Cryptocurrencies: A good Watch on the Synthetix project (SNX)
May 21, 2021 1:03 PM
As the crypto universe is in the midst of a correction phase, with Bitcoin in the spotlight, some projects continue to attract investors. This is particularly the case of Synthetix (SNX) which has posted price growth of more than 10% over the last 7 days. Here, we will detail together the project behind the SNX token. We will also seek to know if the bullish phase could be prolonged in the longer term.
Synthetix: A Decentralized Trading Platform?
Synthetix: A decentralized platform The Synthetix solution has been around since 2018. It is a decentralized financial platform. To explain and schematize the developed solution, it is essential to define the notion of synthetic. A synthetic is a product created and which makes it possible to represent assets on a market. Via the synthetic, it is then possible to interact with the market and benefit from the properties of the asset concerned. Without actually having it. Synthetic could be likened to a CFD that is found with many online brokers.
Indeed, like CFDs, synthetic allows the properties of an asset to be replicated without having to assume certain constraints. Constraints such as the storage or maintenance of assets, issues that are particularly visible for assets such as raw materials. However, the synthetic will make it possible to position oneself in assets with potential but also very liquid since they are accepted by a large number of players in the financial markets. Today, Synthetix works with assets like cryptocurrencies, commodities and even currencies. It is thus possible to invest in sBTC for Bitcoin or sUSD for US dollar.
The solution deployed by Synthetix works through the inclusion of oracles. Tools provided by ChainLink (LINK) and which make it possible to ensure price consistency between the real asset on the market and its synthetic.
Zoom on the SNX Token
The SNX token is the governance token of the Synthetix ecosystem. Token holders can then stake their tokens as collateral. A guarantee that will allow the creation of new synths.
On this point, the protocol works with a strong guarantee system. To create a synth, it is necessary to deposit the equivalent of 7.5 times the amount of it. This means that in order to strike EUR 100, it is necessary to bring and deposit the equivalent of EUR 750 in SNX tokens.
In 2018, 100 million SNX tokens were issued on the market. By 2024, there should be 250 million tokens on the market. Currently, 115 million tokens are in circulation.
Some Key Figures on the Project
In terms of market capitalization, the project currently occupies 54th place. With a capitalization of around $ 2.4 billion and a token that can be traded on exchanges and markets for $ 20.58.
The following chart, available on Coinmarketcap, shows the price of the asset since 2018:
Graphically, we see that the token had already experienced a first bullish phase, which began in June 2020 with a peak at more than $ 7 at the beginning of September. Then followed a correction of more than two months which will see the price of the token drop below the level of $ 3 per unit.
Between December 2020 and February 2021, there followed a very sharp rise in the price of the token. For several months, the project has remained extremely volatile, as evidenced by the curve.
What to expect from the Synthetix Project?
First, the Synthetix project is in the field of DeFi, a sector particularly popular with investors. As we have seen, the proposed solution is not conceptually innovative. Some products like CFDs could also be strong competitors for synthetics. The differentiation between the two concepts lies in the centralized or decentralized nature of the solution. The CFD or CFD is clearly centralized, the intermediary being a broker, Synthetix endeavors to offer a decentralized solution. A solution which makes it possible to multiply the potentials. Because on paper, Synthetix and its users have the ability to synthesize any asset in the world.
The development of trading, which is particularly visible during the various confinements, could also increase in the months or years to come. And bring solutions like Synthetix to the forefront.
The platform also allows an incentive staking mechanism that provides liquidity and fluidity to the project. This system also obviously provides some form of stability to Synthetix.