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Overview
Synapse is a generalized cross-chain communications protocol that seamlessly connects decentralized applications across all chains. The project started as Nerve, a simple AMM on Binance Chain that enabled users to move assets between Ethereum and Binance Smart Chain but in 2021, the project transitioned to Synapse with loftier interoperability goals in mind.
The Synapse Protocol comprises a messaging architecture and a robust token design for achieving consensus regarding the validity of inter-chain transactions. It presents an expandable set of smart contracts that can be implemented on any blockchain, allowing developers to create native cross-chain applications.
As a base layer protocol, Synapse consists of three main components: Generalized Cross-chain Communication, an Optimistic Security Model, and the Synapse Bridge. Currently, the Synapse Bridge is the primary product, utilizing the Synapse network and cross-chain AMM. However, the team has plans for a Synapse v2, as well as a future Synapse PoS Chain enabling developers to build truly cross-chain applications, including cross-chain DEXs, lending platforms, yield aggregators, and more. However, the primary bridge still currently runs on an MPC with a few signers.
SYN Token
Why Hold the SYN Token?
The native token of the Synapse Network, SYN, is used to;
- bootstrap liquidity and provide incentives for liquidity pool stakers.
- govern the Synapse DAO.
- once the Synapse Chain launches, provide economic security to the chain, much like any other PoS chain.
Notaries will post bonds in SYN prior to attesting to transactions. Should the notaries act maliciously, the SYN can be slashed. Notaries will be compensated with a portion of the transaction fees. There's a nine bps bridge fee for every transaction, which, for now, goes 100% toward the treasury. The DAO could vote later to turn on fee generation for token holders who could split that fee.
Initial SYN Distribution
Remember that Synapse began as Nerve on the Binance Chain. Because of this, the project had to migrate over the token from NRV to SYN. The team did so in 2021 at a rate of 1 NRV = 2.5 SYN. The total supply of SYN is 250M. There are currently ~190M circulating.
New tokens are released as rewards, as discussed in the Technology section.
Currently, ~197,400 SYN are released per week. At this rate, the full 250M supply cap will have been issued by January 2025.
Currently, emissions are distributed as such on a weekly basis
- Stable pools
- 20,160 - nUSD pool on Avalanche
- 19,958 - nUSD pool on Arbitrum
- 17,388 - nUSD pool on BSC
- 15,875 - nUSD pool on Fantom
- 15,120 - nUSD pool on Polygon
- 7,056 - nUSD pool on Optimism
- ETH pools
- 10,080 - nETH pool on Avalanche
- 13,305 - nETH pool on Arbitrum
- 5,040- nETH pool on Optimism
- Other: 59,038 - SYN/ETH Sushi LP on Ethereum
Total: 197,400 per week for a ~5.4% annual inflation.
SYN Token Distribution
As of Q1 2023, there are relatively few SYN token holders, totaling ~6500. The top 100 addresses hold ~75% of the tokens in circulation.
Synapse Bridge Usage
As of Q1 2023, Synapse bridge is currently connecting 15+ of the top blockchain protocols, including Ethereum, Ethereum rollups, BNB chain, Polygon, Fantom, and more.
The figures and charts below illustrate a few interesting takeaways from Synpase usage. Unsurprisingly, overall TVL is way down over the course of 2022 and into 2023. The bridging space is quite competitive and the bear market has resulted in most things contracting 70%+. Synapse TVL has gone from a peak of ~$280M in 2022 to sitting around $100M in February 2023.
A somewhat surprising recent revelation is that TVL on Arbitrum is now rivaling and, at times, surpassing the TVL on Ethereum. These two chains make up 70%+ of Synpase’s overall TVL, suggesting users are using other bridges for alt-L1s or there simply isn't the demand.
Despite Arbitrum TVL in Synpase pools at times exceeding Ethereum’s, Ethereum is still the dominant leader in volume (image below) while Avalanche and its subnets (DFK) lead daily transaction count. DeFi Kingdoms (DFK), a popular blockchain gaming protocol, recently integrated a bridge to an additional “realm” on the Avalanche blockchain. Due to the tokenomics of DFK, this integration raises the transaction volume of the ecosystem, as can be seen in the image below.
Fees (green) and token price (purple) remain low compared to the early 2022 highs. Source
Daily active users of Synapse are trending up in 2023, regularly exceeding 1000. Source
