With more than $48 billion locked into DeFi protocols, the decentralized finance market is actively building financial use cases for blockchain technology. But with a reported 79 percent increase in crypto-related crimes from 2020 to 2021 and a record 14 billion in losses, investors have learned to be more cautious. Especially in an industry that often considers government regulation and protections to be an intrusion, it’s up to crypto companies themselves to protect investors and users of their products.
This is why Synapse Network, a platform building software for DeFi projects that offers launchpad and other services, introduced a new protection program for investors. The program helps investors feel more secure knowing the quality of projects they are investing in by building concrete safeguards to prevent bad actors from taking advantage of the system and shorting investors. The platform actively penalizes projects that skirt around the rules or don’t follow regulations by requiring them to return part of their project's investment when foul play is detected.
“As an experienced investor, I know how hard it can be to do your own research and analyze pillars of every project that catches your interest,” says Michal Domarecki, Co-Founder of Synapse Network. “We’re taking that responsibility off the shoulders of investors, and going the extra mile to demand specific guidelines from projects to prevent unnecessary financial loss for our investors.”
For example, Synapse Network requires all projects to maintain its token price above the IDO price until 41 percent of tokens from the IDO sale have been distributed or for seven days from the listing. This is just in case the project releases more than 41 percent of its total tokens on a listing day.
So when one of the project tokens fell drastically below the IDO price, Synapse Network refunded 90% of allocated investor’s funds (the other 10% was previously distributed to users). It was the only way to secure investors’ funds and it was also aligned with the Investor Protection Program, which the project approved during talks with the Synapse Network launchpad.
Sometimes the refunds are also based on a good will of both sides. An example would be SpaceY, while Synapse, after talks and agreement with the project, offered a return of the capital invested in SpaceY in exchange for the waiver of the right to $SPAY tokens. In this case, both Synapse Network launchpad and SpaceY came to the conclusion that the communication on the release of tokens along with the listing on tier 1 exchange could be insufficient.
Synapse Network also limits the span of time between the IDO, public round, and listing date. If the listing is significantly delayed or postponed, the funds are returned to the investors, and the IDO and public round are repeated on a date closer to the listing one.
In addition to the Investor Protection Program, Synapse Network expands access to the DeFi services by providing businesses with end-to-end customizable solutions for their projects through Synapse Technology Labs, including actually building tokens for projects.
The DeFi platform also creates smart contracts for token staking and other DeFi services, as well as anti-bot filters preventing interference from malicious automated scripts. Its cross-chain launchpad integrates with 16 chains and incorporates a fiat payment gateway.
The company also has a VC fund, which has invested a total of $10 million for 200 of the most promising DeFi projects.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.