Synthetix (SNX) is a decentralized liquidity provisioning protocol built on Ethereum and Optimism, serving as a backend liquidity layer for some of the most innovative protocols in the DeFi ecosystem. SNX is the native token of the Synthetix Network and has two main functions: staking and governance.
Synthetix enables the creation and trading of synthetic assets backed by stakers using SNX tokens. The collateralized SNX tokens are locked in a staking contract; in return, stakers receive rewards and market returns.
The liquidity provided by stakers allows for trading synthetic assets and perpetual futures at oracle prices, eliminating the need for traditional order books and counterparties. As a result, Synthetix's liquidity is cross-market composability, and fungible, and traditional slippage is eliminated.
SNX stakers receive a proportional share of the debt relative to their SNX stake, and their voting weight is quadratically weighted for everyone except the Finance Council. Voting occurs through the Synthetix Governance module, which is fully installed on-chain, allowing SNX token holders to participate in decisions about protocol upgrades, fee changes, collateralization ratios, and other essential matters. This creates a decentralized governance system in which the community can help shape the direction and development of the Synthetix Network.
The Synthetix platform allows users to access underlying assets through Synths without holding the underlying asset. The DEX platform enables users to trade with Synths autonomously and features a staking pool where holders can stake their SNX tokens and earn a share of transaction fees.
Synthetix uses smart contract price delivery protocols, known as oracles, to track the underlying assets, trade Synths seamlessly, and eliminate the need for third parties. SNX tokens are used as collateral for the synthetic assets that are minted. Synthetix currently supports two main types of synthetic assets:
These synthetic assets represent the value of real assets such as cryptocurrencies, fiat currencies, and commodities. Users can take positions in various assets without holding the underlying assets.
Perps is a decentralized exchange for perpetual futures that utilizes Synthetix's liquidity as a counterparty for traders. It features high liquidity and low fees, and stakers (Perp LPs) are exposed to the combined performance of all traders while also earning trading fees. Financing rates and premium/discount mechanisms incentivize traders to balance the markets to become delta-neutral. Off-chain oracles reduce fees to 5-10 basis points, with risk management tools ensuring market neutrality in the long term.
SNX token holders have the opportunity to participate in governing the Synthetix network. SNX stakers receive weekly rewards for collateralizing the network, which is paid as trading fees for traders and inflationary rewards in the form of newly minted SNX tokens held in a trust account for one year. Custodially held SNX tokens can be staked during this trust period, providing additional rewards for stakers.
The Synthetix project was launched in September 2017 by Kain Warwick under Havven (HAV), later renamed Synthetix. Kain Warwick is the founder of Synthetix and has experience in several other cryptocurrency projects.
Peter McKean, the CEO of the project, has over two decades of experience in software development. Jordan Momtazi, the COO of Synthetix, has several years of experience with blockchain, cryptocurrencies, digital payments, and e-commerce systems. Justin J. Moses, the CTO, has experience in technology and was a co-founder of Pouncer.
Synthetix raised $30 million during the seed round and token sale phase, with more than 60 million $SNX tokens sold.
SNX Coin, the native token of the Synthetix network, is unique in several ways compared to other cryptocurrencies. Here are a few of the key features that could make SNX a good investment:
As a platform for synthetic assets, SNX Coin is an interesting option for traders and investors who want to participate in the price movements of various assets without physically owning them.
SNX tokens are used as collateral for the issuance of synthetic assets. This means that the total value of circulating synthetic assets is always backed by the value of the locked SNX tokens, ensuring the system is over-collateralized and reducing counterparty default risks.
Synthetix uses a Proof-of-Stake (PoS) consensus mechanism, which is more energy-efficient than the Proof-of-Work (PoW) consensus used by many other cryptocurrencies.
There are several reasons why the price of Synthetix Network (SNX) could increase in the future:
As more users and traders utilize the Synthetix Network, the demand for SNX tokens could rise and increase the price.
Synthetix has expanded its range of synthetic assets, which could attract more users and traders to the platform and increase the demand for SNX tokens.
Synthetix recently transitioned to the layer-2 Optimism network to lower gas fees and increase transaction speeds, which could make the platform more attractive to users and traders.
Synthetix has already partnered with several other projects and platforms, such as Curve and Ren, which could help increase the adoption and usage of the Synthetix Network and boost the demand for SNX tokens.
The Synthetix team continues improving the platform, regularly releasing new features and updates. Positive developments and updates could strengthen confidence in the project and spur demand for SNX tokens.
SNX is the native token of the Synthetix protocol and has the following functions:
SNX tokens are collateral for the synthetic assets minted on the platform. SNX tokens are locked up in a smart contract whenever synths are issued.
Synthetix placed a safeguard mechanism to prevent a fall in the prices of SNX tokens. This method has previously prevented a severe drop in the price of SNX crypto after Synthetix announced a considerable increase in the supply of SNX tokens.
Trade Synthetix token against other cryptocurrencies to capitalize on fluctuating market circumstances and volatility. You can buy or sell SNX on the KuCoin Spot Market or hold it for an extended period if you have faith in the long-term prospects of the Synthetix network. We recommend doing your own research (DYOR) before trading to reduce risk exposure.
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Yes, SNX token holders can stake their tokens and earn rewards for providing liquidity to the Synthetix Network. By staking $SNX, users can create demand for them. When you stake SNX, you also receive rewards in the form of newly minted SNX tokens, which are distributed as an incentive for providing liquidity to the network to the stakers.
No, Synthetix (SNX) cannot be mined. SNX tokens are created through inflationary rewards distributed to stakers who provide liquidity to the network by locking their tokens in the staking contract. The inflationary rewards are generated through newly minted SNX coins held in custody for one year.
They are distributed to the stakers as an incentive for securing the Synthetix protocol and participating in its governance. This reward system is designed to incentivize coordination and growth within the network.