The universal cross-chain credit layer for busy DeFi Professionals.

Decentralized finance has evolved significantly over the last few years. New primitives have become battle tested, infrastructure has made progress on scaling, and use-cases continue to expand. Despite this, our lending and borrowing markets remain heavily siloed in practice, even for those with extensive technical expertise. It’s time for a new standard in money markets to emerge. The era of crosschain decentralized financial markets has arrived.

Today, we’re introducing Synonym Finance - a new crosschain money market. Synonym gives DeFi users the tools they need to act on opportunities across ecosystems without sacrificing speed, efficiency, or security. Synonym markets will be accessible from any chain, at any time, with a massive variety of compatible assets. Time is money.

Existing Money Markets

Existing lending and borrowing markets have proven to be crucial sources of liquidity and yield for the broader DeFi landscape. That said, they suffer from unique challenges that are a result of their single or multi-chain nature. In traditional DeFi money markets (ex. Compound), token liquidity is fragmented into markets that are siloed away from one another.

For example, USDC that is available for borrowing on Arbitrum is not unified with USDC that is available on Optimism in existing markets. This is the case for major money markets like Compound and Aave, which are inherently multichain - they exist across multiple chains, but are not unified.

Existing markets have generally worked around this by encouraging users to wrap and bridge assets across chains to participate in their multichain pools. In practice, this fragments liquidity even more due to differences in token wrapping and bridging methods. Wrapped assets are essentially IOUs for tokens that are not interoperable with each other across different chains. Beyond the need for multiple transactions and additional gas costs, these bridge complexities introduce a large attack surface for malicious parties looking to exploit multichain deployments. Bridges have historically been the most attractive target for hackers, with billions in tokens stolen between 2020 and 2023.

Siloed lending markets have proven to be invaluable to DeFi up until now, we don’t deny that. That being said, it's time to explore what truly crosschain money markets are capable of. Enter Synonym.

Our Architecture

Synonym Finance is designed around a hub-and-spoke architecture. Our core hub will be housed on Arbitrum and will be responsible for accounting and updating balances, market state, and more. Spokes, which will initially be on Optimism, Arbitrum, and the Ethereum Mainnet, will interact with the hub to signal new transactions and activity. We’ll be rapidly expanding Synonym Spokes to even more chains in the near future. Your ecosystem is coming to Synonym.

For users, this means they can deposit tokens on Ethereum, borrow against them on Optimism, and repay their debt from Arbitrum - no bridging needed. The ultimate unified credit layer for the busy decentralized finance professional.

Our hub-and-spoke architecture is powered by Wormhole Crosschain Messaging technology, which is part of their broader xChain technology stack. Wormhole allows Synonym to securely transfer assets and information throughout our hub-and-spoke architecture. Users never need to interact with an external bridge or token wrapping mechanism when using Synonym.

There is a wide range of crosschain messaging technologies, all with their own unique advantages and disadvantages. We’ve selected Wormhole as our messaging layer of choice given its flexibility and deployment advantages. Wormhole uses a proof-of-authority validator system that uses Guardians to sign and validate crosschain transactions. Crosschain transaction requests are constantly monitored and checked for their validity and state.

To deliver these signed messages, the Wormhole messaging stack uses relayers to deliver messages to their intended recipients for processing and execution. These relayers work with oracles to ensure that received messages are delivered to the correct recipients on time.

So what happens to your assets in a crosschain transaction? We’re glad you asked. Blockchain-specific assets like ETH can never be truly native outside of their own ecosystem (i.e. on a blockchain other than Ethereum). To get around this issue, Wormhole messaging technology automatically mints representations of assets from other chains on the target chain. These representations can be transferred or burned depending on the goal of the transaction, resulting in a much more flexible accounting system for crosschain applications.

This serves as an enhanced asset wrapping and transfer experience that abstracts away the need for the user to perform additional steps outside of the core Synonym platform.

Supercharged by CCTP & USDC

Certain tokens can live in a natively crosschain way that unlocks significantly more capabilities for users. Circle’s USDC is already a natively crosschain stablecoin that is quickly adding support for even more chains. USDC’s crosschain capabilities are powered by the Crosschain Transfer Protocol (CCTP).

CCTP allows USDC deployments on multiple blockchains to seamlessly transfer USDC to other networks via mint and burn transactions. These transactions rely on a variety of bridges to send crosschain messages (Ex. Burn 100 USDC on Ethereum, Mint 100 on Optimism), one of which is Wormhole.

In practice, this makes borrowing or repaying on Synonym from any chain even easier. Users can easily repay a loan on a network different from the one they borrowed on. No more frantically shuffling assets between chains to repay borrowed funds. With Synonym and Circle CCTP, your UDSC just became even more flexible.

Why Arbitrum

The Synonym hub needs to handle a high volume of transactions at a high speed. Moreover, it should ideally be an excellent onboarding location for additional liquidity from DeFi-native users. Arbitrum checks all of these boxes.

• Efficiency: Arbitrum maintains some of the lowest transaction execution costs of any ecosystem

• Security: Arbitrum is secure, battle tested, and home to nearly 3x as much TVL as other comparable rollups

• Ecosystem: Arbitrum has a thriving ecosystem - expect exciting partnerships between Synonym and Arbitrum-native teams early on

The Result

Synonym represents a potent mixture of cutting edge crosschain technology, ecosystem partnerships, and DeFi professionalism. In summary, Synonym users unlock:

• Seamless crosschain lending, borrowing, repayment, and withdrawals - no need to perform multiple expensive bridging transactions

• The ability to quickly and efficiently act on emerging opportunities across multiple chains

• Secure access to lending and borrowing markets with deep liquidity unified by Circle’s CCTP and USDC

• Decentralized Finance Professional Status

What’s Next

We want Synonym to become the de facto crosschain money market for DeFi Professionals. User feedback and testing will be a critical component of achieving that vision.

We’ll be launching our incentivized test net campaign in the near future to maximize our launch and make sure that your expectations are exceeded. We’ll be releasing more details on our development, community events, and ways to get involved shortly.

In the meantime, request our business card for access our incentivized test net program: