🧵SYNTHETIX ULTIMATE GUIDE🧵
The survival of #DeFi depends on the integration of Real World Asset (#RWA). 🌎
Let's dive into one of the most significant DEFI protocols that incorporate these RWAs into the blockchain. 🔥
THREAD 🧵
/26
The survival of #DeFi depends on the integration of Real World Asset (#RWA). 🌎
Let's dive into one of the most significant DEFI protocols that incorporate these RWAs into the blockchain. 🔥
THREAD 🧵
/26
1- What is @synthetix_io?
2- What are synthetic assets?
3- How does it work?
4- Synthetix utility
5- Synthetix ecosystem
6- Tokenomics
7- Metrics
8- My opinion
1/
2- What are synthetic assets?
3- How does it work?
4- Synthetix utility
5- Synthetix ecosystem
6- Tokenomics
7- Metrics
8- My opinion
1/
1- What is @synthetix_io?
Synthetix is a protocol that enables the issuance of synthetic assets on the blockchain.
These synthetic assets are backed by a real-world asset or another cryptocurrency such as gold or Bitcoin.
2/
Synthetix is a protocol that enables the issuance of synthetic assets on the blockchain.
These synthetic assets are backed by a real-world asset or another cryptocurrency such as gold or Bitcoin.
2/
The protocol enables you to speculate on various markets without actually owning them and without leaving the blockchain.
Synthetix Network bridges the gap between the real world and on-chain digital assets, thereby creating a global derivatives market on the blockchain.
3/
Synthetix Network bridges the gap between the real world and on-chain digital assets, thereby creating a global derivatives market on the blockchain.
3/
2- What are synthetic assets?
These synthetic assets are called Synths on @synthetix_io, representing the performance of the underlying asset.
Synths are comparable to futures or contracts.
You do not own these assets, you are purely speculating on their prices!
4/
These synthetic assets are called Synths on @synthetix_io, representing the performance of the underlying asset.
Synths are comparable to futures or contracts.
You do not own these assets, you are purely speculating on their prices!
4/
For example, you can hold a synthetic token $GMX that has the same price as the $GMX token but without the benefits that a holder of the actual $GMX token would have.
The protocol can issue any asset with a specific price (gold, silver, currency, energy, etc.).
5/
The protocol can issue any asset with a specific price (gold, silver, currency, energy, etc.).
5/
3- How does it work?
The protocol turns around the $SNX token, its native token.
$SNX is used as collateral to create Synths.
To create a Synth, an equivalent value of $SNX has to be staked.
$SNX stakers are rewarded with a portion of the fees generated by the protocol.
6/
The protocol turns around the $SNX token, its native token.
$SNX is used as collateral to create Synths.
To create a Synth, an equivalent value of $SNX has to be staked.
$SNX stakers are rewarded with a portion of the fees generated by the protocol.
6/
To track the price of the underlying assets, Synthetix uses the Oracle system @chainlink.
It consists of a set of smart contracts that track the price of an asset and transmit it to the blockchain. Chainlink bridges the gap between off-chain and on-chain data.
7/
It consists of a set of smart contracts that track the price of an asset and transmit it to the blockchain. Chainlink bridges the gap between off-chain and on-chain data.
7/
4- Synthetix utility
Thanks to Synthetix, any asset with a price can be integrated and traded on the blockchain. Isn't that incredible?
We're talking about commodities, stocks, currencies, as well as artwork, diamonds, or any other tradable asset.
8/
Thanks to Synthetix, any asset with a price can be integrated and traded on the blockchain. Isn't that incredible?
We're talking about commodities, stocks, currencies, as well as artwork, diamonds, or any other tradable asset.
8/
The derivatives market is a multi-trillion-dollar market.
DEFI currently represents only 0.005% of the derivatives market capitalization.
Synthetix is a protocol that aims to bring a portion of that capitalization into DEFI.
9/
DEFI currently represents only 0.005% of the derivatives market capitalization.
Synthetix is a protocol that aims to bring a portion of that capitalization into DEFI.
9/
5- Synthetix ecosystem
The Synthetix ecosystem consists of several derivative product protocols, which are at the core of this ecosystem :
- @Kwenta_io
- @DecentrexHQ
- @lyrafinance
- @PolynomialFi
...
10/
The Synthetix ecosystem consists of several derivative product protocols, which are at the core of this ecosystem :
- @Kwenta_io
- @DecentrexHQ
- @lyrafinance
- @PolynomialFi
...
10/
- KWENTA
Kwenta has been designed to facilitate the trading of Synths and serves as the primary DEX (Decentralized Exchange) within the Synthetix ecosystem.
Kwenta employs a P2C (Peer-To-Contract) system, where Synths are exchanged for a smart contract powered by Chainlink.
11/
Kwenta has been designed to facilitate the trading of Synths and serves as the primary DEX (Decentralized Exchange) within the Synthetix ecosystem.
Kwenta employs a P2C (Peer-To-Contract) system, where Synths are exchanged for a smart contract powered by Chainlink.
11/
- Decentrex
Unlike Kwenta, Decentrex is exclusively used for cryptocurrencies and fiat currencies.
Decentrex is a decentralized perpetual futures contracts exchange powered by Synthetix.
12/
Unlike Kwenta, Decentrex is exclusively used for cryptocurrencies and fiat currencies.
Decentrex is a decentralized perpetual futures contracts exchange powered by Synthetix.
12/
- Lyra
Lyra is an option DEX operating on an AMM (Auto Market Maker) system.
Lyra uses Synthetix's sUSD as the quote asset, so traders pay to open long positions or close short positions with sUSD.
13/
Lyra is an option DEX operating on an AMM (Auto Market Maker) system.
Lyra uses Synthetix's sUSD as the quote asset, so traders pay to open long positions or close short positions with sUSD.
13/
- Polynomial
Polynomial automates financial derivative strategies to create products that deliver passive yield on various assets. Polynomial Earn is the first DeFi Options Vault (DOV) that executes completely on-chain by selling options directly to an AMM.
14/
Polynomial automates financial derivative strategies to create products that deliver passive yield on various assets. Polynomial Earn is the first DeFi Options Vault (DOV) that executes completely on-chain by selling options directly to an AMM.
14/
6- Tokenomics
The SNX token is the primary form of the collateral supporting the synthetic assets available in the Synthetix protocol.
Total supply: 300M $SNX
The inflation of SNX gradually decreases by 1.25% per week, reaching a final inflation rate of 2.5% on Sep 6, 23.
15/
The SNX token is the primary form of the collateral supporting the synthetic assets available in the Synthetix protocol.
Total supply: 300M $SNX
The inflation of SNX gradually decreases by 1.25% per week, reaching a final inflation rate of 2.5% on Sep 6, 23.
15/
The SNX supply is expected to be fully circulating by approximately March 2024.
16/
16/
The protocol also issues the stablecoin sUSD. This synthetic token tracks the value of the U.S. dollar (USD) through price feeds provided by Chainlink's decentralized oracle network.
It can be traded without slippage against other native assets of the Synthetix protocol,
17/
It can be traded without slippage against other native assets of the Synthetix protocol,
17/
The protocol's governance is composed of 4 DAOs
- Spartan Council
- Grants Council
- Ambassador Council
- Treasury Council
All of the councils are elected by Synthetix Stakers.
18/
- Spartan Council
- Grants Council
- Ambassador Council
- Treasury Council
All of the councils are elected by Synthetix Stakers.
18/
7- Metrics
Synthetix has a TVL (Total Value Locked) of $430M on Ethereum and Optimism, while its market capitalization is $800M.
This may indicate a slightly overestimated price at the moment.
19/
Synthetix has a TVL (Total Value Locked) of $430M on Ethereum and Optimism, while its market capitalization is $800M.
This may indicate a slightly overestimated price at the moment.
19/
It is interesting to see that the trading volume of Synthetix is starting to surpass that of GMX. Over the past 7 days, @synthetix_io has performed twice as well as @GMX_IO, which is impressive.
