A multi-layer ecosystem of Synthereum and our go-to-market strategy

Last month, we have published the Synthereum Manifesto, a dense document providing a high technical overview of the protocol and its roadmap.

The following article is more business-oriented, to share with you our go-to-market strategy, marketing plans, and vision of a multi-layer ecosystem powered by Synthereum.

I had a dream…

Wallets can put decentralized finance and crypto in the hands of everyone if they onboard the correct technology.

While we mainly focus on the protocol powering exchanges and trading at the moment, to attract traders and liquidity, the long-term vision is for the protocol to power wallets such as Argent. Eventually, it will power our own synthetic assets-based L2 wallet...

Imagine a Revolut for DeFi… You create your account in few seconds. No ID, no KYC, just your social media account and your fingerprints. And no need to backup your private key… Like with Revolut, you can seamlessly top up your account. You take your card, and with no fees, and instantly, your old-fashioned fiat becomes a better version of it... a synthetic version of it, to be accurate. You don’t realize it yet, but you just have entered the world of DeFi.

This alone allows you to combat negative interests. And now, you can do more with your money…

• You can open an almost risk-free saving account denominated in your local currency, where your funds generate interests while being insured.
• You can invest them in a riskier investment vehicle, still denominated in your local currency, to look for double-digit yield.
• Or you can trade every day! Buy another fiat, or any crypto, stocks, indices, commodities, metals, etc.

All of this could be achieved through Synthereum, and by building multiple layers on the top of it.

Multi-layer ecosystem

Layer 1: issuance and exchange

Synthereum provides two different methods of minting synthetic assets:

• With the Bank contract, users become their own bank and can self-issue their own money by depositing collateral.
• With the Broker contract, users can buy or sell synthetic assets, or exchange synthetic assets between them, at the oracle price and without slippage (the Broker contract actually combines a mint + sell function).

Synthereum’s synthetic assets are multi-collateralized: multiple Bank and Broker contracts with different collateral can be linked to the same synthetic assets.

The Broker contract allows for cross-protocol atomic swap:

• A USDC or ETH Broker contract would allow you to buy wBTC with jEUR, using USDC or ETH as a “liquidity bridge”. The jEUR are sold to the broker for USDC or ETH, at the oracle price, without slippage, and then are swapped for wBTC on Uniswap.
• A UST Broker contract could do the same atomic swap between Mirror’s synthetic stocks and our jFiat, using UST as a liquidity bridge.

The Broker contract allows exchanging any jFiat for any asset listed on an AMM, and any Synthereum’s synthetic assets between them without the need of creating new liquidity pools on AMM. This is how a jEUR holder could seamlessly buy BTC or mAAPL.

The Broker contract comes into two versions: the spot-Broker and the derivatives-Broker. We will introduce the latter later this year.

Layer 2: yield and utility

This layer provides utility (payment, remittance, credit, etc.) and yield to any jFiat minted through the Broker or Bank contracts. The most straightforward use case to generate yield are money markets such as Aave and AMM such as Uniswap.

Note that native yield on our synthetic assets can also be generated at the protocol layer, but this has not yet been introduced.

Layer 3: trading

Trading adds another layer of utility to our synthetic assets: it could be for hedging or for mere speculation.

Trading is important as it attracts liquidity.

Layer 4: DeFi front-end

This last layer wraps all of the layers with the simple and convenient application as described above.

Layer 5: the bridge

But nothing will really be possible without powerful and liquid fiat on and off-ramp. Users should be able to seamlessly buy jEUR with EUR, jNGN with NGN, and jJPY with JPY.

This could be achieved in two ways:

• A Fiat <>ETH, DAI, USDT, or USDC on/off-ramp, and then the Broker contract to mint jFiat. This elegant solution leverages the ETH and USDC wide integration across most of the on/off-ramp companies.
• A Fiat <> jFiat on/off-ramp. This solution is the most straightforward but requires that on/off-ramp companies accept jFiat. It is complicated to convince these companies with newly launched synthetic assets (no network effect, no deep liquidity, regulatory concerns, etc.). Yet, it is strategic for us to develop such solutions, especially in some countries where ETH and USD-stablecoins are traded at a premium or are difficult to access, making the first option impossible or non-efficient.

To achieve the dream showcased in the first part of this article, to power the wallet, all these layers have to be built and attract liquidity.

How can we build this ecosystem?

First, liquidity and issuance.

We need to attract DeFi-native and DeFi-power users to bootstrap the liquidity and the issuance of synthetic assets.

