concentrate liquidity around the market price dynamically and provide a tighter spread around the market price. It’s also worth noting that unlike other AMMs on L1, SyncSwap allows for low cost, fast transactions thanks to the L2 tech underpinning zkSync Era.
As of this writing, there’s collectively only $4M in daily trade volume being tracked by DeFiLlama on zkSync Era in the last 24 hours, including $2.2M on Maverick and $1.19M on Mute but according to Coingecko, there is another $8.3M in trade volume just on SyncSwap!
According to liquidity, the most popular Pools for earning as an LP on SyncSwap are below. Over 90% of SyncSwap’s $39.4M in liquidity is just 2 pools: USDC/ETH + BUSD/USDC.
Another notable feature of SyncSwap is their “Dynamic Fees.” Trading fees are highly customizable on SyncSwap and can be adjusted according to market conditions or at the will of future governance voting.
Variable Fees: Variable fees allow fees to be separately adjusted for different pool models and specific liquidity pools.
Directional Fees: Directional fees allow a liquidity pool to have custom trading fee tiers in different directions, which includes two directions: buy a token or sell a token.
Fee Discount: A fee discount will be available for token stakers in the future with different fee discount tiers. The more tokens that have been staked, the higher the discount ratio is.
Fee Delegate: With fee delegation, it’s possible to delegate the trading fee of specific pools to partner ecosystem projects dynamically, based on a future governance vote.
Personally, I have enjoyed testing out the SyncSwap UI. The design is similar to my other favorite AMMs like Uniswap but arguably cleaner. They also have some new features like “Time Machine” where you can track your total performance in a Pool as an LP, combined with earned fees and Impermanent Loss (IL) since your “last action.” Check it out under Pools -> My Position!
As of this writing, there is no live SYNC token but the SyncSwap docs indicate it will have a 100M…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
