What Is Synthetix?
Synthetix is an easy platform for people to trade synthetic real world assets on the decentralized Ethereum blockchain. pay for anything without having any intermediaries from any third party by trading, holding, and minting various derivatives using fiat currencies and cryptocurrencies.
Synthetix enables any user to use its issuance protocol to issue new token for decentralized assets and trade the synthetic asset on its exchange. The asset doesn’t have to be just cryptocurrency but includes fiat currency and commodity.
However, you may have a lot of question in your mind like, is Syntheix safe? or how does Synthetix work?
So, we will take a detailed look at this DeFi project in our Synthetix review. After reading this article, you will have the basics of Synthetic assets, how to use Synthetix platform and start trading decentralized Synths.
As usual, let’s start with the basics to help everyone understand this amazing Defi project.
Who Created Synthetix?
Synthetix has 6 primary investors who have bet huge on the Synthetic asset trading platform. Only one investment VC was the major contributor to Synthetix ICO. Other investors invested in Synthetix later through multiple venture rounds.
- Infinite Capital – Investor since Synthetix ICO
- Framework Ventures
- IOSG Ventures
- Paradigm Capital
- Coinbase Ventures
SOSV alone funded Synthetix using Convertible note method. All other investors took the normal venture equity for cash route.
Synthetix Liquidity Partners
Synthetix needs liquidity for any Synth asset to buy and sell freely without any problems with advanced market maker liquidity partners.
Synthetix has 9 major liqudity partners
- Framework Ventures
- Three Arrows Capital
- Hashed Capital
- IOSG Ventures
- ParaFi Capital
- DTC Capital
- Spartan Ventures
- DeFiance Capital
What Are Synths?
Synths are synthetic assets that are derived from a real word asset. Synths tracks the price of the real world asset closely and accurately using price oracles.
Users need to own SNX tokens and lock them in order to create new synths. These synths are price-trackers that could hold similar value to mirrored real-world assets. Binance is the best exchange to acquire SNX tokens.
If you want to earn SNX tokens from already available Synths, all you need to do is Synthetix Staking or SNX staking. Later, lock these SNX tokens as collaterals and start minting new Synths or collect trading fees to avoid being a passive wallet holder for these tokens.
What Synths Can You Trade On Synthetix?
Investors that are interested to trade Synths on Synthetix may want to check their website synthetix.io to see what assets they support. Synthetix helps you to trade different types of assets or commodities such as silver, gold, cryptocurrencies, fiat currencies, and inverse currencies.
Fiat Currency Synth
Fiat currency synth or synthetic fiat currencies are the synthetic assets on Ethereum blockchain in the form of sUSD, sAUD, sKRW, etc. Fiat Synth tracks government-based paper money or fiat money. It is difficult to get hold of Foreign currencies to diversify currency risk. But, Synthetix makes it easy for you to hold a basket of Fiat currencies through various fiat currency synths.
Crypto Synth tracks the price of crypto through Synthetix Oracle fed price feeds. Chainlink Oracle network will replace the current Synthetix Oracle price feeds soon.
Inverse Synth (iSynths)
iSynth inversely tracks the asset price through Chainlink Oracle or Synthetix Oracle. This is similar to taking a short position in traditional finance or Crypto markets. iSynths are right now available for Index Synths and Crypto Synths.
There are various ranges of commodities that can be traded in the synthetic world of Synthetix. For instance, gold and silver are commodities exchanged in synth tokens with a real price tracker of gold and silver.
Forex Synth emulates the forex currency price through Chainlink price oracle.
Index Synth tracks the index price through Chainlink Oracle network price feeds. The main advantage of Synthetic Index is that it doesn’t necessarily have to be a traditional finance index, it can be something like Crypto top 10 index or Defi index (sDEFI).
Some traditional off blockchain finance index like Nikkei or Dow can be tracked and represented within Synthetix network through sNikkei and similar synthetic tickers.
