Kwenta is a decentralized derivatives trading platform that offers perpetual futures and options trading. It launched in 2022 and was born out of the Synthetix community.
Let’s dive in!
How does Kwenta work?
Kwenta offers “derivatives trading with infinite liquidity.” Users can gain exposure to a range of assets with up to 25x leverage.
It offers access to real-world and on-chain synthetic assets and is powered by the Synthetix protocol.
Click here for Kwenta’s 2023 roadmap.
What are synthetic assets?
‘Synthetic’ assets or ‘synths’ reflect the price of their real-world counterparts. Think of synthetic materials (materials made by people rather than those found in the natural environment).
An example is sBTC, which mirrors the price of BTC (Bitcoin). However, Synths can be used for any real-world asset (oil, gold, FTSE 100, and even property). Synths can also be described as ‘derivatives.’
What are perpetual futures?
Perpetual futures are a type of derivative contract. Derivatives are based on the value of an underlying asset- its ‘derived value.’ The two most popular types of derivatives are futures and options.
‘Perpetual futures,’ better known as ‘perps,’ are commonly used in crypto.
A future is an agreement to purchase an asset (such as Ethereum) at a point in the future.
‘Perpetual’ refers to the fact that there’s no settlement date. They roll on until you close the position.
Synthetix
Kwenta is built on Synthetix, a derivatives liquidity protocol. This means that the liquidity Kwenta traders can access is created entirely by Synthetix stakers.
Optimism
To allow for scaling derivatives trading, is built on Optimism’s Layer 2, using Synthetix smart contracts. This helps to minimize gas costs and trading fees.
KWENTA
It is a community-run protocol that’s governed by the KWENTA token. Its governance framework allows the community to coordinate on maintaining and improving the protocol.
Holders can stake their KWENTA to receive staking rewards and earn voting power.
Tokenomics
KWENTA had an initial supply of 313,373. Weekly emissions start at 14,463.37 KWENTA and will drop to around 200 KWENTA after 4 years. This will result in a total supply of 1,009,409.43 at the end of 4 years.
The supply is distributed as follows:
- 30% to Synthetix stakers
- 5% to early synth traders
- 5% to investment
- 25% to community growth fund
- 15% to core contributors
- 20% to treasury
