Synthetix launches alpha version of V3 spot market, here’s a quick overview of its main features and functionalities

Synthetix launched V3 spot market alpha version with key features and functionalities.

Asset protocol Synthetix has released the alpha version of its V3 spot market, which allows anyone to exchange stablecoins and synthetic assets under the V3 protocol. Synthetix has outlined the new features and advantages of the V3 spot market in an article, and stated that Preps V3 is currently under construction and will be integrated with the spot market to allow Synths to be used as collateral positions.

Powered by Synthetix V3, the spot market allows anyone to exchange synthetic assets for stablecoins using the V3 protocol. As per SCCP-304, the spot market system deploys Synthetic ETH tokens by creating a market for them. Synths comply with the ERC-20 standard, which means they are compatible with a wide range of protocols, standard smart contracts, and wallet applications. While the spot market uses the same tools and tech stack as the core system, it is technically an independent system.

One advantage of “atomic orders” is their composability, as any smart contract can integrate with the spot market, allowing orders to be fulfilled as part of another function. The ability to generate quotes and place orders can also be used to build integrations, specifying the expected amount received at the exchange. However, a disadvantage of atomic orders is the risk of front-running, which can be mitigated by the market applying a fixed fee. Additionally, the spot market has implemented asynchronous orders to effectively solve the issue of front-running.

Regarding the issue of expanding derivative liquidity, the V3 spot market achieves the functionality of wrapping and unwrapping by providing collateral to the core system.

New features of the V3 spot market include: 1) Skew fee, which is intended to enable the wrapper spot market, similar to the premium/discount function in V2, incentivizing traders to buy or sell to reduce slippage; 2) Utilization fee, which is introduced to help limit the risk of liquidity providers to price behavior as the V3 system can control the contracts between liquidity pools and markets more precisely; 3) Interest rate, which the market can enable for low swap volume Synths, and the decaying token module implements an approximate interest rate formula on-chain to adjust Synth balances and charge fees.

Reference: https://blog.synthetix.io/spot-market-v3-alpha-release/

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