Similar to derivatives as it relates to legacy finance, synthetic assets are being used as financial instruments in the form of ERC-20 smart contracts on various blockchains. They can track and provide returns for assets without actually requiring that you hold that asset. Synthetix is looking to be the head of the “Synth” movement.
Because of the still speculative nature of the synthetic market, making a Synthetix price prediction is tough. The Ethereum-based protocol has become a major player when it comes to the issuance of synthetic assets, particularly with its decentralized exchange (DEX) platform. But what does the future hold for Synthetix?
What is Synthetix (SNX)?
At its essence, Synthetix is a decentralized finance (DeFi) protocol built to facilitate synthetic assets on the Ethereum blockchain. Think of it in the same way as derivatives in traditional finance work. These synthetic assets get their value from not only crypto, but real-world assets as well.
Users are able to buy and sell assets by generating their own synthetic assets that track real-time prices using the oracle feeds. The difference here is that you don’t have to actually own those real-world assets. Access forex markets, raw materials, stocks, and other real-world assets by locking SNX tokens into the protocol.
Who are the Founders of Synthetix (SNX)?
Kain Warwick is noted as the founder of Synthetix. Initially, the project was launched in 2017 under the Havven brand before being changed to Synthetix. Warwick is an Australian crypto and tech entrepreneur with experience coming from the fiat payment gateway Blueshyft and online auction platform Pouncer.
What Makes Synthetix Unique?
The single most important factor that makes Synthetix unique is that users aren’t required to use intermediaries when trading Synths. Users are able to enjoy higher liquidity by trading Synths on the Kwenta network, making them more accessible than ever before.
The decentralized liquidity pool, funded by SNX provided by holders, ensures that the exchange remains stable and that there is necessary collateral for each transaction. Finally, you don’t even have to trade in the name of the Snyth originally minted by you. So long as you use a Synth that is similar to the one you minted, the protocol will accept it.
HodecentralisedSynthetix (SNX) Coins are There in Circulation?
When it was launched, Synthetix was given a total supply of 343,889,850 SNX tokens. Since then, more than 344 million of those tokens have been released into the circulating supply. The relative rarity of SNX is something that helps Synthetix price compared to other tokens.
How is the Synthetix Network Secured?
Synthetix has a pool collateral model in which all Synths are backed by a pool of SNX tokens across the entire network. In order to mint Synths, users are required to deposit 750% of that Synth’s value. Over-collateralization is believed to promote more honest users and dissuade fraudulent activity.
Smart contract audits are performed regularly in an environment that is decentralized and managed by the community. There is also a bug bounty program in which security researchers are incentivized to find and report system flaws so that they may be addressed in a timely manner. All these features and more contribute to the overall security of the Synthetix network.
Synthetix (SNX) Ecosystem
There are two major aspects to the Synthetix ecosystem: minting and its DEX Kwenta. Let’s start with the latter. Kwenta, built on the Synthetix network, allows users to trade Synths directly instead of having to withdraw assets to a web3 wallet before trading them on another decentralized finance protocol.
There is also the minting of sUSD. Users are able to mint sUSD using SNX as collateral. This facilitates the process of creating Synths right there in the Synthetix ecosystem. You can also trade with any Synths on the platform with sUSD that you minted previously, even staking SNX as passive income rather than letting assets remain idle.
FAQs
What’s the history of Synthetix?
Synthetix was created in 2017 as Havven, a decentralised stablecoin. It was rebranded to Synthetix in 2018, with an initial coin offering (ICO) that raised $30 million. The v2 launch, plus the “Synths” launched in 2019, with expansion decentralised over the next few years. It has since branched into different DAO protocols in order to handle development and funding.
What is SNX used for?
SNX, the native token of Synthetix, has a variety of uses. For one, it acts as protocol control in the governance of the network. It can be used to back synthetic assets that track real-world assets like stocks, commodities, and fiat currencies. Users can earn rewards and SNX can even be used as arbitrage on cryptocurrency exchanges.
What is the highest and lowest price for Synthetix (SNX)?
The all-time high and low prices of a token are a good indicator of its volatility. Synthetix is evident of that. The all-time low came on Jan. 6, 2019, when it fell to $0.0347 per token. It achieved an all-time high more than two years later, hitting $28.53 per token on Feb. 14, 2021.
What is the market cap for Synthetix (SNX)?
Market capitalisation is one of the most important metrics when talking about a cryptocurrency. We can determine that number by taking the current number of tokens in circulation and multiplying it by the current market price. With a market price of $1.14 per token and 343 million tokens in the supply, that gives us a market cap of $384 million USD.
What is the fully diluted valuation of Synthetix (SNX)?
The fully diluted valuation of a token is determined by taking the current market value of the token and multiplying it by the total supply of that token. With 343.889 million tokens in the total supply and a current market price of $1.14 per token, that gives SNX an FDV of roughly $385 million USD.
Is it safe to invest in Synthetix Network Token?
Though Synthetix has a unique foundation for synthetic derivatives and assets, there are many major risks. Market volatility is bad enough, not to mention ongoing regulatory uncertainty. The security risks – particularly cyberattacks – are perhaps the biggest red flags to consider.
How has Synthetix Network Token price changed over time?
Synthetix remained largely stable over the first two years of its lifespan before seeing the same massive spike that most of the crypto industry saw in 2021. It drop precipitously throughout 2022 before ultimately settling into some stability, slightly above where it was from 2018 to 2020.
Can I trade Synthetix Network Token at a lower price?
There are a number of trading strategies that allow investors to trade Synthetix at a lower price. Going short with futures – selling high and buying low to profit from price decreases – can be a sound strategy. There is also the potential for limit orders, which allows you to buy SNX at a specific price threshold.
Is now a good time to buy Synthetix Network Token?
Speculators predict a bullish crypto market in the near future, but a closer look at Synthetix indicates that now may be a good time to buy. It stabilises over the summer before experiencing another dip in July. It has since started to rise slightly, which could mean that it is an excellent time to ride the upward trend.
What affects the Synthetix Network Token price?
There are market-wide factors like overall sentiment and regulatory developments that provide challenges. The stability of stablecoins like sUSD, not to mention technical and infrastructure issues, can all play a part in current prices as well.
How can I analyse prices with the Synthetix Network Token chart?
Price charts are helpful tools for any cryptocurrency. For Synthetix Network Token, the chart can be used to view historical patterns and trends, 24-hour trading activity, and so much more. All of which are invaluable tools for buying and selling at the best time.
What risks should I consider before trading or holding Synthetix Network Token?
There are inherent risks when it comes to investing in any cryptocurrency. For Synthetix, there are additional security risks. Smart contract vulnerabilities were exposed in a denial-of-service attack in 2022, plus there was an Oracle attack in 2019 that led to misreported crypto prices.
How do I report Synthetix Network Token transactions for tax purposes?
The best way to report transactions of Synthetix is to keep detailed records of everything. Being able to prove your transactions is the most crucial part. It also helps to confer with crypto tax experts to ensure that every requirement is met and you avoid any potentially costly penalties.
