Synthetix (SNX) is a decentralized finance (DeFi) protocol built on the Ethereum blockchain that allows users to create and trade synthetic assets, also known as “synths.”
These synthetic assets replicate the value of various real-world assets like fiat currencies, cryptocurrencies, commodities, and stocks.
Synthetix operates a decentralized exchange (DEX) called Synthetix.Exchange, where users can trade various synths against each other and against other cryptocurrencies. It also helps users to enhance the trading experience and attracts liquidity to the platform.
Unlike some other DeFi projects, Synthetix does not rely on external oracles for price feeds of the underlying assets. Instead, it uses an on-chain oracle mechanism to derive prices based on the Synthetix price feeds.
Synths and SNX token
Synthetix allows users to mint synthetic assets (synths) by locking SNX tokens as collateral. These synths track the value of the underlying assets they represent, enabling exposure to a wide range of assets without needing to hold them directly.
To mint synths, users need to lock SNX tokens as collateral, and the value of SNX collateral must exceed the value of the synths minted. This collateralization ensures the stability and integrity of the system.
SNX token holders can stake their tokens and participate in the network’s governance. They also earn rewards in the form of staking rewards and fees generated by the Synthetix protocol.
