Synthetix’s Return to Ethereum Mainnet and Recent Trading Competition
Synthetix, a well-established player in decentralized finance (DeFi), has made its comeback to the Ethereum mainnet after a period spent on the Optimism (OP) Mainnet. This protocol, which first launched in 2018, has navigated various challenges and shifts in focus, ultimately opting for an order book perpetual decentralized exchange (perp DEX). Although Synthetix has claimed expertise in perp DEX, gleaned from their experiences over the previous couple of years, they acknowledged that much of that time was not optimally utilized. Therefore, this return to Ethereum can be viewed as a new beginning for the platform. Nonetheless, the primary highlight of this transition is the recent contract trading competition, which took place from October 20 to November 20, according to Beijing time. Unfortunately, the outcome of this event was far from successful.
Competition Results Reflect Disappointing Outcomes
So, just how poor were the results of this competition? The Synthetix Leaderboard revealed that among the 98 participants, only 12 managed to avoid losses, with two participants not engaging in any trades at all. A staggering 68 individuals saw their investments plummet by over 90%, and 27 participants went bankrupt. To provide some context, the competition’s structure invited 100 traders, with half of them selected through direct invitations. These invitees included notable figures in the trading community, such as James Wynn, who famously made and lost $100 million in just 70 days, Evgeny Gaevoy, CEO of Wintermute, and Kain, the founder of Synthetix. Additionally, the competition included community members who had staked sUSD and sUSDe or held Kwenta Points, culminating in a total of 98 participants.
Prize Pool and Trading Mechanics
The competition featured a highly uneven prize pool, offering a grand prize of $1 million for first place, while the runner-ups from second to tenth only received a maximum of 25,000 SNX each, equivalent to roughly $15,000 at the competition’s conclusion. Each participant began with a margin of 50,000 USDT, which was later replenished to this amount on November 5. Furthermore, from November 1, Synthetix allowed community voting to allocate an additional 10,000 USDT to players with margins below 1,000 USDT, but these funds could only be utilized within the platform and were not withdrawable. The competition permitted flexible leverage trading, focusing on popular cryptocurrency assets such as Bitcoin, Ethereum, and others. Most participants aimed to seize the top spot, leading to aggressive trading strategies.
High Leverage and Margin Calls
In the early days of the competition, many participants adopted cautious approaches, but Feng Wuxiang quickly took the lead by leveraging high amounts to go long. However, after executing 132 trades totaling over $70 million, Feng experienced a margin call when Bitcoin’s price dipped below $90,000. This situation exemplifies the risk inherent in high-leverage trading, where even a single market downturn can wipe out gains achieved through numerous successful trades. Feng noted that while participants aimed for championship titles, achieving high returns without significant leverage can be challenging. He advised that prudent trading often requires lower leverage and effective hedging strategies.
Final Standings and Market Reflection
The competition concluded with Gmoney emerging as the winner, having gained notoriety for purchasing CryptoPunk #8219 for 140 ETH, which was approximately $176,000 at the time. Gmoney’s profile picture on X still features this iconic NFT. Until the final moments of the competition, Bodhi Ventures held the lead, but a strategic pivot in market positions led to a dramatic shift in standings. In the Polymarket prediction market, meanwhile, out of 59 participants, only 6 turned a profit, with most others suffering substantial losses. Collectively, the top ten players managed to generate $2.184 million from an initial $1 million investment, with the champion alone netting $1.117 million. However, the overall losses incurred by the 98 participants reached approximately $4,020,154, totaling nearly $6 million when accounting for the trial funds Synthetix had intended to distribute.
Lessons Learned from the Competition
If this competition had involved real funds, the financial repercussions for Synthetix would have been significant. Observers noted that those who monitored the competition could have potentially profited immensely by strategically navigating the market against participating traders. Feng suggested that the fierce quest for the top prize led to reckless high-leverage trades, resulting in the majority of participants ending up with negligible returns. The educational aspect of this experience, particularly in discouraging risky gambling behaviors, seems more valuable than any promotional benefits for the platform.
Looking Ahead: Season Two of the “Discouragement Contest”
The second season of this “discouragement contest” is set to commence on December 1, expanding the participant pool to 1,000 individuals, comprising 200 elite traders and 800 community members. Directly invited participants will need to share their insights on X as part of their entry requirements. Community spots will be awarded to users who have pre-deposited a minimum of 10,000 sUSD with Synthetix. The prize distribution for this upcoming season appears to be more balanced, suggesting a shift from the outcomes of the first season. As participants prepare for the next round, it remains to be seen whether the allure of the grand prize will encourage prudent trading or if the outcomes will simply reflect human tendencies toward greed.
