What is Synthetix Network Token (SNX)?
Synthetix Network Token (SNX) is an exchange-based token created and issued by Synthetix, a decentralized synthetic asset issuance protocol built on the Ethereum blockchain.
What is Synthetix?
Synthetix is a decentralized synthetic asset issuance protocol founded by Kain Warwick and the Synthetix Foundation. Initially, it was known as Havven when it first launched in September 2017. During its seed round and token sale, it managed to raise $30 million by selling 60 million HAV tokens to investors. In late 2018, the platform expanded its vision and rebranded to Synthetix. Today, the platform is the largest decentralized exchange for derivatives in the decentralized finance (DeFi) space, boasting an impressive ~$700M in total value locked (TVL) as of November 2020.
What are synthetic assets?
Synthetic assets or Synths are derivatives that provide exposure to real world assets on the Ethereum blockchain. Similar to derivatives in traditional financial markets, Synths allow users to hedge and reduce their risk, speculate on price movements and gain access to unavailable assets or markets. This is all accomplished without an individual ever holding the underlying asset.
What can Synthetix Network Token (SNX) do?
Synthetix Network Token (SNX) is primarily used as collateral to mint synthetic assets. SNX holders can head over to Mintr to stake their SNX into the Synthetix smart contract and create sUSD – synthetic United States dollars. The amount of sUSD minted will depend on two factors: i) the amount of SNX staked, and ii) the collateralization ratio (C-Ratio) of the platform. At present, the C-Ratio is 600%. This means that in order to mint 1 sUSD, a user would need to stake at least 6 SNX as collateral.
SNX is also used to earn rewards. SNX holders who stake their SNX into the platform are incentivized to do so through two main reward mechanisms: i) exchange rewards and ii) staking rewards. Exchange rewards are generated whenever a trade takes place on Synthetix, the value of which can range from 0.1-1% of the trade value, though it is typically 0.3%. Staking rewards meanwhile, are rewards from the protocol’s inflationary monetary supply. The new SNX generated by the protocol is given to SNX holders who stake their tokens. Both these rewards are distributed as SNX on a weekly, pro-rata basis and are escrowed for 1 year. This is subject however, to an individual’s compliance with the target C-Ratio.
Synthetix also offers other time-limited incentives such as liquidity provider rewards. These can be viewed on Mintr by clicking the LP Rewards tab.
How do I obtain Synthetix Network Tokens (SNX)?
Synthetix Network Tokens (SNX) can be obtained by buying them from an exchange such as Binance or Uniswap. You can find SNX trading on various centralized and decentralized cryptocurrency exchanges via the link provided. Alternatively, you can check out this page's markets tab for a list of all the exchanges that are trading SNX pairs.
