Unchained Episode 926 Summary

Title: Ethereum's Layer 1 Lacks a Perp Dex. Synthetix Intends to Change That
Host: Laura Shin
Guest: Kane Warrick (Founder of Infinix and Synthetix)
Date: October 17, 2025

Overview: Main Theme

This episode explores why Synthetix is launching a Perpetual Decentralized Exchange (Perp Dex) directly on Ethereum Layer 1 (L1), the technical and philosophical reasons behind their decision, and what it means for DeFi, traders, and the broader crypto landscape. Kane Warrick dives into the technical innovations enabling this move, the current fragmentation within the Ethereum ecosystem, the interplay between centralized and decentralized architectures, and his larger vision for DeFi super apps.

Key Discussion Points and Insights

Why Launch a Perp Dex on Ethereum L1?

• Historical Background:
  • Synthetix initially aimed to build derivatives on Ethereum but migrated to Layer 2 (Optimism) due to L1 congestion ([01:12]).
  • Over time, Ethereum L1 has become more performant, and Synthetix has refined their hybrid on/off-chain infrastructure ([02:11]).
  • Quote:

    "Ethereum needs a canonical perp Dex in the same way that every centralized exchange needs perps...Ethereum today doesn’t actually have a perp dex on L1."
    — Kane Warrick ([03:25])

• Liquidity and Asset Base:
  • Ethereum continues to house the most stablecoins and margin assets, making it optimal for a Perp Dex that doesn't require bridging ([00:00], [05:27]).

Technical Design: Order Matching and Transparency

• Architecture:
  • The order matching engine is off-chain and centralized at launch. Orders are batched and settled onto Ethereum Mainnet ([05:27], [07:17]).
  • All core margin/liquidation infrastructure is on-chain to preserve trust, but standing orders are not transparent to the public ([10:53]).
  • Quote:

    "You can't run it fully on chain...the margin and liquidation engines and all of the core infrastructure run onchain."
    — Kane Warrick ([07:17])

• Trade-offs:
  • Non-transparency of standing orders can be viewed as a feature, providing privacy for traders (no stop-hunting) ([10:53]).
  • Quote:

    "As a trader myself, I personally have a preference which is for people to not be able to hunt my stops."
    — Kane Warrick ([11:23])

• Latency & Speed:
  • Targeting sub-50ms order matching off-chain, with L1 settlement facing inevitable delay (~10 seconds) due to Ethereum block times ([08:35]).
  • Quote:

    "The key insight is that the order matching is what people care about. They want their orders matched as quickly as possible."
    — Kane Warrick ([09:45])

Competitive Strategy in a Crowded Market

• Trader Experience Above All:
  • Synthetix’s guiding philosophy is to prioritize trader experience and trust over tokenomics ([22:09]).
  • Quote:

    "If you lose the traders, then you have nothing…you have to support traders, you have to make sure traders are confident in the platform that you're building."
    — Kane Warrick ([22:38])

• Attracting Attention:
  • Launching with a high-profile trading competition featuring prominent crypto personalities to generate buzz ([12:38], [51:40]).

Design Choices in Response to Ethereum Fragmentation & Black Friday Incident

• L2 Fragmentation Issues:
  • Proliferation of L2 tokens and environments has confused users and diluted ETH’s status as the premier asset ([14:19]).
  • Quote:

    "The positive unintended consequences were...a lot more block space than expected...But if you can bring all of that activity back to the L1...that's optimal."
    — Kane Warrick ([14:58])

• Black Friday Impact:
  • The collapse exposed fragility in margin systems during high congestion, affirming Synthetix’s L1 focus for better counterparty security, albeit with challenges ([17:52]).
  • Solutions may include fallback L2s for margin operations during periods of high congestion ([17:52]).

Perp Dex Technical Design: Liquidations, ADL, and Trust

• Liquidation Waterfall:
  • Synthetix employs a multi-step process for handling liquidations to avoid automatic deleveraging (ADL) except as a last resort ([25:02]).
  • Protecting traders against unfair loss of profits is paramount.
  • Quote:

    "If you lose a trust of traders really hard to get it back… Not getting paid. The profits that they believe they deserve is probably the highest."
    — Kane Warrick ([27:23])

Decentralization Roadmap

• Long-term Vision:
  • Plans to decentralize order matching and potentially leverage privacy-preserving cryptography, but only if user feedback demands it ([29:29], [31:57]).
  • Avoids 'building palaces in the sky'—emphasizes iterative feedback-based product design.

