With the popularity of the DeFi universe on the rise, new technologies are emerging every day, which makes the blockchain market more competitive than any other. No one doubts the power of the synth assets market based on blockchain. Synthetix Protocol is a two-component platform that promises to revolutionize the way of issuing and trading Ethereum synthetic assets.
How Does Synthetix Work?
This video details how does Synthetix actually work!
This platform emerged from another previous platform, called Havven, which also operated similarly. The difference is that although both use the same pooled collateral model, only Synthetix brings as a protocol that supports issuance and trading of a variety of synthetic assets.
The platform is divided between two components. The first one is Synthetix, the underlying protocol. Then comes Synthetix.Exchange, the platform exchange for trading the synthetic assets enabled by the protocol itself.
Synthetix involves people locking crypto collateral, which works as the staking process, to issue the assets, named Synths. Stakers receive the fees generated by users, then these assets getting traded with Synthetix.Exchange.
The trading process is done all P2C form (peer-to-contract), which means that is an exclusive decentralized exchange, without liquidity or slippage throughout the entire thing.
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Who Can Benefit From The Platform?
Like everything great in life, this platform cannot be considered “free for all”. Advanced blockchain users and more experienced crypto traders can benefit from the platform better than most people, for sure.
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Synthetix.Exchange stands out especially among traders, who are looking to gain more exposure to a wide range of assets, with no risk of slippage, and without trusting a centralized form of control.
About the protocol itself, it relies on people staking cryptocollateral, having a platform “homemade” token, called SNX.
The mechanisms can be described as somewhat complex, not recommended for beginners. In addition to complexity, there are additional factors such as various responsibilities stakers need to take on, including managing their debt.
The issue of redemptions also requires regular input from stakers, cause the yield is actively managed by them, needing constant fixing on collateralization ratios before redeeming rewards.
Future For Synthetix Means Right Now
The team behind the platform, made up of experienced blockchain enthusiasts, keeps getting ideas off the ground. All focus now is applied to building more trading features on Synthetix.Exchange, including new possibilities like leveraged synths, synthetic futures, optimistic rollups, and binary options. Sounds like heaven for crypto junkies, right?
Who Is Behind The Idea?
The founder is Kain Warwick, an Australian who is already well known in the blockchain scene. Warwick has always had a crush on entrepreneurship, having been involved in several startups since his twenties.
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After some time, he decided to establish Blueshyft, which ended up becoming the largest payment gateway using cryptocurrencies in Australia.
The experience in the field showed him the potential of cryptocurrencies, leading him to believe in the need for a decentralized stablecoin. From that idea came to Havven, which later was articulated into Synthetix.
Conclusion
An Australian initiative that took the crypto world by storm, Synthetix is today DeFi’s second-biggest DApp.
It has a pooled collateral model, also supporting issuance and trading of a wide range of synthetic assets. The idea came to reality with two components, Synthetix and Synthetix.Exchange. While Synthetix works as the underlying protocol, Synthetix.Exchange is the platform exchange for trading assets enabled by the protocol.
Although the platform is not yet strongly recommended for beginners, advanced users (especially traders) can benefit extensively, gaining more exposure to different kinds of assets with zero slippage.