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Mirror takes on Synthetix, Funding Depressed, Aave Dominates Lending

Jun 28, 2021 · 3 min read

By Jeremy Ong, and Ashwath Balakrishnan

Market Update

Markets opened strongly after testing range lows amidst weekend weakness, albeit with lower volumes. Hash rate exodus continues as the China mining & derivatives clampdown continues. ETH showing long awaited strength against BTC after weeks of weakness.

Mirror Eclipses Synthetix In Terms of Trades Per User

  • Mirror protocol eclipses Synthetix as the top DeFi synthetic assets platform with more than 3,000 daily active users (DAUs) compared to 60-70 DAUs on Synthetix.
  • User stickiness of Mirror Protocol is also astounding, each user does an average 4-5 trades per day, compared to only 1.2-1.3 on Synthetix.

But Average Volume Per User Is Much Higher On Synthetix

  • On the surface, it looks like Mirror appeals more to cost-sensitive users, leveraging on the low fees that the Terra blockchain offers while Synthetix is the preferred synthetic assets exchange for whales.
  • However, Synthetix’s design requires stakers to take on the other side of all trades. So when users stake SNX and mint sUSD against it, they have to constantly position themselves to mimic the debt pool to avoid increasing their debt relative to their synths held. Together, with the low user count and high volume per user, it’s clear that Synthetix is a whale dominated exchange with a few large traders who are also SNX whales.

BTC and ETH Funding Rates Are Depressed

  • Sustained FUD, panic selling and market weakness has led BTC and ETH funding rates into unchartered territory (weeks of negative funding). This is possibly due to increased flight to safety and hedging demand from spot holders during this period of uncertainty.
  • Our take on this is that even though market sentiment is weak at the moment, negative funding rates would not persist in the medium to long-term as we are still long-term structurally bullish BTC and ETH.

Aave Continues To Dominate Lending

Notable Tweets

Dune Analytics now supports Polygon.

NFTX launches v2.

Community update thread on Alchemix

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