• Adding various collateral to reach out to more communities will boost the issuance. AAVE (and stkAAVE), CRV, LINK, UST, etc. and of course JRT (and stJRT).
• For the liquidity, it could be achieved through incentives until the native yield can be enough to attract and retain liquidity. The protocol is flexible enough to create high-yield farming loops and enable sexy ponziconomics.

While building Synthereum, we met with a lot of non-crypto people who show a lot of interest in Fiat-based yield farming. But these investors need the protocol to be insured and secure enough before depositing liquidity. Therefore, we will also work toward launching an insured farming vault for this type of audience.

Then, business dev: integration and network effect.

These farms and minting capacities will both increase the yield, liquidity, and TVL, which will ease the integration within other protocols such as yield aggregators (yEarn, APY, Harvest), funds management (TokenSet, Enzymes), money markets (Aave, Rari) and AMM (Sushi, Curve).

Eventually, this network effect will flow into the JRT token, which will increase its utility, integration, liquidity and momentum. We will release another article next month about the JRT tokens and how to give it more momentum and liquidity.

Then, trading and scaling layers.

The whole point is to bootstrap, attract, and retain liquidity on AMMs and on the Broker contract, to power trading features.

• The atomic swap feature of the Broker contract can enable new pairs such as BTC/NGN, AAVE/DKK, UMA/JPY, mAAPL/BRL etc. with the deepest liquidity.
• The AMMs liquidity provision can be seen as Long and Short trading as explained in our Manifesto; we want to push this vision further and provide leverage trading (up to 5) combined with the risk-reduced Long/Short using AMMs, to introduce novel trading mechanics to Forex swing traders.

Trading on ETH L1 can work for some cases, but to attract traders, deploying on sidechains, layer 2 and EVM-compatible blockchains will be mandatory, and a prerequisite before starting more marketing work.

Trading using Synthereum is the PMF needed to replace liquidity incentivises with native yield, which will ensure the sustainability of the protocol.

Finally, the mass market.

This teeming underlying ecosystem lays the foundation of Synthereum and brings utility, demand, yield, liquidity, and resilience to our synthetic assets.

This allows to integrate and wrap this ecosystem within wallets, to provide payment, remittance, trading, saving account, high-yield investment vehicle, etc.

Of course, concomitantly with that, enabling on and off-ramping solutions will be mandatory.

Marketing and go-to-market strategies

As we explained it in this article, building the Synthereum ecosystem will be rolled up in three parts: building the liquidity, increasing the number of integrations, and then attracting the real end-users (our PMF).

Reaching out to new communities

As we explained above, both liquidity mining and adding new tokens as collateral could help attracting more users, liquidity, and minters.

Then, a strong business development strategy to integrate jFiat and JRT within other protocols will happen.

Scaling Ethereum

While we ideologically prefer Ethereum and L2 (Optimism, Arbitrum, ZkSync), and while we will be building our ecosystem and governance on it, we will be deploying Synthereum on a few EVM-compatible scaling layers such as Polygon, BSC, Avalanche, Solana (as soon as they support Solidity) etc. to gain a bigger user base and generate value there.

Education

Our strategy is mainly focused on education and educational influencers on YouTube and other platforms. Education is the key to capture most of the crypto newcomers and funnel them to our products.

I am already spending a lot of time on various French Discords and Telegram groups, participated in many meetups and live streams, and I will double down my presence on these channels. But I will also invest a lot of time and resources in growing my own YouTube channel (currently 40k followers) by launching DeFi lessons, tutorials, strategies, portfolio monitoring, etc. I have been using such an approach in the past and it worked pretty well: educating people allows them to discover DeFi through you, and they identify you as an expert they can trust; they will then grow your community, and follow you in your adventure.

Yet, heavy marketing for end-users will not happen before having enough liquidity in the system, yield, and deployment be on a scaling layer.

Investing in niche

We are not a Synthetix or Mirror killer. We are in a niche, without frontal competition and it will likely remain this way. Some niche markets are actually very big and promising: for ex. building out Synthereum sub-ecosystem around CHF, NGN, ZAR, BRL, PHP, VDN, JPY will position the protocol as the first mover in these regions, actively involved in crypto.

Referral and multi-level marketing

Embedding a multi-level referral system within the protocol will allow users, influencers, and developers to monetize their network, audience, community, and ideas.

Conclusion

Like in any ecosystem, all the stakeholders are very differents but dependant on each other! The layer 3 to 5 of the Synthereum’s ecosystem cannot deliver value to end-users without a solid, scalable and liquid foundation on the layer 1 and 2!

Each layer requires a different audience and communication.

Pascal (pscltllrd on Twitter).

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