Polysynth , a Polygon-based synthetic asset platform, has secured investments from several DeFi venture capital firms and angel investors.
The team announced a $ 1.5 million funding round as part of its initial round on November 15, revealing the involvement of Jump Capital, DeFi Alliance, Hashed, and various individuals including Alan Howard, co-founder of Brevan Howard Asset Management, and the co-founders of Polygon, Sandeep Nailwal and Jaynti Kanani.
The platform is currently in beta, testing only a handful of assets, including perpetual futures for BTC, ETH, and MATIC . When live on the mainnet, the protocol aims to create derivatives for 100,000 different cryptocurrencies.
Polysynth will offer a scalable virtual market maker (VMM), which the team claims to offer several advantages over a traditional order book or automated market maker .
A VMM does not use the collateralized debt position (CDP) model that typical automated market makers employ . Instead, traders use the stablecoin collateral to open long or short positions for each synthetic asset. They can access liquidity and other benefits, such as low slippage and better quotes, by providing stablecoins and using them to buy and sell synthetic assets directly.
Jump Capital partner Saurabh Sharma explained that “Polysynyth eliminates capital inefficiency in the traditional overcollateralized approach and therefore significantly reduces barriers to mass adoption.”
He explained that current synthetic asset solutions generally require five times the collateral and manual rebalancing, adding that “Polysynth’s VMM-based model eliminates these challenges by allowing traders to trade against a constant virtual product curve . ”
To generate use of its beta version, the protocol will launch a trading competition on November 16. Users who generate the highest returns or report errors present on the platform will be eligible for cash rewards.
PolySynth also declared its intention to form a decentralized autonomous organization and launch a governance token in the future.
According to DeFiLlama , there is currently $ 4.92 billion locked across the entire Polygon ecosystem. The network provides second layer scalability for Ethereum.