Synchrony On-Chain Copy-Trading Features
What is On-Chain Copy-Trading?
On-chain copy-trading is an automatic form of copy-trading that replicates another user’s on-chain transactions — transactions that were done on the blockchain. It enables users to not only input a wallet address and replicate all of its valid transactions in their own copy-trade wallet, but also to define those restrictions on their wallet instead of the protocol defining the restrictions.
A variety of copy-trading and social trading applications are available in the traditional markets but have yet to break into the DeFi world. With Synchrony, users have three distinct copy-trading strategies that are safe, automated and customizable, meaning that those who take advantage of Synchrony can experience its effortless DeFi platform.
Safe (Parameterized) copy-trading enables users to outline the criteria for which a valid transaction, made by a leader wallet, is considered to be a candidate for copy-trading. Parameterized copy-trading does grant some granularity at the level of control over their copy-trade wallet’s behavior. Some examples:
frequency of copied transactions;
Auto (Naked) copy-trading enables a straightforward copy of the transactions a leader wallet executes that is deemed valid. This does present some inherent risks, as the copied trader can purposefully sabotage the copier by executing trades explicitly to fail. Therefore, the most appropriate use-case for naked copy-trading is one where the user completely trusts the leader’s wallet, from pre-existing relationships, for example. Synchrony does not restrict access to this feature, since users can blindly copy at their own discretion and accept the associated risks.
Custom (Index-Driven) copy-trading enables dynamic whitelisting of candidate tokens, protocols, or instruments. Index-driven copy-trading builds upon parameterized copy-trading by utilizing indexes to define when a valid transaction, made by a leader wallet, is considered a candidate for a copy-trade. For example, copy-trade wallets utilizing the “Solana Ecosystem Index” will only replicate transactions on tokens that are present in that index. The default setting for index-driven copy-trading follows a combination of Synchrony composed indexes. However, users may choose to utilize any index or combination of indexes on the Synchrony platform, and they can even construct their own.
Synchrony further empowers users to leverage the ledger.
Since blockchains are transparent and immutable ledgers, every transaction in a network is available for viewing or analysis. Now, not only is this a powerful tool for analytics but also for copy-trading. The current off-chain iterations of copy-trading are only granted to traders who are approved by the platform, and opt-in to having their trades copied or to be copy-traded. The result is that any data and analytics available to a user regarding copy-trading is limited to that scope. On-chain copy-trading alleviates such barriers — a wallet does not need to be listed on the Synchrony marketplace in order for a user to be able to see the transactions it is executing. However, there are advantages that come with having a listed wallet, one of which is the Synchrony Leaderboard.
Any wallet listed on the Synchrony marketplace is eligible to be featured on the copy-trade leaderboard. Traders (and their wallet’s) that prove to be consistently profitable can garner community accolades and privileges, for instance avatars or cosmetics skins that showcase their standing and/or personality. The leaderboard will be the focal point of competitions and time-based events, driving community engagement and contribution. A perk of maintaining a position on the leaderboard is that users are given a SCY (the Synchrony native SPL Token) reward proportional to their seven-day performance average which enters them into a community-driven lottery.
Synchrony grants access to on-chain instruments that are currently unavailable for their off-chain copy-trading counterparts. This enables users to trade in a truly trustless manner with a high degree of control and minimal price divergence. Every user archetype can broaden their horizons on Synchrony by gaining exposure to assets they may not have otherwise traded.
Historically, on-chain copy-trading would have been, and still is, prohibitively expensive on proof-of-work blockchains, like Ethereum. That narrative has changed with the advent of Solana, making on-chain copy-trading a realistic endeavor. Solana’s very high transaction speeds and very low transaction fees enable the execution of copy-trading for fractions of a penny, meaning that Synchrony does not have to pull wallets in order to offset gas prices.
We believe on-chain copy-trading capabilities open up access to the DeFi landscape, so users of all experience levels can participate. With the proper implementation of Synchrony, it is possible to be “in the know” regardless of base knowledge to make use of the various methods of copy-trading available.
Synchrony works with users and for users, offering ease, convenience and a trustless platform to trade. We believe on-chain copy-trading capabilities open up access to the DeFi landscape, so users of all experience levels can participate. Stay tuned as we continue to share updates, teasers, community driven experiences and partnership announcements.
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