What Makes Synthetix Unique?
Synthetix is not only one of the many decentralized exchange platforms, but it is also an exchange that handles issuance of synthetic assets. Synthetic assets are called as Synths and are issued and traded in Synthetix.
Besides exchanging commodities such as gold, silver, and currencies as in fiat currency, it also handles trading of inverse synths. So, you can easily get exposed to any real world asset in matter of seconds in a one stop Synthetix platform.
Is Synthetix A Good Investment?
Synthetix offers issuance of synthetic assets – Synths whereby the derivatives are collected or created. It is a one-stop platform to do all kinds of imaginable stock exchanges.
Other than allowing trading stocks, shares, currencies, commodities’ metals, Synthetix also allows for minting and trading its own SNX crypto or procure money from selling SNX cryptocurrency.
One is encouraged to invest in Synthetix if one wants to be exposed to many financial instruments considering the ability of procuring synthetic assets through its Ether-based SNX cryptocurrencies. Do note that Synthetix follows a reliable price-tracker platform, Chainlink which provides oracles where the prices given are not too far-fetched from real-world ones.
How Does Synthetix Work
Ever heard of someone holding their assets but not actually holding onto it? That is how Synthetix works, by allowing investors to procure assets that hold similar value in real-world through the ownership of synths.
Synthetix provides prices for assets through a smart-contract outlet namely Chainlink that provides oracles where Synths are traded as if one actually holds the real assets.
Take, for example, an investor buys gold and silver from another DeFi platform, the company will actually hold the assets bought by the investor.
However, in the synthetic cryptocurrency world, the investor is only exposed to the real price of gold and silver and only acquired the synthetics instead of buying the real commodities.
Synthetix also offers incentives on a certain collateralization percentage level, a reward for maintaining the collateralization at a target percentage which can be claimed by the investors.
Synthetix Collateralization – 750% Collateral C – Ratio
Collateralization ratio that Synthetix has specified is at 750%. It is the debt against the amount of SNX coins that one has staked.
For example, in the case of synthetix staking, the investor buys synthetix crypto at a desired price and then mints sUSD by staking SNX coins, the investor will get a Collateralization Ratio and a debt which allows for earning staking rewards.
If it falls below 750%, the investors will be blocked from claiming rewards although the investment will not be liquidated. To be on the safe side, there are two options the investors could go for – either buy more SNX cryptocurrencies or burn the SNX coins staked.
This is done through decentralized App (dApp) platform which is called Mintr. It is an app for SNX holders to participate in the Synthetix network.
Synthetix Debt Pool
The higher the SNX coins staked, the higher the staking rewards will be. Thus, the staking debt will also increase in a similar amount if the price of the synths went up.
The network debt goes up and down on a regular basis, regardless of what the investor does. It depends on the profitability of people who buy synths or the ability to do synthetix crypto price prediction.
In Synthetix exchange website, there are many features available such as market, snyths, trade, loans, and options. These features are provided on the upper left toolbar of the website. One can access the website on synthetic.io, or on synthetix.exchange. Let’s do some synthetic network reviews on the website!
This is the first feature available where one can see the Synthetix markets for synths such as sUSD, sBTC, sETH, sFiat. There are also inverse synths that are in the form of iDEFI, iOil, iLINK, iADA, etc.
Synths feature is an overview of each asset available on Synthetix.Exchange. This is where one can see the price of all synths available on the market along with the trend fluctuation. There are buttons for trading options available next to each row of these snyths.
The ‘Trade’ feature allows one to see the fluctuation trend for optional periods such as 1 hour, 4 hour, 1 day, 1 week, and 1 month. To trade, one needs to connect a wallet, select synths, convert synths, and make the trade.
Moving on to the next bar, Loans feature provides easy access to ‘create a loan’ button where it allows holders to borrow synthetic assets. In addition, it also provides a ‘view contract’ for more comprehension on how this loan works.
