What Is Synonym?

Synonym Finance
5 min readJan 5, 2024

Introducing Synonym

Synonym is a universal, cross-chain credit layer that allows users to lend, borrow, and earn interest on native assets between different blockchains, while maintaining simple, unified accounts to view and interact with all open positions. By using infrastructure that combines assets across chains, Synonym fixes some critical issues that have plagued DeFi’s inability to scale.

Currently, there are 2 problems that Synonym aims to solve: liquidity fragmentation and inefficient bridging systems.

Liquidity Fragmentation

Scaling has undoubtedly advanced in some areas of DeFi, such as rollups and sidechains. However, with the addition of more blockchains comes the problem of fragmented liquidity. In order for any new blockchain to be successful, it needs a solid foundation of liquidity to fund an ecosystem of apps. Building that foundation can be difficult, and it usually requires large incentive schemes that may or may not attract a lasting supply of liquidity. Without a solution to seamlessly use the same liquidity on multiple chains, liquidity will likely make its way back to the largest chains over time.

Inefficient Bridging

The increase in the number of blockchains has resulted in an increase in the number of bridging solutions, which transfer assets back and forth between blockchains. However, bridges come with their own share of issues.

Bridging assets between chains requires complex transactions that can take a long time and have high fees. And since new blockchains are frequently launching, it may take multiple “hops,” or bridge transfers, to get from one blockchain to another.

Bridging infrastructure has been another point of contention, and many safety flaws have been exposed in recent years through a number of hacks and lost funds. For example, wrapped tokens can deviate from their underlying token’s price, and liquidity pools on bridges have proven to be vulnerable attack vectors.

Synonym’s Solutions

To solve these problems, Synonym is focused on creating a chain-agnostic user experience. In other words, users should feel like they’re using one singular platform rather than interacting with multiple blockchains. Synonym can achieve this through their integration with cross-chain messaging platforms such as Wormhole and Circle CCTP, which eliminate the need for traditional bridges. By leveraging these messaging services, Synonym unifies, rather than fragments, liquidity across blockchains.

Therefore, when it comes to the budding ecosystem of new L2 and even L3 blockchains, Synonym can turn the liquidity fragmentation problem into a major growth driver. As stated earlier, more chains means more liquidity fragmentation, but this is due to a lack of effective ways to transfer assets to these new blockchains. Cross-chain messaging solutions like Wormhole and CCTP are changing that, and Synonym is using their technology as a foundation for their platform.

A complex omnichain system such as this has many benefits, but our top priority is making sure our users are fully protected. In Q4, we completed two audits by OtterSec and another by Runtime Verification; both of these auditing firms have very positive reputations.

Hub And Spoke Model

Synonym plans on expanding across many chains via the “hub-and-spoke” model. Its central “hub” will remain on Arbitrum, while all connected chains will be spokes. We chose this model to minimize the chances of any connected chains storing inconsistent data.

All transactions on each connected chain will be stored on Arbitrum in the order they’re received to create a central accounting ledger, and each spoke chain will derive its own state log from this ledger. This streamlines the communication process and ensures that no two chains have conflicting information. When dealing with a rapidly expanding ecosystem of blockchains, it’s crucial to maintain consistency in each one’s transaction history.

$SYNO Tokenomics

As a quick preface, Synonym Finance completed a merger with New Order DAO in August 2023. Part of the merger proposal stated that New Order’s NEWO token would be converted into SYNO tokens. So, there will be a total of 800 million SYNO, equivalent to NEWO’s total supply.

38% (304 million SYNO) will be reserved for veNEWO stakers, who will be able to exchange their veNEWO for tSYNO at a 1:1 rate.

The rest of the distribution will be as follows:

  • 20%: Synonym Team
  • 20%: Emissions

110M SYNO will be distributed as incentives over a 15-month period, the remaining 50M will be distributed in perpetuity.

  • 10%: Investors
  • 7%: Reserve

This will fund future growth costs such as marketing and unexpected future opportunities.

  • 5%: Ecosystem

Ecosystem funds will serve as incentives directed toward partnerships and general ecosystem support

The SYNO token is expected to go live in Q1 2024 and will play a vital role in our ecosystem of products. There are also two SYNO token derivatives that users can hold to earn platform fees: tSYNO and vlSYNO.

tSYNO

NEWO stakers will be able to convert to tSYNO, which will undergo a 15-month vesting period. Holders of tSYNO will receive 10% of interest paid on Synonym’s borrowed assets. Additionally, all veNEWO holders are eligible to receive rCT: a soulbound token representing a claim on the BTRFLY and Y2K tokens within Synonym’s (formerly New Order DAO’s) treasury.

vlSYNO

Lenders on Synonym can lock up to 10% of their deposits in vlSYNO, which will be an 80/20 BPT containing 80% SYNO and 20% ETH. Like tSYNO, vlSYNO tokens will accrue borrowing fees in the form of SYNO as well as real yield from borrowed assets, providing an additional stream of income for lenders. Depositors will be able to choose how long their vlSYNO is locked; locking for the maximum duration (1 year) will earn 40% of the platform’s borrowing fees.

Looking Ahead

So far, we’re thrilled with the growth that our platform has seen on testnet. Since our testnet launch on November 13th, over 86,000 transactions were recorded in less than 6 weeks!

Looking beyond the testnet era, our mainnet launch is also in the works! Our target for mainnet launch is Q1 2024; our mainnet app will launch in conjunction with the SYNO token.

In short, 2024 holds massive potential for Synonym as we take omnichain money markets to the next level. To stay up to date on all of our progress, make sure to follow us on X as well as join our community on Discord.

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