What is Synthetix?
The Synthetix token, or SNX, is the native token of Synthetix - the decentralized finance platform for issuing crypto-based synthetic assets a.k.a. Synths.
SNX is powered by the Ethereum blockchain and is based on the ERC-20 token standard.
The main feature of SNX is that it serves as collateral for network users who require synthetic assets. This means that, in order to obtain synthetic assets, holders must stake their SNX tokens. These tokens are then locked into a smart contract in order to issue new synthetic assets.
The Synthetix price is greatly influenced by the unique inflation model implemented within the Synthetix ecosystem. The inflation rate will increase over time until it reaches 2.5%.
This model has been implemented to avoid the risks related to halving events. This feature should ensure the relative stability of the SNX price.
SNX holders receive exclusive benefits such as crypto rewards for simply staking their Synthetix tokens. These rewards are called exchange rewards and staking rewards. They’re paid out weekly.
Exchange rewards come from the transaction fees produced by Synthetix. They can reach up to 1% of the original trade value, however, they generally stay at around 0.3%. On the other hand, staking rewards come from an inflationary supply of SNX tokens.
Besides taking out loans, SNX can be used to trade within the Synthethix ecosystem.
For more in-depth information about the Synthetix price, you can check the graph above.
What is a Synthetic Asset?
A synthetic asset, or a Synth, is a digital tokenized derivative that allows holders to predict price movements and minimize risk. In total, there are 5 types of Synths that track the price:
- Forex currencies;
- Assets in an inverse manner.
What are the Main Features of Synthetix?
As mentioned above when discussing What is Synthetix, we’ve established that it’s a decentralized platform that enables synthetic asset issuance. This means that users can access underlying digital assets without owning them, with the help of Synths. These underlying assets are tracked by oracles.
In addition, Synthetix facilitates the trading of Synths in a decentralized manner.
When it comes to governance, the Synthetix crypto project was governed by two different models. From the moment it was launched up to 2020, the Synthetix Foundation took the responsibility of governing the project. The Synthetix Foundation implemented 2 unique proposal management mechanisms:
- Synthetix Improvement Proposal, or SIP, manages proposals related to the smart contract of Synthethix;
- Synthetix Configuration Change Proposal, or SCCP, handles changes related to the configuration variables.
This model of governance was abolished in July of 2020, with the hopes of increasing decentralization through a decentralized autonomous organization (DAO) model, which was split into 3 DAOs:
Who Developed Synthetix?
The Synthetix crypto project was founded by Kain Warwick in late 2017. It entered the market during a time when the only viable stablecoin available was USDT.
Initially, it was introduced as Havven and received 30,000,000 US Dollars from investors who purchased over 60,000,000 SNX tokens.
In November of 2018, the project went through a rebranding process and received a new name - Synthetix.
Before Synthetix was founded, Kain Warwick was working on another Australia-based project powered by blockchain technologies - Blueshyft payment platform. It was launched in 2014 and has managed to spread globally since then. He has also gained valuable experience as a CEO for Pouncer - an auction-based shopping platform.
The Synthetix crypto project is backed by a board of advisors with different professional backgrounds. It includes Walter De Brouwer, Matthew Di Ferrante, and Renqi Shen, among many other accomplished individuals.