This feature is called ‘binary option’ – a type of options agreement that allows a yes/no outcome. It also supports the market for all non-inverse synths and SNX coin holders. There are options for ‘Trading’, ‘Bidding’, and ‘Maturity’ for each asset which specify the phases.
Synthetix Exchange Fees
You will be paying some fee while executing a trade or exchange of assets. This Synthetix exchange fee is 0.3 % of your transaction value. It is fixed usually. However, it may vary from currency to currency in which you are performing an exchange. For example, exchanging long assets such as sETH or iBTC makes the fee double.
For the governance of Synthetix, Synthetic Foundation was performing this task previously. But now three decentralized autonomous organizations (DAOs) are governing the Synthetix. It is further divided into three groups i.e. protocol DAO, grants DAO and synthetic DAO. These all perform their respective tasks related to the development methodologies.
Inflation on Synthetix
An inflation model has been implemented on Synthetix from March, 2019 to attract more capital. At the beginning, the policy suggested a 75% annual rate with a decline to halve every year for a period of five years. Later on, a collective decision through community governance led the inflation rate to drop further in Dec 2019. You can view detailed figures here.
What Is SNX Token?
You can generate synths (synthetic assets) through synthetix. These assets are financial instruments known as Synths that are able to track the value of any other asset for you. For this purpose, you need to purchase SNX (Synthetix Network Token) to provide a collateral for the assets (synths) on Synthetix. These tokens are then used to generate new assets (synths).
SNX Circulating Supply and Total Supply
In cryptocurrency, circulating supply means the number of coins that are accessible to the public for their use. While total supply represents the existing number of coins i.e. the sum of circulating supply and the amount held back in escrow.
|Circulating Supply||114,841,533 SNX|
|Total Supply||215,258,834 SNX|
Where can I buy Synthetix ($SNX) Token?
There are many ways to buy Synthetix ($SNX) Token. The easiest and simplest way to do so is through Coinbase. It is a trusted global exchange where you can buy SNX tokens at a relatively lower fee than other crypto exchanges. Apart from this advantage, kraken is rated as a secure and trusted platform in the world. Some other options that you can avail while buying SNX tokens are Uniswap, Kucoin, Kraken and Poloniex.
Synthetix Staking Process
Synthetix Staking is a process in which you stake your SNX tokens into a pooled collateral. By doing this, you start minting sUSD that can be used for trading synthetic assets.
You can earn several rewards by staking your SNX tokens. According to a stat, 80% of tokens are staked by as per Feb, 2020. You can view detailed stats related to staking of SNX tokens here.
For staking your SNX tokens, you must have a compatible wallet. Transfer your SNX to a wallet and head to staking.synthetix.
Here you can mint sUSD by giving your SNX tokens. The simple mechanism behind skating is that as the value of SNX token increases, you can mint more sUSD. However, if the value decreases, your minted value has no effect but your chances to claim reward may become low.
Synthetix Skating Rewards
Rewards can be claimed every wednesday in a week. You can claim your rewards by navigating to the claim section of the staking.synthetix.
To claim rewards, you have to have enough collateralization ratio (C-Ratio). The current targeted C-Ratio is 800% i.e. if the user’s collateralization ratio drops below this limit, they will be unable to claim their rewards.
You have to claim these rewards every week. If you fail to do so, your rewards will go to the communal rewards pool. Moreover, the claimed rewards can not be transferred or sold for the period of 1 year.
Mintr – Synthetix Ecosystem
Mintr is a platform for Synthetix staking. It is a dApp (decentralized application) where a SNX holder can mint synthetic assets (Synths) such as sUSD by staking their SNX tokens and contributing to the Synthetix Ecosystem. We have discussed above the process of SNX staking and claiming rewards.
Mintr provides you an interface that visually tells any user their current SNX holdings and a relationship between user’s SNX and minted Synths by them. The minted Synths are directed into your wallet.
