Synapse to roll out Blockchain as part of major upgrade

There has long been a debate in crypto about when a token is necessary for a project to flourish.

Now several projects are asking themselves when a blockchain is necessary, and the answer increasingly seems to be yes.

Enter Synapse, which bills itself as a universal interoperability protocol that enables secure cross-chain communication. Synapse introduced a plan to deploy its own blockchain on July 28, saying the testnet would arrive within a few weeks with a mainnet launch “shortly after.”

The chain is part of an overhaul of the protocol, which Synapse calls its V2.

The blockchain will be an optimistic rollup, like Arbitrum and Optimism, that acts as an execution layer for smart contract-enabled transactions. Transactions will be settled on Ethereum and as such transaction fees will be paid in ETH.

A new class of protocols may emerge, as not just assets, but smart contract logic, begin to link different blockchains together. “The most obvious use cases are cross-chain DeFi, gaming and governance,” Max Bronstein, who stepped into the COO role at Synapse in March after working with Coinbase’s venture team, told The Defiant.

Improved efficiency

The Synapse team sees the new chain as increasing efficiency by allowing projects to deploy their smart contracts on the Synapse chain, rather than having to make individual deployments to each blockchain.

In addition to efficiency, money markets like Aave and Compound would theoretically be able to access deeper liquidity as a Synapse Chain distribution would mean the availability of assets across all 16 blockchains that Synapse connects to.

Infrastructure across chains

It is not the first time a project has attempted to develop infrastructure that enables cross-chain applications – Axelar, which raised a $25M Series A led by Polychain Capital in June 2021, has petitioned the leading decentralized exchange (DEX) of Cosmos- ecosystem, Osmose, to build a cross-chain DEX using their solution.

Regardless of the competition, the market reacted positively to Synapse’s announcement – ​​the protocol’s SYN token is up 32.4% in the last 24 hours after a dramatic spike when the news broke.

While SYN won’t be used to pay transaction fees, at least initially, it will be used for efforts to incentivize valid transactions as part of what Synapse calls its “optimistic verification model,” which is part of V2.

Bridges have been the most vulnerable piece of crypto infrastructure to date – an Into The Block report in April estimated that well over a billion dollars have been lost in hacks targeting bridges. Synapse is not immune to the high-risk environment – according to a Synapse Medium post, the bridge protocol suffered a hack that could have resulted in a loss of $8.2 million last November, although no funds were lost.

Synapse has seen its monthly volume fall since it peaked at $2.6 billion in January. Broprotokollen has processed $185.9 million in July with three days left in the month, according to Synapse’s analysis page.

The announcement of a chain comes on the heels of derivative protocol dYdX’s announcement to launch its own chain. Synapse’s chain differs in that it sits on top of Ethereum as a rollup, rather than being a standalone chain like dYdX’s.

Still, with DeFi Kingdoms Kingdom launching its own chain in April on Avalanche Subnets, it’s clear that more and more projects are considering launching custom chains as the infrastructure to do so builds out.