Synthetix, a new financial primitive, can create synthetic assets, providing unique derivatives and linking real-world assets on the blockchain. SNX is the native token of the Synthetix platform, and it is also a necessary token for the platform to create synthetic assets on the chain. SNX is short for Synthetix Network Token (Havven).
The Synthetix platform supports the creation of on-chain synthetic assets (Synths) to track the value of assets in the real world, and Synthetix enables this service only through code, without the need for financial intermediaries. The trading categories of Synthetix are defined by the platform, and currently, there is no function that supports the free creation of synthetic asset categories.
At the time of writing this article, the price of SNX is $2.65, the total market capitalization is $585,520,636, and the total SNX supply is 245.3 million.
How Synthetix NetworkSNX Works
Synthetix uses the most dynamic debt calculation method. Synth is minted when SNX holders stake their SNX as collateral using the Synthetix Staking app, a decentralized application for interacting with Synthetix contracts. Presently, Synths is backed by a 400% collateralization ratio.
SNX is active on both Ethereum (ETH-USD) and the ETH layer 2 chain Optimism (OP-USD). SNX has utility both as a protocol financing mechanism and as a revenue-generating asset. As an inflation token, SNX requires staking to protect the purchasing power of holders. SNX rewards are paid to stakers, and the protocol shares the revenue of protocol transaction fees:
Each transaction incurs a transaction fee, which is sent to the fee pool for SNX stakers to claim their percentage on a weekly basis.
An important mechanism in Synthetix (SNX) is the capitalization ratio or "c-ratio". According to litepaper, the optimal c-ratio is 400%. This is done to protect the protocol from token fluctuations. The lower the price of SNX, the more pressure on the c-ratio. If a user's c-ratio is too low, they will not be able to claim a staking fee. With the liquidation contract, there is embedded protection against a too low c-ratio:
Once an account is flagged, the account starts a 72-hour liquidation timer to give flagged stakers a window of opportunity to repair their c-ratio and stop the liquidation countdown.
If the user's liquidation ratio is lower than 200%, the liquidation timer starts, and the user has three days to restore their c-ratio to 400%, otherwise they will face forced liquidation of the asset.
What is Synthetix NetworkSNX?
Synthetix, founded by Kain Warwick, started out as a protocol called Havven through the sale of 300,000 HAV tokens in 2018. Havven aimed to create cryptocurrencies that simulate the performance of currencies, such as the dollar or euro in various blockchains, including Ethereum and EOS.
Synthetix is a decentralized synthetic asset issuance protocol built on Ethereum. These synthetic assets (Synths) come from collateralized Synthetix Network Token (SNX) and can be directly traded with each other using Synthetix smart contracts on the Synthetix.Exchange.
There are two major product lines under Synthetix, namely:
Synthetix.Exchange: a decentralized exchange, mainly used for trading synthetic assets.
Mintr: The minting and burning of synthetic assets of major users.
On Synthetix, users can use ETH or SNX to mint synthetic assets with a mortgage rate of 600%. For example, if a user mortgages SNX of $6, he will get sUSD worth $1. The reason for this is that SNX does not have such a strong value consensus to set a high mortgage, thus reducing the risk of insufficient collateral value.
sUSD is the stablecoin of the Synthetix platform. All trading pairs on the exchange are based on sUSD. Through sUSD, users can exchange for any other synthetic assets, such as sBTC, sETH, etc. Using sUSD to trade on Synthetix Exchange can also be understood as the process of minting purchased synthetic assets, because the platform will burn sUSD while creating the corresponding synthetic assets.
Staking SNX can help users get two kinds of rewards:
Extra SNX token reward: extra SNX token rewards are used to reward users who participate in the mortgage and can be claimed once a week.
Trading rewards for synthetic assets: On the Synthetix trading platform, a 0.3% transaction fee will be charged, and this part of the transaction fee will be distributed to SNX stakers in proportion.
LP liquidity reward is another prize. For example, after staking SNX to generate sUSD, users can purchase sETH through the Synthetix platform. This part of sETH can be added to the sETH/ETH trading pool in circulation pools such as Uniswap to get liquidity rewards. This way, Synthetix provides itself with liquidity with the help of an external liquidity pool, thus keeping the price of sETH/ETH anchored.
Synthetix NetworkSNX Crypto Wallet
In addition to placing SNX in the Gate.io exchange to facilitate trading, SNX can also be placed in the crypto wallet.
1. What determines the price of Synthetix Network?
There are two schools of thought in determining the price of Synthetix Network.
By way of intrinsic value: This typically involves on-chain metrics, project metrics and financial metrics of Synthetix Network, collectively known as fundamental analysis. The law of supply and demand, tokenomics, use case, project roadmap as well as regulations and governance involved would affect the value of Synthetix Network from a long term perspective.
By way of price action: Primarily analyzed via candlestick chart patterns and technical indicators such as MACD, RSI and the bollinger bands, technical analysis forecasts the price of Synthetix Network on the basis that history tends to repeat itself. As the candlestick charts are a general representation of the emotion of the market, news announcements and community sentiment can be significant price action drivers for Synthetix Network as well.
HODLers tend to prefer the long term nature of fundamental analysis, whereas short term traders tend to rely on technical analysis more. In reality, both analyses may combine and create interesting scenarios for Synthetix Network and the cryptocurrency market as a whole.
2. What is the highest price of Synthetix Network in history?
Synthetix Network achieved the all-time high of €27.11 in 2021-02-14, and is currently trading at €1.68.
3. What is the lowest price of Synthetix Network in history?
In 2019-01-06, Synthetix Network reached the all-time low of €0.033.
4. Should I buy Synthetix Network now?
It is important to remember that Synthetix Network, like all other cryptocurrencies, are subject to extreme market conditions, legal policies, project team management and other unpredictable factors. As such, cryptocurrencies fluctuate greatly and it is important to manage your own risk level. Users are advised to do your own research when making investment decisions in the crypto market.