What is Synthetix Network Token (SNX)?
Synthetix is a decentralized asset insurance protocol, and it allows users to mint, hold, and trade a wide range of derivatives – including commodities, FIAT currencies, and even stocks. They can also do this for certain cryptocurrencies as well, the most popular being BTC.
Why is this important?
The protocol’s synthetic assets, Synths, are collateralized through the Synthetix Network Token (SNX) – driving value and liquidity to the underlying assets while also offering an increased level of accessibility to traditional financial assets and new trading strategies.
Keep in mind that there are also binary options, as a way to purchase a position on a yes or no outcome over a pre-defined time-frame. The Synthetix ecosystem can even reward traders by providing them capital to different components of the Synthetix ecosystem.
Synthetix was originally governed by the Synthetix Foundation, which was a not-for-profit foundation created in Australia. However, over time, control was shifted to three decentralized autonomous organizations (or DAOs) in 2020.
- ProtocolDAO – controls funding for protocol upgrades and changes to Synthetix’s smart contracts
- GrantsDAO – controls funding for the community proposals for public goods on Synthetix
- SynthetixDAO – controls funding for entities that are advancing the network’s development.
As such, Synthetix provides exposure to a wide range of both crypto and non-crypto assets in a decentralized, permissionless, and censorship-resistant method – enabling participation in the DeFi ecosystem even if you do not hold any of these assets.
How Does Synthetix Network Token Work?
To start trading Synths, you can use multiple methods. The first is to purchase ETH on an exchange, swap that ETH for sUSD on Kwenta (a dApp allowing trade on the Synthetix network), and then trade for other Synths such as sBTC.
The second method is to obtain SNX tokens on an exchange, stake them on Mintr, and create synths while beginning to trade them on Kwenta.
On Synthetix, all of the Synths which are created through staking SNX tokens are backed by 750% collateralization ratios, which is determined by community governance (and may be subject to change). Stakers have to manually manage their ratio on Mintr through minting sUSD if it is too high – or burning sUSD if it ends up being too low.
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Through staking SNX and minting sUSD, users are essentially taking on debt which reflects the amount of sUSD that has to be burned in order to un-stake their SNX. This, in turn, represents a portion of all of the debt on Synthetix, and is denominated in sUSDT and that debt increases or decreases in accordance with the supply of Synths, as well as their exchange rates.
Who Are The Founders of Synthetix Network Token? (History of Synthetix Network Token)
Kain Warwick is the founder of Synthetix, a derivatives liquidity protocol on Ethereum, and is currently leading the team for its future development.
He has past experience in building cryptocurrency payment platforms in Australia, the biggest one being Blueshyft. More importantly, he was the non-executive director there.
Before that, Warwick was also an Advisory Council Member in Blockchain Australia, as well as the Advisory Board Member at The Burger Collective.
As previously mentioned, the project was originally founded as Havven, and raised $30m in early 2018 through its Initial Coin Offering (ICO) and the sale of their native token SNX from major crypto funds.
There are two other prominent members of the Synthetix core team: Justin Moses and Clinton Ennis.
Justin Moses is the CTO at Synthetix and has been with the project since the beginning. Before joining Synthetix, Moses was Director of Engineering at MongoDB. He has extensive experience with large-scale systems, specializing in design and deployment.
Synthetix’sSenior Architect, Clint Ennis, has over 18 years of experience in software engineering. Coming from traditional finance, Ennis used to work as an Architect Lead at JPMorgan Chase.
What Makes Synthetix Network Token Unique?
There are certain things that make the Synthetix Network truly unique. Most notably is the ability for anyone to convert Synths without the need for a counterparty.
Any Synth can be traded for any other Synth on the Synthetix Exchange, and the functionality it has provides for an almost infinite level of liquidity.
Another innovation the Synthetix network offers is peer-to-contract (P2C) trading, where the trades themselves are executed quickly and easily – all without any order book. A distributed pool of token holders is responsible for providing this collateral on the platform, as well as maintaining the stability of the entire exchange.
Synths can be in any form and are designated with a prefix of “s” – FIAT synths look like sEUR, sUSD, and so on.
Users do not need to trade in the same Synth type that was originally coined. As long as the Synth that is used for payment has the same market value, it will be accepted by the system.
What Gives Synthetix Network Token Value?
When a user mints Synths, they become a part of the platform’s debt pool. The amount of the total debt pool is equal to the total value of all Synths on the network. The debts can increase and decrease regardless of the original value of the minted Synths, and users are at risk of losing value due to volatility or price swings. The Synthetix system has a requirement of collateral, with a rate of 750% – so if a user wants to mint 1000 sUSD, they must deposit $7500.
How Many Synthetix Network Tokens (SNX) Are There In Circulation?
The maximum supply of SNX is 212,424,133 tokens. Currently there are SNX in circulation.
Through their Initial Coin Offering (ICO), Synthetix sold over 60 million tokens, raising $30 million USD.
Out of the 100,000,000 tokens sold in the ICO, 20% was distributed to the team and advisors, 3% was allocated to bounties and marketing incentives, 5% went to partnerships, and 12% was given to the Synthetix Foundation to fund further development.
