What is Synthetix (SNX) and How Does It Work?

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Synthetix is a complex but intriguing project in the decentralized finance (DeFi) space. To understand what it aims to do and whether its native SNX token is a worthwhile investment, let’s break down the basics of how Synthetix works.

What is the purpose of Synthetix (SNX) coin?

Synthetix snx coin

Launched in 2017 under the name Havven and subsequently rebranded to Synthetix, the project aims to bring more diversity to the crypto economy by allowing the creation of “synthetic” assets. These synthetic assets, or “Synths,” track the prices of real-world assets like stocks, commodities, currencies, and even other cryptocurrencies without needing to own the underlying assets.

For example, through Synthetix one could trade a synthetic version of Tesla stock (sTSLA) that mirrors Tesla’s market movements without owning any actual Tesla shares. This allows DeFi users global exposure to a variety of markets traditionally restricted to institutional traders.

How does Synthetix (SNX) crypto work?

The Synthetix Network Token (SNX) is used to power this synthetic asset ecosystem. To issue Synths, SNX holders must stake their tokens as collateral on the protocol. This collateral underwrites the value of all Synths in circulation and is increased or decreased proportionally based on asset price changes.

Synthetic assets can be traded on the integrated decentralized exchange Kwenta. Pricing data comes from decentralized oracles like Chainlink to ensure assets track their real-world counterparts accurately. Fees from Synth trades are dispersed to staked SNX holders as rewards proportional to their collateral backing the network.

This novel approach as a “pooled counterparty” mitigates risk compared to traditional derivatives by replacing centralized counterparties with smart contracts and community-collateralized backing. Users can now trade synthetic assets with no need for trusted third parties.

Does Synthetix (SNX) Token Have a Future?

Synthetix snx coin future

Since its launch, Synthetix has grown into one of the largest DeFi protocols by total value locked, currently over $450 million. As the crypto space matures, projects facilitating interactions between crypto and real-world economies are likely to remain integral.

By bringing new markets and trading strategies to decentralized finance through synthetic assets, Synthetix expands what crypto-native investors can access directly on-chain. As more institutional capital enters the space, demand for exposure to traditional assets in a decentralized manner is only expected to rise.

Continued support from major players like three new DAO governance bodies also bodes well for the longevity and accountable evolution of the project. Those able to stake and provide liquidity can also look forward to ongoing rewards from network transaction fees.

As one of the pioneering DeFi asset issuance protocols, Synthetix and its SNX token seem well-positioned to benefit from crypto’s long term growth – especially if the project sustains its current size and success.

When Synthetix (SNX) Coin Launched?

Though it was originally called Havven and launched in September 2017, the project rebranded to Synthetix in 2018 under founder Kain Warwick. At launch, it raised $30 million through an initial coin offering (ICO) of the Synthetix Network Token (SNX).

Is Synthetix (SNX) Crypto a Scam?

Synthetix snx coin scam

Considering Synthetix’s large scale, multi-year operation, and integration into the DeFi ecosystem, it clearly is not a scam in the traditional sense. As with any new technology, there are inherent risks to be aware of like bugs in smart contract code or unforeseen economic factors.

But Synthetix remains a transparent open-source project with an active community. It has evolved its governance model to three decentralized autonomous organizations (DAOs) to maintain accountability. With prominent exchanges like Binance supporting SNX trade, all signs point to its legitimacy. Of course, do your own research as with any investment.

Is it Safe to Invest in Synthetix (SNX) Token?

Nothing in the high-risk crypto markets is entirely without risk. However, compared to smaller, newer projects, Synthetix is relatively low risk given factors like:

  • Large total value and trading volumes demonstrating real world adoption over many years.
  • Public code audits and continued development by a experienced full-time team.
  • Established DAO governance safeguarding the protocol’s future evolution in a decentralized way.
  • Integration in the broader DeFi ecosystem provides additional infrastructure support like oracles.

As with any investment, only put in what you can afford to lose and diversify your portfolio. But overall Synthetix is likely one of the safer bets if looking to invest in an established DeFi project.

Is Synthetix (SNX) Coin Worth It? SNX Price 2023

Synthetix snx coin price 2023

SNX tokens have seen impressive growth since launch, reaching a high of around $28 in early 2021. While suffering recent declines along with the wider crypto bear market, long-term holders have still achieved solid returns given the coin traded under $1 just three years ago.

Looking ahead, if Synthetix maintains its market leadership in synthetic assets and more institutional investors enter the space, there is potential for SNX to reach new highs. However, DeFi remains a risky sector subject to volatility. Price prediction is impossible, but those willing to hold for multiple years could see worthwhile gains if the project executes on its roadmap.

SNX may be a worthwhile investment for crypto believers looking to back an established DeFi protocol with strong underlying utility. Just be prepared for short-term turbulence and only risk funds one can afford to lose long-term if the market turns.

Where to Buy Synthetix (SNX) Crypto?

Some top exchanges allowing fiat or crypto purchases of SNX include Binance, KuCoin, Gate.io, Coinbase (with fees) and HTX. To ensure getting the best price, review exchange rate differences and look for platforms with your preferred payment methods and funding currencies. Kryptomat also offers trading pairs against stablecoins like DAI, USDC and EURT.

How to Sell Synthetix (SNX) Token?

Synthetix snx token

Selling your SNX follows the same process as purchasing but in reverse. Transfer your tokens to an exchange supporting SNX trading like the above options. Select a suitable SNX trading pair like SNX/USDT and place a limit sell order. Funds will be credited to your exchange wallet, from which you can then withdraw to your preferred off-ramp back to fiat. Some DEXs like Kwenta also allow direct swaps from SNX to other tokens or stablecoins.

How to Stake Synthetix (SNX) Coin?

In addition to potential price appreciation, staking SNX allows you earn additional tokens from transaction fees on the Synthetix network. You can delegate your SNX holdings for staking through several interfaces like the Synthetix Staking app or directly on Ethereum using smart contracts. Staked collateral also underwrites the value of synthetic assets on the network. Minimum staking amounts may apply, so be sure to review requirements before locking up your funds long-term.

How to Mine Synthetix (SNX) Crypto?

Synthetix snx crypto mine

Unlike Bitcoin or other proof-of-work blockchains, SNX cannot be mined through use of specialized mining hardware or rigs. The only way to obtain SNX tokens is by purchasing them on crypto exchanges using fiat currencies or other cryptocurrencies. Some exchanges may offer SNX as rewards for completing tasks or holding certain coins long-term, but direct minting through mining new coins is not possible on Synthetix network.

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