Synthetix, a “decentralized” asset management protocol that offers non-custodial mimetic trading, had briefly surpassed the $1 billion mark (according to DeFi Pulse data). However, the decentralized finance (DeFi) market has experienced a somewhat strong correction, as around $1 billion in value has been lost almost as fast as it was added.
During the past 24 hours, the highly risky and volatile DeFi market hit the $9 billion mark, but has now fallen below $8 billion, at the time of writing. However, Synthetix’s SNX token’s price has surged dramatically during 2020, like most other major DeFi protocols such as Aave, Compound, MakerDAO, among many others.
On August 15, 2020, the SNX token reached an all-time high of $7.32. It had rallied over 400% year-to-date.
Most of the altcoin (alternative coin) hype this year has been around “decentralized” lending platforms, digital asset liquidity providers, and yield farming. But Synthetix also aims to offer services that are somewhat similar to those provided by more traditional finance platforms.
Synthetix provides a decentralized or non-custodial crypto exchange (DEX) that has been developed using the Ethereum protocol and blockchain. Like most other DeFi services, Synthetix uses several smart contracts (programmable business logic).
But Synthetix does not support trading between crypto-assets. like many ERC-20 compliant tokens or stablecoins, which are currencies pegged or backed 1-to-1 with major world currencies like the US dollar or commodities like gold. Instead, Synthetix enables trading between “Synths” or synthetic assets.
Synths are digital or tokenized representations of real-world assets. They can be used to keep track of the price of virtual tokens that are basically traditional assets that investors are already familiar with. Commodities and traditional stocks may be traded via the Synthetix DEX. For instance, it’s possible to trade major fiat currencies, in the form of sUSD (synthetic US dollar) or sEUR (synthetic Euro).
Decentralized cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) also have their synthetic representations that may be traded via Synthetic’s exchange. The DeFi protocol may also be used to issue and trade Synth tokens that are used to track the price of assets inversely, like the iUSD and iETH.
Last month, digital asset exchange OKEx introduced daily options trading for cryptocurrencies, and added support for Synthetix (SNX).
As reported in June 2019, a trader on Synthetix took advantage of a price feed (oracle) glitch governing smart contracts on the platform to mint $37 million in synthetic ethers.
Synthetix launched a synthetic Bitcoin on the Ethereum blockchain known as synthetic Bitcoin (sBTC) back in February 2019. The product was introduced after the platform rebranded from Haven to Synthetix (in December 2018).