Defi Implications & Super App Vision

• Mainnet Perps Revitalize DeFi:
  • Bringing Perps to mainnet is expected to drive new volume and opportunities for DeFi composability, reducing the friction caused by fragmentation ([32:41]).
  • Quote:

    "Not having perps of any kind on Ethereum, mainnet has definitely been net negative for Ethereum and I think bringing it back is going to be a net positive."
    — Kane Warrick ([34:13])

• Super App Thesis (Infinix):
  • Belief that next-gen platforms will aggregate trading, DeFi, cross-chain, and asset management into a single, user-friendly, non-custodial app ([39:53], [44:30]).
  • Envisions on-chain "super apps" supplanting centralized exchanges over the next cycle ([39:53]).
  • Quote:

    "I think that by the time we get to the next cycle, it will be the first cycle where on chain platforms dominate and centralized exchanges start to fade into the background."
    — Kane Warrick ([43:52])

Collateral Choices and Pragmatism

• USDT as Base Asset:
  • Despite earlier ideological opposition, USDT is now chosen as the primary settlement because of deep liquidity ([34:40]).
  • Synthetix will support multiple premium collaterals (sUSD, WETH, cbBTC, wstETH, etc.), favoring liquidity over strict decentralization ([37:27]).
  • Quote:

    "Pragmatism wins in the end."
    — Kane Warrick ([36:59])

The Trading Competition: Experimentation and Attention

• High-Profile Launch:
  • 50 “celebrity” and 50 community-trader slots, margin provided by Synthetix, $1m prize pool ([51:42]).
  • Gamification with public leaderboards, social voting to “revive” liquidated traders — designed to maximize engagement and feedback ([53:09]).

Notable Quotes & Memorable Moments

• On Ethereum’s Unique Needs:
  • "Ethereum needs a canonical perp Dex in the same way that every centralized exchange needs perps."
    — Kane Warrick ([03:25])
• On Privacy vs. Transparency:
  • “As a trader myself, I personally have a preference which is for people to not be able to hunt my stops.”
    — Kane Warrick ([11:23])
• On Competing in DeFi:
  • "Build it and they will come has never worked in crypto and it works even less today than it ever has."
    — Kane Warrick ([23:50])
• On Design Philosophy:
  • "You need iteration. And so what we’ve tried to do is make the right decisions to get the core framework in place."
    — Kane Warrick ([30:46])
• On Changing Attitudes Towards USDT:
  • "I used to walk around in a T-shirt back in like 2018 that said ‘tether is a crypto abomination.’ And yet here we are. Pragmatism wins in the end."
    — Kane Warrick ([36:59])

Timestamps for Key Segments

| Time | Segment | |----------|--------------------------------------------------------------| | 00:00 | Opening – Rationale for L1 Perp Dex | | 01:12 | Historical Perspective: L1 to L2 and Back | | 05:27 | Technical Design: Hybrid Order Book | | 07:17 | Centralization/Decentralization Trade-Offs | | 08:35 | Target Latency & Matching Engine Design | | 10:53 | Transparency and Privacy | | 12:38 | The Trading Competition Plans | | 14:19 | L2 Fragmentation and Impact on ETH | | 17:52 | Black Friday & Margin Dynamics | | 22:09 | Competing with Other Perp Dexes | | 24:33 | Liquidations, ADL, Trust | | 29:29 | Path to Decentralization | | 32:41 | Mainnet Perps’ Impact on DeFi | | 34:40 | Collateral Choice: USDT and Others | | 39:53 | Super App Thesis and Infinix Vision | | 44:30 | Evolution from Centralized to On-Chain Platforms | | 51:40 | Trading Competition Details and Community Engagement |

Style, Tone, and Closing Thoughts

The conversation was frank, self-aware, and focused on both pragmatic engineering and broader ecosystem strategy. Kane frequently referenced lessons learned from prior cycles, past ideological stances, and the need for user-focused iteration.

Kane’s present-day pragmatism, willingness to embrace change, and focus on trader experience all reflect a maturing DeFi philosophy. Synthetix’s move back to Ethereum L1 represents both a bet on Ethereum’s continued primacy and a belief that user preferences (privacy, liquidity, trustlessness) will drive DeFi’s next phase.

Final Memorable Moment:

"Of all the things that I’ve cooked up over the years and there are many, [the trading competition] is the one that I’m maybe the most excited about. It’s actually shocking to me that no one has really tried to do something like this before."
— Kane Warrick ([51:40])

For the latest developments and ongoing updates, the Synthetix trading competition and protocol launch are set to be major events to watch in the coming month.