To contribute to Synthetix Network more effectively, you can increase the liquidity of minted sUSD by selling them either by an exchange or by sending it to the Depot (a tool used for converting sUSD, SNX and ETH between each other).
How does Synth Pegging to Real Assets Price works?
Synth pegging is a process that is necessary for a good functioning of an ecosystem. It provides both stability and liquidity between Synths and other assets for traders.
Synth trading performed on the open market involves the chance of synths falling below the assets they track such as US dollars. It is required that there is minimal deviation from the peg value.
Arbitrage is a common method to maintain Synth pegging. The SNX stakers mint synths by taking a debt.
If the Synth peg drops, they can reduce their debt by burning sUSD they bought as a profit. In the synthetix system, 1 sUSD worths $1 USD. So this is how the process of Synth Pegging to real assets (USD) works.
Is Synthetix Safe?
Synthetix, no doubt, is an innovative and modern technology having unique benefits for its users. However, there is a large risk that this system is still in development and has no guarantee of success in the long term.
You may have to burn more Synths than you have generated in order to unlock your SNX. Another risk is dependence of the Synthetix system on Ethereum and its current centralization.
The regulatory policies may also impact Synthetix in future.
Synthetix Price Prediction
Synthetix Short Term Price Prediction
The current short term prediction of Synthetix price is $21.55. It means that in the near future, 1 SNX token will be worth 21.55 dollars.
Synthetix Price Prediction 2021
According to our Synthetix price prediction, by the end of 2021 the price of SNX token will be $32.8 USD. You can view a detailed trend of Synthetix price in the current year through digital coin price.
Synthetix Price Prediction 2023
According to our Synthetic price predictions, 1 SNX token will be worth $47.63 USD by 2023. You can view detailed figures of Synthetix price throughout 2023 through digital coin price.
Synthetic Long Term Price Prediction
According to the cryptocurrency price prediction platforms, Synthetix is profitable in terms of long-term investment. The worth of SNX token will be more in upcoming years and you can earn profit by long term investment in the Synthetix system.
Synthetix Price Prediction 2025
According to the forecast of Synthetic price prediction platforms, SNX token will be worth $66.8 USD in 2025. You can access detailed stats of Synthetix price for 2025 through digitalcoinprice.
Synthetic Price Prediction 2030
According to the forecast, SNX price will reach $101.39 USD by 2030. It may increase beyond the predicted value as per developments in the Synthetix ecosystem.
Synthetix Login Process
It is a simple process to get started with synthetix trading. You can trade your Synths at a decentralized platform synthetix exchange.
Just connect your wallet that contains Synths and ETH. Synths can be minted using SNX tokens which is discussed above also. In case you have no Synths, you can buy sUSD, sETH or sBTC by utilizing ETH.
After acquiring Synths, you can trade into other synthetic assets using them. As a synthetix trader, you must note that synthetic assets are different from real assets. They represent the price of the assets they are tracking.
There are some other platforms also that you can use in place of Synthetix to invest in SNX. Some alternatives available in market are:
Amazon Quantum Ledger Database
IBM Blockchain Platform
You can compare these platforms with Synthetix and get more information about how the system works here.
Synthetix Social Media Handles
To stay updated with policies and decisions made by the governing body to bring improvements in the Synthetic architecture, you need to get in touch with Synthetix through social media handles.
Synthetix has a large community on discord where meetings are arranged to take suggestions of the community through community governance. You can join discord server to get the latest information.
Takeaway – Synthetix Review
Synthetix is emerging as one of the largest decentralized finance (DeFi) cryptocurrency systems in blockchain space. Synthetix allows you to deal with both crypto (synths) and non-crypto (US dollars) assets in a decentralized ecosystem.
It has a user-friendly interface and provides an opportunity to earn rewards by staking SNX tokens.
However, there are some concerns discussed earlier that can be outplayed by bringing improvements in the Synthetix architecture. In short, it is safe to invest in Synthetix if you HODL your Crypto and aim for long term profits.