In our commitment to broaden our offerings continually, we are introducing a new project addition - Synthetix. Synthetix is a platform for minting and combining assets.
This article provides a comprehensive overview of Synthetix, its native token SNX, tokenomics, functionalities, and potential impact on the crypto ecosystem. Lastly, you will learn how to buy SNX coins.
What Is Synthetix?
Synthetix is a pioneering decentralized liquidity provisioning protocol built on the Ethereum and Optimistic Ethereum platforms. Its main purpose is to enable users to seamlessly generate new crypto assets that combine real-world and digital currencies.
Amidst the growing decentralized finance (DeFi) landscape, Synthetix facilitates this process through the use of code. At its core, Synthetix consists of a network of smart contracts operating on the Ethereum blockchain. This decentralized approach eliminates the need for reliance on any single organization or individual to oversee users' crypto assets. Instead, users trust that the code will execute precisely as designed, highlighting the protocol's foundational trust in immutable code execution. Synthetix creates these new assets through collateralization.
How Does SNX Work?
The Synthetix asset platform is powered by the SNX token. With SNX, users can create synthetic assets known as "synths," representing fiat currencies, commodities, and other cryptocurrencies. Synths are tokens that mimic the value and benefits of another asset without the need to physically possess it.
According to the litepaper, creating a synth requires locking SNX into a smart contract worth 750% of the value of the underlying synth asset. Once the SNX is deposited into the smart contract, a new synth token is introduced into circulation.
Users who lock their SNX are rewarded with SNX transaction fees as an incentive for their continued over-collateralization of the synth token and their participation in the Synthetix network. In addition to generating and issuing synth tokens, SNX holders also lock their tokens into smart contracts, helping to stabilize the price of the SNX token.
Unlike other decentralized exchange (DEX) platforms, Synthetix enables trading of synths without requiring a counterparty. This is possible due to the over-collateralization of SNX, which creates a collateral pool that allows for the conversion of one synth into another based on the exchange rate and the value of SNX.
Overview of SNX
The Synthetix protocol provides a platform for creating synths, including synthetic versions of assets like Bitcoin (sBTC) and fiat currencies like sUSD. The collateral for these synths is made available to users in the form of Synthetix Network Tokens (SNX). SNX also serves as the utility token of the ecosystem, facilitating staking rewards and decentralized governance through community voting.
While Synthetix does not operate user-facing derivatives platforms, it does provide the backend financial infrastructure and liquidity necessary for running such platforms. As a result, Synthetix refers to itself as "the derivatives liquidity protocol."
Infinite liquidity
Synthetix differentiates itself by offering "unlimited liquidity" since it doesn't rely on a central limit order book (CLOB) or experience slippage in the traditional sense. Instead, pricing is determined algorithmically, similar to automated market makers (AMMs). When trading on Synthetix, users are not trading against a market maker or individual but rather trading against themselves while borrowing and repaying debt from the debt pool.
Tokenomics
Following a community proposal in May 2022, the SNX token now has a target annual inflation rate of twenty percent, representing the creation of new tokens per year. These newly minted tokens are used to reward stakers for their contributions to the ecosystem.
During the initial distribution of the SNX token, sixty percent went to investors and token sales, twenty percent to the development team and advisors, twelve percent to the Synthetix Foundation (later split into three separate decentralized autonomous organizations), five percent to partners, and three percent to bounties and marketing incentives.
How to Buy SNX Tokens on CoinEx?
CoinEx is a global cryptocurrency exchange trusted by 5+ million users worldwide with 100% reserve. Users can now trade quickly and seamlessly with its 700+ tokens supported, including SNX.
To purchase SNX tokens on CoinEx, follow the steps below.
- Create an Account: Start by signing up for a CoinEx account.
- Deposit Funds: After logging in, deposit funds into your CoinEx account using any supported cryptocurrencies or deposit methods available on the exchange. Having funds in your account enables you to execute trades seamlessly.
- Navigate to SNX Trading Page: Once your account is funded, go to the dedicated SNX trading page on CoinEx. You can find a search box and enter the term "SNX" to swiftly locate the trading pair associated with SNX tokens.
- Choose a Trading Pair: Select the desired trading pair that matches SNX with another cryptocurrency. For instance, you may choose to trade SNX/USDT.
- Specify the Purchase Amount: Determine the quantity of SNX tokens you want to purchase. Input the amount in the trading interface, which will calculate the corresponding cost based on the current market price.
- Execute the Trade: Execute the trade with the specified amount. Confirm the details, and if you are satisfied, submit the order.
Following these comprehensive steps, you can easily trade SNX tokens on CoinEx using the available trading pairs.
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