The Kwenta Fee Switch + Update

A lot has happened since our last report on Kwenta in December. The platform has undergone significant developments, and its token has seen upwards of a 300% price increase. One major enhancement is the implementation of smart margin, which enables multiple positions to utilize a single pool of collateral. Additionally, users can now place advanced order types, such as stop losses and limit orders. These new features allow traders to better manage their risk and optimize their trades. Kwenta has also added more assets to its platform and increased open interest caps, bringing it closer to feature parity with top-tier perps CEXs.

The DEX has experienced explosive growth in trading volume, with the highest volume day rising by more than 25x from $19.2M to over $500M. This has led to a surge in fees, with record daily trading fees increasing from $120,000 to $725,000. Cumulative volume is also approaching $10B, a significant milestone.

Kwenta's growing volume and feature set is promising, but the most significant recent update is a governance proposal passed by the Synthetix council. This proposal allows frontends such as Kwenta to receive a share of the fees they generate, providing a new revenue stream for the protocol and a potential value accrual mechanism for the token.

Kwenta Fee Switch

Kwenta is a frontend for Synthetix Perps V2 on Optimism. Until recently, all fees and trader PnL were delivered back to the SNX staker pool, driving no value to the KWENTA token or protocol. On Feb 27, the Synthetix Council passed SIP-2002, approving the creation of a fee rebate mechanism for Perps V2 frontends according to the following schedule: