Synthetix is a decentralized protocol for synthetic assets built on the blockchain. This Synthetix review is an up-to-date, detailed analysis of Synthetix exchange, containing everything you need to know about Synthetix and whether It’s the right DEX for you.
Let’s find out.
Synthetix Crypto review
Kain Warwick launched the network under the name Havven in September 2017. (HAV). After about a year, the company changed its name to Synthetix. Kain Warwick founded Synthetix and serves as a non-executive director of the blueshyft retail network.
Warwick worked on several other cryptocurrency projects before founding Synthetix. He also founded Pouncer, an Australian-only live auction site. Peter McKean is also the CEO of Synthetix. He has over two decades of software development experience.
Synthetix is one of the most intriguing Decentralized Finance (DeFi) projects on the market right now. A blockchain-based protocol for distributed asset issuance. This project, built on the Ethereum network, allows users to create and trade synthetic decentralized assets.
These synthetic assets can track any other asset’s price. If it has real-world value, the Synthetix platform will allow the creation of a synthetic asset to track the price of that asset.
This includes not only cryptocurrencies but also fiat currencies, equities, bonds, and commodities. Its high liquidity and low fees make it an ideal backend for a variety of exciting protocols on both Optimism and Ethereum.
The mechanism behind Synthetix is similar to the one used by stablecoins to keep their value pegged. Synthetix, on the other hand, will allow anyone to mint a synthetic asset backed by the SNX token rather than a single stablecoin.
What is Synthetix Crypto?
Synthetix is a decentralized cryptocurrency exchange and synthetic asset platform built on the Ethereum blockchain. The protocol is designed in such a way that users can issue and trade various synthetic, decentralized assets through synths without holding the underlying asset.
The platform enables users to trade and exchange synths autonomously. It also has a staking pool where holders can stake their SNX tokens and be rewarded with a portion of the Synthetix Exchange transaction fees.
Oracles, which are smart contract price delivery protocols, are used by the platform to track the underlying assets. Synthetix enables users to trade synths without worrying about liquidity or slippage. It also does away with the need for third-party facilitators.
Synthetix review: How Synthetix works
As previously stated, Synthetix was built on the Ethereum blockchain. Unlike most other blockchain projects, it has two types of tokens:
The main token used in the creation of synthetic assets is called Synthetix, and it is denoted by the ticker symbol SNX.
The Synth token is the second type of token. These are all of the synthetic assets produced by the Synthetix platform.
From the outside, the Synthetix system appears to be straightforward and simple. Users buy SNX tokens and then store them in a compatible wallet. Once the SNX tokens have been locked up, they can be used to create Synths that track the price of another real-world asset.
Things get a little more complicated here. Oracles determine the price of each Synth, and many of these have already been provided through a partnership with Chainlink (LINK).
The only Synths that are currently available are primary currency or cryptocurrency pairs. There are also gold and silver-based Synths available, and all Synths can be traded and exchanged at the Synthetix Exchange.
It is extremely simple to create Synths that track prices in whatever way the creator desires. There are Bitcoin-based Synths, for example, and the sBTC tracks the price of Bitcoin, but the iBTC is an inverse token that gains value when Bitcoin falls in value.
These are two of the most basic applications for Synthetix and Synths, but the ability to mint and own Synths based on various criteria will encourage many new ways to trade assets, create and manage asset portfolios, hedge, and even make payments.
SNX tokens power the entire Synthetix ecosystem since they are used as collateral to mint the Synths, or synthetic assets. Those who hold SNX tokens can stake them and earn a portion of the fees generated by the Synthetix Exchange.
SNX tokens are used as collateral for the synthetic assets that are minted. This means that whenever synths are issued, SNX tokens are locked up in a smart contract. The live Synthetix network token price (SNX Coin) as of this writing is $1.97 USD with a 24-hour trading volume of $13,492,208 USD. Synthetix is up 3.54% in the last 24 hours.
The current Synthetix exchange ranking is #72, with a live market cap of $488,762,069 USD according to coinmarketcap. It has a circulating supply of 248,044,172 SNX coins and a max. supply of 308,069,419 SNX coins.
Synthetix review: Synthetix Staking
Synthetix staking is unlike other DeFi protocols in that it allows anyone to earn rewards by contributing collateral (SNX) to the Synthetix protocol. Staked SNX enables many advantages for Synthetix-based protocols, such as deep liquidity, low slippage, and highly competitive trading fees.
Stakers of SNX receive two types of rewards: exchange fees and SNX staking rewards. However, by staking, they also accept the risk of ‘debt.’ When someone stakes their SNX, they must burn as much sUSD as they just minted in order to immediately unstake it; sUSD is their debt, and all SNX stakers’ debt is pooled together (with each staker holding a proportion of it).
However, profits and losses from Synthetix traders are also pooled in this debt. Because exchanges are represented, a staker’s debt can fluctuate over time based on traders’ overall profits and losses. When they stake their SNX, they are taking this risk.
Staked SNX performs several crucial tasks:
- Increases the liquidity of Synths traded on Synthetix.
- Supports a wide range of protocols that rely on Synthetix liquidity (Kwenta, Lyra, Curve, dHEDGE, etc.)
- Staking SNX earns you two types of rewards: sUSD fees generated by traders (Kwenta Futures, Lyra options, Kwenta Spot, Curve cross-asset swaps, and so on) and SNX inflationary rewards.
- Both of these rewards must be claimed manually in a single transaction each fee period (i.e., once a week), or they will be returned to the pool and redistributed to other stakeholders.
SNX Staking Rewards
The inflationary monetary policy implemented in March 2018 generates SNX staking rewards. Stakers can claim their staking rewards, which are escrowed for a year, and at the same time they claim their exchange fees. The SNX staking rewards enabled by the inflationary supply will gradually decline until September 2023, when it will become a 2.5% annual terminal inflation rate.
Synthetix review: How to Stake Synthetix
Staking SNX tokens can be done directly through the Synthetix online platform’s staking section. Users can use the platform to create Synths for the network, manage staking, and claim rewards. A Web 3.0 digital wallet, such as MetaMask, is required to connect with Synthetix. A Web 3.0 digital wallet connects a user’s digital assets to the Synthetix platform.
- Go to the official Synthetix staking website, and in the top right corner of the page, click “Connect Wallet.”
- Connect your Web 3.0 digital wallet to the Synthetix platform by choosing it from the pop-up menu.
- Click “Staking” in the left tab after your wallet has been connected, then “Mint & Burn.” Depending on your SNX holdings, you can either choose to mint the maximum amount of sUSD or a custom amount. Enter the desired stake in SNX in the following window, then click “Mint sUSD.”
- The transaction must be approved in your Web 3.0 digital wallet. Once confirmed, your SNX tokens will have been staked and sUSD tokens will have been created. Now, you’ll start to accumulate sUSD and SNX tokens. These can be checked in the Synthetix platform.
- Click the “Home” tab on the Synthetix platform to access your rewards. Simply click the “Claim SNX” box on the homepage. You can see the next reward period’s end date and whether a claim is open or closed on the following page. Your rewards must be claimed within 7 days of issuance in order to avoid forfeiture and rolling back into the pool of collateral. Users must maintain their collateralization ratio within 1% of 600% in order to receive rewards. In essence, this means that it cannot be less than 594%. On the staking platform, you can keep an eye on the wallet’s collateralization ratio.
Synthetix review: How to withdraw SNX tokens
A user must pay the corresponding sUSD debt in order to withdraw staked SNX tokens. SNX cannot be eliminated until all of the sUSD tokens have been burned. Please be aware that you must wait eight hours before burning the sUSD that you have already minted.
- Visit the Synthetix staking website and connect your Web 3.0 digital wallet.
- Click “Staking” on the left side of the homepage, then “Mint & Burn.”
- There are four options on the burn page. 1) You can burn the maximum available amount of sUSD in your wallet. 2) You can automatically select the amount of sUSD to burn that will bring your collateralization ratio back to the optimum. 3) You can burn a custom amount of sUSD. 4) You can purchase sUSD to clear the total debt required to withdraw your original SNX tokens.
- Choose the option you prefer, and if necessary, enter the number of sUSD you want to burn.
- Approve and sign the transaction via your Web 3.0 digital wallet. Once approved, the sUSD tokens will be burned and your SNX tokens will be released.
Synthetix was initially governed by the Synthetix Foundation, a non-profit foundation based in Australia, but in 2020, control was transferred to three decentralized autonomous organizations (DAOs). The protocolDAO is in charge of protocol upgrades and Synthetix’s smart contracts, while the grantsDAO is in charge of funding community proposals for public goods on Synthetix, and the synthetixDAO is in charge of funding entities advancing the network’s development.
Synthetix exposes you to a diverse range of crypto- and non-crypto assets in a decentralized, permissionless, and censorship-resistant manner, allowing you to participate in the DeFi ecosystem despite not owning DeFi assets. Synthetix has taken the lead in introducing derivatives to the cryptocurrency market, advancing the ecosystem’s maturity.
The trading platforms used by various exchange platforms differ in terms of customization, user-interface simplicity, navigation, and design. It is because different exchange platforms use a variety of criteria when developing their trading platforms.
Regardless of the differences, a good trading platform should be user-friendly, easy to navigate, and include essential trading tools in its API. The Synthetix app is not currently available, but the protocol may consider developing one in the future.
Synthetix review: Synthetix Exchange
The Synthetix Exchange is a place where people can buy and sell all of the different synths that have been created. Because the exchange is supported by smart contracts, no counter-party or third party is required in the exchange process. Anyone can buy and sell at any time, taking advantage of Synthetix’s infinite liquidity.
Connecting a Web3 wallet to the exchange makes accessing and using the exchange simple. After that, users can quickly and easily convert between different synths and SNX.
The exchange fee for all assets on the exchange is currently 0.3%. Because these exchange fees are distributed to SNX holders as a reward for providing the system with collateral to back the Synths in circulation, they provide an incentive to hold SNX tokens.
Synthetix Exchange fees are generated whenever a user exchanges one synthetic asset (Synth) for another through Synthetix.Exchange. Fees are typically between 10-100 bps (0.1%-1%), though usually 30 bps i.e. 0.3% and when generated are sent to the fee pool, where it is available to be claimed proportionally by SNX stakers each week.
Synthetix review: Synthetix Supported Coins
The Synthetix exchange supports a pool of cryptocurrencies, some of which include:
- Aave (sAAVE)
- Australian Dollars (sAUD)
- Bitcoin (sBTC)
- Cardano (sADA)
- Chainlink (sLINK)
- Ether (sETH)
- Polkadot (sDOT)
- Synthetix (SNX)
Supposed fiat currencies
The supported fiat currencies on Synthetix include:
- Euros (sEUR)
- Japanese Yen (sJPY)
- Pound Sterling (sGBP)
- South Korean Won (sKRW)
- Swiss Franc (sCHF)
- US Dollars (sUSD)
Synthetix Bug bounty
The Synthetix ecosystem is gaining traction, which means they are discovering more issues due to the large user base. It has a bug bounty program in place to encourage users to report any bugs discovered in its protocol. Their contracts have gone through several rounds of security audits, notwithstanding that they have a lot of surface area, especially across the Synthetix dApps, so the protocol wants any issues, whether security or cosmetic, to be raised and resolved to ensure the best user experience.
Synthetix is offering four tiers of bug bounties, each of which will be paid in sUSD. To report a bug, please use responsible disclosure and send an email to firstname.lastname@example.org. The Synthetix team will investigate the claim, and if the report is correct, they will pay you based on the severity of your discovery.
The Synthetix reward brackets are below:
- Informational: $100 sUSD
- Low severity: $500 sUSD
- Moderate severity: $1000 sUSD
- High severity: $5000 sUSD
Synthetix review: Conclusion
Synthetix is at the forefront of the DeFi movement by providing synthetic assets to users all over the world, allowing them to access Synthetix trading strategies.
Synthetix has the potential to create a massive tokenized market on the Ethereum blockchain, given the massive size of traditional financial markets, which reach hundreds of trillions of dollars.
The Synthetix team should be commended for their vision in attempting to revolutionize and modernize the financial markets.