SNX

Synthetix

SNX to USD
Performance
Market capitalisation
Total transaction volume
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7D
1M
6M
1Y
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Market cap
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24h Volume
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All time high price
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YTD Performance
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YTD Low
Maximum supply
260,263,816 by Aug 2023, then 2.5% annual inflation.

Project history 

Originally launched as Havven in 2017, Synthetix is a decentralised derivatives liquidity protocol that operates on the Ethereum blockchain. The project allows the creation of synthetic assets, known as Synths, that track the value of real-world assets such as currencies, commodities, and stock indices. Instead of providing direct ownership or claims to the underlying assets, Synths offer exposure to their price movements through digital tokens. 

The platform utilises the Synthetix Network Token (SNX) for collateralisation, requiring users to lock up SNX to mint Synths. This process, governed by smart contracts, aims to ensure that each Synth is backed by sufficient collateral value, maintaining its price linkage to the real-world asset it represents.

Technology

Synthetix utilises smart contracts to enable the creation of Synths, which are digital representations of real-world asset prices. Users begin by staking SNX tokens as collateral, exceeding the value of the Synths they wish to mint, a process known as overcollateralisation. This excess collateral requirement safeguards the platform against volatility and ensures the stability of Synths. 

Oracles are integral to Synthetix, providing accurate, real-time price data for the underlying assets. These decentralised networks source price information from multiple exchanges, ensuring Synths reflect true market values. Through this combination of overcollateralisation and reliable price feeds, Synthetix offers a stable environment for trading synthetic assets. 

In addition to standard Synths, Synthetix also offers inverse Synths (iSynths), which allow users to gain exposure to the inverse performance of an asset. For instance, if the price of an asset falls, the value of its inverse Synth would rise, and vice versa. This feature enables traders to hedge against price movements or speculate on price declines without the need to hold the actual asset or short it.

Token Supply Model 

The SNX token has a capped total supply of approximately 215 million tokens. New SNX tokens are created through a programmed inflationary process, aimed at incentivising staking for network security and growth. This inflation decreases over time, intending to match network expansion with a manageable approach to the token supply and distribution of rewards, until reaching the fixed supply cap. 

Key Value Drivers 

Synthetix benefits from increased DeFi market activity, as this typically leads to higher traded volumes and increased demand for derivatives and synthetic assets. The increased volumes would generate more fees and rewards, which is distributed to SNX tokenholders.

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