In an era where decentralized finance (DeFi) is expanding beyond simple swaps into full-scale derivatives, liquidity, and real-world asset exposure, the SNX token of the Synthetix protocol stands out as a core piece of infrastructure. By enabling collateralised synthetic assets, permissionless derivatives, and deep liquidity pools, Synthetix is pushing the boundaries of what Web3 finance can be.
Synthetix was founded in 2017 and has since evolved into a leading decentralized protocol that allows users to create and trade synthetic assets, known as “Synths.”
Today, we will cover the following topics:
– About Synthetix
– How does Synthetix work?
– Key Features
– Technical Analysis
– Why is SNX The Coin of the Week?
About Synthetix (SNX)
What is Synthetix?
Synthetix allows users to stake SNX (and increasingly other approved collateral types) to mint synths, which are ERC-20 tokens that track the value of various underlying assets without the user needing to hold the actual asset.
These synths can then be traded, swapped or used in DeFi without relying on a counterparty. The system uses price oracles, pooled collateral, and a high collateralisation ratio to maintain system stability and provide deep liquidity.
Dig deeper into SNX whitepaper.
SNX Token
The SNX token lies at the heart of the protocol’s design. It underpins the minting of Synths, powers governance decisions, and captures protocol value.
Collateral and Stability
SNX is staked to create synthetic assets, ensuring sufficient overcollateralization and maintaining system stability.
Staking Rewards
Stakers earn trading fees generated across the Synthetix ecosystem as well as network rewards tied to usage and volume.
Governance Participation
SNX holders can propose and vote on upgrades, collateral parameters, reward schedules, and integrations.
Liquidity and Value Capture
SNX rewards and fee distributions align token value with actual usage and trading volume.
Deflationary Evolution
Over time, Synthetix has transitioned away from inflationary reward models toward sustainable, fee-based value distribution, increasing long-term token efficiency.
How does Synthetix work?
Staking and Collateralization
Users stake SNX in the protocol to mint synthetic assets. The system enforces a high collateralization ratio, typically several times the value of the Synths issued, to safeguard solvency and manage market volatility.
Minting Synthetic Assets
Once SNX is staked, users can mint various Synths such as sUSD, sBTC, or sXAU, each representing a tokenized version of a real or digital asset. These Synths can be traded freely across Synthetix and integrated DeFi platforms.
Oracle Pricing and Tracking
Decentralized oracles provide accurate, real-time price feeds that ensure each synthetic asset mirrors the market price of its real-world equivalent, maintaining transparency and trust.
Trading and Market Liquidity
Traders interact with a shared liquidity pool rather than individual order books, enabling instant swaps between any Synths without counterparty risk. This pooled model allows for infinite liquidity at fair market prices.
Earnings and Distribution
SNX stakers earn a portion of trading fees from the entire network’s activity, creating a direct link between protocol usage and tokenholder rewards.
Key Features and Use Cases
Synthetic Asset Exposure
Synthetix allows users to gain exposure to multiple asset classes, from currencies and commodities to indexes and crypto, all through decentralized, on-chain tokens.
Pooled Liquidity Model
Instead of matching individual buyers and sellers, Synthetix uses a shared debt pool that guarantees deep liquidity and efficient pricing for all participants.
Derivatives and Perpetuals
Beyond simple spot exposure, Synthetix offers on-chain derivatives, including perpetual futures and leveraged products, expanding the scope of DeFi’s financial tools.
Cross-Asset Collateral Support
While SNX is the primary collateral, the protocol continues to integrate additional asset types to improve capital efficiency and accessibility.
Revenue-Based Rewards
Stakers earn a share of trading fees from network activity, ensuring that rewards are tied to protocol performance rather than token inflation.
Multi-Chain Deployment
Operating on Ethereum and Optimism, Synthetix combines security with scalability, providing low-cost and high-speed trading options.
Decentralized Oracles
Reliable oracle feeds track global asset prices, ensuring each synthetic token remains accurately pegged to its underlying value.
Technical Analysis
As per our latest SNX update, the overall structure remains bullish, with price continuing to trade above the rising orange trendline.
This week, SNX has been in a correction phase and is currently retesting the orange trendline, which is acting as dynamic support.
Moreover, it is also testing the key psychological level at $1.
As long as both the orange trendline and the $1 level hold, we will be looking for trend-following long opportunities, targeting the upper boundary of the range near $2.5.
Why is SNX The Coin of the Week?
Synthetix represents one of the most mature and versatile projects in decentralized finance. It has established itself as the backbone for synthetic asset issuance and decentralized derivatives, with a robust economic model and growing adoption.
From a technical perspective, SNX is retesting the key psychological level at $1, which coincides with both a horizontal support zone and a rising trendline, forming an A-grade setup for traders.
This week, we explored SNX, the native token of Synthetix, a decentralized liquidity protocol powering derivatives trading on-chain. Built on Ethereum and Optimism, Synthetix enables the creation of synthetic assets that mirror the value of real-world assets like commodities, fiat currencies, and cryptocurrencies.
Thanks for tuning in to this week’s coin of the week! We appreciate your readership and enthusiasm for exploring the crypto landscape with us.
See you next week for another coin of the week! 🚀
