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Synthetix logo

Synthetix

SNX

1.84

0.00

Market Cap

$604.019129M

24h Volume

$24.758M

Volume/Market Cap (24h)

4.10

Circulating Supply

327.769196M SNX

Total Supply

328.193104M SNX

Swapping Synths: Explaining the Synthetix Cryptocurrency 

Transforming assets into crypto tokens (aka tokenization) already commands a multi-billion-dollar market share, but some analysts foresee trillions of inflows into this growing web3 niche. Although countless crypto projects now incorporate tokenization into their programs, Synthetix is one of the most influential decentralized finance (DeFi) protocols specializing in synthesizing synthetic assets. 

Based on the Ethereum (ETH) blockchain, Synthetix offers eligible crypto traders permissionless programs to create and trade synthetic cryptocurrencies representing tangible and intangible assets. So, what’s behind Synthetix’s tokenization tech, and what does it bring to web3? 

Synthetix’s history

The Australian developer Kain Warwick launched what would later become Synthetix in 2017 as a decentralized application (dApp) on Ethereum called Havven. Unlike Synthetix, Havven exclusively focused on issuing synthetic stablecoin assets based on fiat currencies like the U.S. dollar. 

In 2018, Warwick rebranded Havven to Synthetix and introduced a broader range of features and asset categories available for tokenization. While Synthetix still offers synthetic cryptocurrencies (aka synths) mimicking fiat currencies, it also aims to support financial vehicles in other sectors, including commodities, equities, and real estate. 

In addition to Ethereum, Synthetix protocol integrates with Ethereum’s layer 2 scaling solution Optimism. The non-profit Synthetix Foundation initially led the development efforts on Synthetix, but the protocol has since created three decentralized autonomous organizations (DAOs) to offer users access to democratic governance. 

How does Synthetix work?

Synthetix uses automated commands called “smart contracts” on Ethereum to record and enforce actions on its protocol. Thanks to the decentralization of smart contracts, crypto traders don’t interact with third-party intermediaries when using Synthetix’s services. 

To back the value of every synth offered on Synthetix, traders deposit the dApp’s proprietary SNX token into smart contract vaults and receive their desired synthetic tokens in a self-custodial wallet. When minting synths, traders send a higher dollar amount of SNX as collateral relative to the tokens they want. This overcollateralization reduces the odds of the initial deposit falling to a liquidation level, even during periods of price volatility. For enhanced liquidity, Synthetix also lets traders lock (or “stake”) SNX tokens on the protocol.

Each synth relies on price feeds from decentralized oracles like Chainlink (LINK), which provide real-time market prices between onchain and offchain sources. Crypto traders can use their synthetic tokens on other Ethereum-based DeFi applications or return them to the Synthetix protocol to reclaim locked collateral. 

Synthetix FAQs

What is the Synthetix coin price? 

The Synthetix price refers to the market price for Synthetix’s SNX token, which is essential in backing synthetic assets within the Synthetix ecosystem. A real-time Synthetix price chart on reputable crypto price aggregators and exchanges shows the current price per SNX in the crypto market.   

What’s the purpose of Synthetix?

Synthetix’s primary goal is to offer crypto traders a peer-to-peer (P2P) platform for exchanging digital derivative products. Using tokenization and collateralization technologies, Synthetix provides a way for traders to speculate on the price of various assets without literally owning the underlying asset. 

How do traders use the Synthetix protocol? 

Eligible traders interested in Synthetix can use the official Synthetix dApp on Ethereum or Optimism to access DeFi services, including issuing synths or staking SNX. After linking a compatible self-custodial crypto wallet like MetaMask, traders deposit SNX to the protocol, pay gas fees, and receive staking rewards or synths in their crypto wallet. 

Disclosures

The content of this article (the “Article”) is provided for general informational purposes only. Reference to any specific strategy, technique, product, service, or entity does not constitute an endorsement or recommendation by dYdX Trading Inc., or any affiliate, agent, or representative thereof (“dYdX”). Use of strategies, techniques, products or services referenced in this Article may involve material risks, including the risk of financial losses arising from the volatility, operational loss, or nonconsensual liquidation of digital assets.  The content of this Article does not constitute, and should not be considered, construed, or relied upon as, financial advice, legal advice, tax advice, investment advice, or advice of any other nature; and the content of this Article is not an offer, solicitation or call to action to make any investment, or purchase any crypto asset, of any kind.  dYdX makes no representation, assurance or guarantee as to the accuracy, completeness, timeliness, suitability, or validity of any information in this Article or any third-party website that may be linked to it.  You are solely responsible for conducting independent research, performing due diligence, and/or seeking advice from a professional advisor prior to taking any financial, tax, legal, or investment action.

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