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What is Synthetix (SNX)?
Synthetix (SNX), is an Ethereum based network on which users can create and exchange synthetic assets.
ERC-20 smart contracts, which operate on the Ethereum blockchain, are commonly used to construct synthetic assets. In contrast to options and other traditional derivatives, they tokenize the relationship between the derivative product and the underlying asset.
The decentralised exchange of Synthetix is called Kwenta (it allows Synths to be traded and also an important aspect of the Synthetix network) on which the users can trade Synths, which include cryptocurrencies, indices, inverses, and real-world assets like gold.
The Synthetix Network Token (SNX), Synthetix’s native token, is utilised as collateral for Synths that are issued.
Synthetix is a decentralised asset insurance system that allows users to create, hold, and trade a variety of derivatives, including commodities, fiat currencies, and even stocks. The users may also do this with specific cryptocurrencies, like Bitcoin.
Synthetix gives decentralised, permissionless, and censorship-resistant disclosure to numerous crypto and non-crypto assets, allowing you to participate in the Decentralized financial ecosystem.
Understanding Synths
Synths make use of decentralised oracles, which are smart contract-based price discovery algorithms that track the prices of the assets they represent, allowing users to own and trade Synths even if they don’t own the underlying assets.
Synths can provide access to assets that would otherwise be unavailable to the typical crypto investor, such as gold or silver while allowing them to trade swiftly and efficiently.
Users can deposit Synths to other participating Defi platforms, including Uniswap and Curve, and use them to provide liquidity and earn interest because they are based on Ethereum. When it comes to creating markets that will reach equilibrium, instruments and derivatives play a key role in enabling price discovery as well as helping to hedge against volatility.
Who are the founders of Synthetix (SNX)?
The founder of Synthetix is Kain Warwick. Kain built cryptocurrency payment services of which Blueshift is most well known. Kain was also the non-executive director at the company.
Synthetix was previously stated as Havven and raised 30 million dollars in its initial coin offering.
J.Moses and C.Ennis are two additional key members of the Synthetix core team. Moses is the CTO of the project while Ennis is the senior architect. Synthetix was initially governed by the Synthetix Foundation and the authority was later shifted to DAO in 2020.
What makes Synthetix (SNX) unique?
There are a few elements that distinguish the Synthetix Network. Synths can be generated and converted by anyone without the necessity for a counterparty is the most notable feature.
On the Synthetix Exchange, any Synth can be swapped for another and the service allows for an almost unlimited amount of convertible assets.
Peer contracts trading is another Synthetix network invention, in which trading is carried out rapidly and easily without the use of an order book. The token holders of the platform’s collateral are responsible for the exchange’s overall stability.
Users are not required to trade in the same Synth type as when it was first created. The system will accept any Synth that has the same market value as the one being used for payment.
How Many Synthetix (SNX) Coins?
There are 189,453,995 SNX tokens in circulation as of now with the maximum supply being 212,424,133 SNX tokens.
How does SNX (SNX) Work?
You can utilise a variety of strategies to get started with trading Synths. The first is to buy ETH on an exchange, then exchange it for USD on Kwenta and then trade for other Synths like BTC.
The second approach is to acquire SNX tokens on an exchange, stake them on MINTR( a dApp for users who hold SNX to mint synthetic assets against their SNX and take part in the Synthetix Network), and generate synths while starting to trade them on Kwenta.
All Synths created by staking SNX tokens on Synthetix are backed by 750 per cent collateralization ratios, which are decided by community governance.
Users are effectively taking on debt by staking SNX and minting USD, which reflects the amount of USD that must be burned to un-stake their SNX. This, in turn, represents a fraction of all of Synthetix’s debt, which is denominated in USD and fluctuates in response to the supply of Synths as well as their exchange rates.
How to use SNX (SNX)?
The major purpose of the Synthetix platform, and the motivation for its creation, was allowing users for trading Synths.
Holders of SNX can use it to build new Synths, get prizes, and see their holdings expand upon staking.
How to choose your Synthetic (SNX) wallet?
To use the SNX Token, the users must store SNX tokens initially, any ERC-20 (ERC stands for Ethereum Request for Comment, and 20 is the proposal identifier) compatible wallet before connecting it to the Synthetic Exchange.
Upon locking SNX in the users’ wallets as collateral, they’re allowed to stake tokens or create Synth as well.
All Synth minted is relevant to this collateral requirement and the worth of the SNX stored in the wallet, therefore users must meet the 750 per cent collateral requirement.
There are several possibilities when it comes to selecting a wallet for storing and exchanging SNX.
Hardware wallets (also known as cold wallets) are the safest alternative that comes with offline storage and backup. They are, however, more expensive and difficult to understand, therefore they are probably better suited to experienced users who have a large amount of SNX tokens to store.
Furthermore, there are online wallets that can be accessed using a web browser. These are known to prove lesser security than those of the other Synthetix wallet alternatives and require consumers to put their SNX tokens in the hands of a platform to manage them.
These are excellent for customers that have a limited number of SNX tokens and trade frequently. Choose a service that has robust security measures and a solid reputation.
Conclusion
Synthetix is the spearheaded of the Decentralized finance movement, delivering synthetic assets to users all over the world and, as a result, access to specialised trading tactics. When compared to the size of existing financial markets, the Ethereum Blockchain establish a large tokenized market of digitised real-world assets.
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