Other Technical Data
Synths use decentralized oracles, which are smart contract-based price discovery protocols that can track the prices of the assets which are represented, allowing users to hold and exchange Synths even when you don’t own the underlying assets. Through this, Synths can provide exposure to assets that would normally be inaccessible to the average crypto investor, such as gold or silver, while letting them trade quickly and effectively.
Due to the fact that Synths are based on Ethereum, users can deposit them to other participating DeFi platforms, such as Uniswap and Curve, and use them to provide liquidity and earn interest. Synths and derivatives are important when it comes to building markets that will reach equilibrium, and this is done through facilitating price discovery as well as helping to hedge against volatility.
Another integral part of the Synthetix network is Kwenta, a decentralized exchange (DEX) that allows for the trading of Synths. Unlike other DEXs, Kwenta does not have an order book and utilizes peer-to-contract trading, which means that all trades are executed against a smart contract able to provide infinite liquidity.
Kwenta users have the ability to buy as well as trade 13 different cryptocurrencies and inverse cryptocurrencies, synthetic gold, and silver, as well as synthetic FIAT currency.
How To Use Synthetix Network Token?
The Synthetix platform’s main goal and the reason it was created was to allow users to trade Synths. Holders of Synths can go long on an asset, and bet that the price will increase, or short an asset and bet the price will decrease.
Through staking SNX, holders can create new Synths, collect rewards, and watch their holdings grow as a result.
How To Choose a Synthetix Network Token Wallet?
In order to use the Synthetic Network Token, you’ll need to hold SNX tokens in an ERC-20 compatible wallet, and then connect that wallet to the Synthetic Exchange.
If you want to stake your SNX tokens or mint Synth for some purpose, you begin by locking SNX as collateral in your wallet. Users must meet the 750% collateral requirement, with all Synth minted being relative to this collateral requirement and the value of the SNX locked in the wallet.
When choosing a wallet for storing and trading SNX, there are many options.
Hardware wallets (aka cold wallets) like Ledger or Trezor offer the most secure option with offline storage and backup. However, they tend to be more expensive and difficult to understand so are probably more suitable for experienced users with large amounts of SNX tokens to store.
A simpler, and usually free option is software wallets. These can be downloaded to your smartphone or computer and may be custodial or non-custodial. These are more convenient for making transactions but less secure than their hardware counterparts, meaning they’re better suited to inexperienced users with smaller amounts of SNX tokens.
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Finally, there are online wallets or exchanges, known as hot wallets, which can be accessed with a web browser. These are less secure than the alternatives and require users to place their trust in a platform to manage their SNX tokens. These are best for users who are holding small amounts of SNX tokens or making frequent trades. Just make sure to pick a service with strong security measures and a good reputation.
Kriptomat offers a secure storage solution, allowing you to both store and trade your SNX tokens without hassle. Storing your SNX tokens with Kriptomat provides you with enterprise-grade security and user-friendly functionality.
Buying and selling SNX, or exchanging them for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.
Synthetix Network Token (SNX) Staking
SNX tokens power the entire Synthetix ecosystem and are used as collateral to mint the Synths. Those who hold SNX tokens can stake them and earn a portion of the fees that are generated by the exchange of these Synths.
Synthetix is at the forefront of the DeFi movement and offers synthetic assets to users across the entire world, providing access to specialized trading strategies as a result of this. When taking into consideration the size of traditional financial markets, it has the potential to truly create a massive tokenized market of digitized real-world assets on the Ethereum Blockchain.
Synthetix Network Token FAQ
I previously locked my SNX to mint sETH. How can I unlock my SNX?
To unlock your SNX, you need to ‘burn’ the sETH you debt owed. Burning will unlock your escrowed SNX first, and then it will start unlocking your SNX in your wallet to transfer.
Why does the number of my staked SNX fluctuate?
This is due to fluctuations in the price of SNX. In order to maintain balance, when the price of SNX rises, your collateralization ratio is raised and some SNX is unstaked. The inverse applies when SNX price drops.
How to Buy Synthetix Network Token (SNX)?
Buying SNX is as easy as visiting Kriptomat’s how to buy Synthetix page and choosing your preferred method of payment.
How to Sell Synthetix Network Token (SNX)?
If you already own Synthetix (SNX) and hold it on a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.
Synthetix Network Token Price
Several factors influence Synthetix Network Token price, including exchange inflows and outflows, sentiment, technical and fundamental developments, the news cycle, and the general economic environment.
Synthetix (SNX) price is also directly impacted by the demand for it by those using the network and wanting to participate in minting and using Synths.
Ultimately though, the price is decided at any given moment by the cumulative buying and selling of millions of participants worldwide.
You can keep up to date on the latest price action and news using crypto exchanges like Kriptomat or one of the many different cryptocurrency tracking services.
The current Synthetix (SNX) price is EUR.
The 24-hour trading volume of SNX is EUR. SNX is currently ranked of all cryptocurrencies by total market capitalization, with a market cap of EUR. It has a circulating supply of SNX.
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