What Is Synthetix Network Token (SNX)?

Synthetix (SNX) is software built on the Ethereumblockchain. Synthetix utilizes a decentralized finance (DeFi) protocol that enables it to provide services without needing any intermediary. This implies that Synthetix users do not have to trust any specific institution or person to manage their crypto asset. The primary purpose of Synthetix is to be used for the creation of synthetic assets, also known as “synths”—a combination of assets having the same value as another asset. The synths may track and provide a return on another asset without requiring anyone to hold that asset. In simpler words, Synthetix cryptocurrency provides exposure to a wide variety of crypto as well as non-crypto assets in a decentralized and permissionless manner. It enables users to participate in the DeFi ecosystem despite not holding the assets.

Further, as mentioned in the whitepaper, synths provide access to even those assets that are usually not accessible for an average trader, such as gold and silver. For doing so, synths use smart-contract-based price discovery protocols, known as oracles, that permit users to hold and exchange the underlying assets. Smart contracts are just like regular contracts; however, instead of being drafted on paper, these contracts run in the form of protocols on the blockchain. They are used to automate a workflow and trigger the forthcoming actions when the conditions are met. In this way, Synthetix aims to allow users to efficiently trade synth assets without facing liquidity issues. Unlike traditional finance, Synthetix does not require any KYC or creating an account, yet anyone can get exposure to stocks, bonds, real estate, and other assets.

SNX is the native token of Synthetix, which is necessary to create synthetic assets (synths). Once the SNX tokens are locked up, new synths can be created.

Since synths are issued on Ethereum, they can also be placed into other DeFi platforms. After that, the assets can be used to provide liquidity and earn yield. Thus, in order to start trading synths, traders can exchange their ETH against synths and start trading immediately. Alternatively, one can also obtain SNX tokens on any platform, create synths, and begin trading them. 

History of Synthetix Network Token (SNX)

Synthetix was founded by Kain Warwick as a system named Havven, which raised around $30 million in 2018 by selling 60 million HAV tokens through an ICO (initial coin offering). Havven changed its name to Synthetix at the end of 2018, broadening its objectives to the formation of synthetic assets for cryptocurrencies and commodities.

Kain Warwick has previous experience in developing cryptocurrency payment services in Australia, the most well-known of which is Blueshyft. Moreover, Warwick has also worked on several other cryptocurrency projects before finding Synthetix.

Peter McKean, Justin Moses, and Jordan Momtazi are three additional key members of the Synthetix core team. Peter McKean is the project's CEO and has vast experience in software development. Justin Moses is the CTO at Synthetix. Jordan Momtazi is the COO, with several years of experience in cryptocurrency, blockchain, e-commerce systems, and more.

How Are New SNX Tokens Created?

New SNX tokens can be created via the staking process. Staking is a way of earning rewards by holding certain cryptocurrencies. The reason why crypto earns rewards while staked is because the blockchain puts it to work. Crypto assets that utilize staking use a consensus mechanism known as proof of stake, which is used to ensure that all transactions are verified and secured without any intermediary. Thus, the crypto that the users choose to stake becomes a part of the process.

On Synthetix, staking enables users to earn weekly rewards for collateralizing the network. In contrast, without staking, traders can make a profit only from an increase in the price of the token. Anyone who holds SNX tokens can participate in the staking process. However, if a staker only has 250–500 SNX, gas expenses may outweigh the benefits of staking. 

How Many SNX Tokens Are There?

The maximum supply of SNX tokens is capped at 240 million SNX.