We are happy to announce the upcoming partnership between SynFutures and Polygon.
This will allow traders and miners to trade Decentralized Hash Rate Futures with near-zero gas fees via the Polygon network for the first time.
Since the last halving in May 2020, a little over 403,000 new Bitcoins have been mined (as of July 2021). Before we reach the year 2140, an additional 2.23 million new Bitcoins will have been mined (worth $68 billion based on today’s price, and it’s continuously increasing).
The average Hash rate has dropped from an ATH of 200 Exahashes/s and is currently hovering around 96.51 Exahashes/s, considerably a more than 50% drop from its previous peak. However, the rate is expected to rise soon as miners continue to relocate their equipment and set up operations in more friendly jurisdictions.
Although this has occurred, the mining industry has always been dominated by large centralized players. However, even these larger players see significant fluctuation in output due to the mining difficulty adjusting mechanism embedded in the Nakamoto consensus.
SynFutures is leaping forward by introducing the Hash Rate Futures, a derivative containing all of the risk factors affecting the return on mining Bitcoins. It has the right team and infrastructure to create a fully decentralized and trustless derivative for the mining difficulty of Bitcoin.
When designing its Hash Rate Futures product, SynFutures tried to achieve practical usage and economic value – its primary concerns by looking at traditional financial market products for guidance.
Interest rate futures are used to speculate or hedge against the change in interest rates (LIBOR in the case of Eurodollar, and USD deposits outside the U.S)…The notional for a contract represents the principal amount for a deposit, with the implied interest rate set for three months after the expiration of the futures contract.
For example, a price quote of $97.45 signifies a deposit rate of 2.55% per annum. In this way, an abstract interest rate index is converted into an economically meaningful value: to get $100 in one year, we need to deposit $97.45 today.
Similarly, SynFutures’s Hash Rate Futures represents the total block mining reward in Bitcoin per PH hash rate, with the implied difficulty for 14 days after the expiry block ( which is always a difficulty resetting block). With this design, the futures contract can be used to perfectly hedge the change in mining difficulty. More importantly, every future difficulty resetting block can have a futures contract expiring on that block for hedging needs. The miners can now easily hedge using derivatives:
1. Short the Hash Rate Futures to hedge against the risk of the increase in mining difficulty and lock in the number of new BTC mined.
2. Short BTC/USD futures with the BTC amount implied by the Hash Rate Futures above to lock in the total USD revenue.
3. Long electricity futures so that the power cost is determined.
SynFutures is an upcoming derivatives protocol, currently in V1 Closed Alpha phase. The team is a combination of crypto natives and Wall Street top guns, with the idea to build a solid infrastructure for future DeFi derivatives on Ethereum and other L2/side chains. In June 2021, SynFutures announced $14mn Series A funding led by Polychain Capital with participation from Framework, Pantera Capital, Bybit, Wintermute, CMS, Kronos, and IOSG Ventures. Earlier in 2021, it announced a seed round backed by Dragonfly Capital and Standard Crypto.
Polygon is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building and connecting Secured Chains like Plasma, Optimistic Rollups, zkRollups, Validium, etc, and Standalone Chains like Polygon POS, designed for flexibility and independence. Polygon’s scaling solutions have seen widespread adoption with 450+ Dapps, ~350M txns, and ~13.5M+ unique users.
If you’re an Ethereum Developer, you’re already a Polygon developer! Leverage Polygon’s fast and secure txns for your Dapp, get started here.