An excellent THREAD by @WinterSoldierxyz explains why:
20/
An excellent THREAD by @WinterSoldierxyz explains why:
20/
https://twitter.com/1579322612466884608/status/1661002538324471809
However, there is a perception that the protocol has reached a liquidity limit.
The TVL has been declining for some time, and the number of stakers seems to have hit an upper limit.
Very few new stakers are joining the protocol.
21/
The TVL has been declining for some time, and the number of stakers seems to have hit an upper limit.
Very few new stakers are joining the protocol.
21/
8- My opinion
@synthetix_io is a revolutionary ecosystem in the DeFi world.
I believe that DeFi needs this kind of protocol that can bring a portion of derivative market capitalization into DeFi.
22/
@synthetix_io is a revolutionary ecosystem in the DeFi world.
I believe that DeFi needs this kind of protocol that can bring a portion of derivative market capitalization into DeFi.
22/
Beyond the fundamentals, Synthetix has made itself innovative by implementing technical optimizations that have been overlooked by other protocols:
- Lower trading fees
- Increased decentralization
- Primary oracle + Chainlink integration
- Frontend decentralization
23/
- Lower trading fees
- Increased decentralization
- Primary oracle + Chainlink integration
- Frontend decentralization
23/
However, there is a liquidity issue with a declining TVL and fewer stakers participating in the ecosystem.
Stakers are at the core of the ecosystem as they enable the creation of on-chain derivative products.
24/
Stakers are at the core of the ecosystem as they enable the creation of on-chain derivative products.
24/
There is significant attractiveness for traders, but I believe much of it is due to the $OP airdrop.
Every week, Synthetix distributes 300K $OP to perpetual traders. For every $1 in fees, traders receive $1.4 in $OP incentives.
25/
Every week, Synthetix distributes 300K $OP to perpetual traders. For every $1 in fees, traders receive $1.4 in $OP incentives.
25/
Traders are being paid to trade, but what will happen once the airdrop ends?
I anticipate that the trading volume will decline and fall below @GMX_IO trading volume.
The upcoming V3 of Synthetix is scheduled for June, and perhaps it will address this liquidity issue.
26/
I anticipate that the trading volume will decline and fall below @GMX_IO trading volume.
The upcoming V3 of Synthetix is scheduled for June, and perhaps it will address this liquidity issue.
26/
Mention some intersting CTs:
@0xFinish
@CryptoGideon_
@belizardd
@nobrainflip
@ardizor
@Donnadelcrypto
@FarmerTuHao
@dazai_0x
@CryptoStreamHub
@ModestusOkoye
@0xFinish
@CryptoGideon_
@belizardd
@nobrainflip
@ardizor
@Donnadelcrypto
@FarmerTuHao
@dazai_0x
@CryptoStreamHub
@ModestusOkoye
Tagging these gigachads who master Synthetix
@CryptoShiro_
@rektdiomedes
@Deebs_DeFi
@TheDeFISaint
@DeFi_Made_Here
@defiprincess_
@CryptoKoryo
@_BillionAireSon
@0xTindorr
@I_am_patrimonio
@Hercules_Defi
@Only1temmy
@wacy_time1
@jake_pahor
@arndxt_xo
@0xSalazar
@CryptoShiro_
@rektdiomedes
@Deebs_DeFi
@TheDeFISaint
@DeFi_Made_Here
@defiprincess_
@CryptoKoryo
@_BillionAireSon
@0xTindorr
@I_am_patrimonio
@Hercules_Defi
@Only1temmy
@wacy_time1
@jake_pahor
@arndxt_xo
@0xSalazar
@CryptoShiro_ @rektdiomedes @Deebs_DeFi @TheDeFISaint @DeFi_Made_Here @defiprincess_ @CryptoKoryo @_BillionAireSon @0xTindorr @I_am_patrimonio @Hercules_Defi @Only1temmy @wacy_time1 @jake_pahor @arndxt_xo @0xSalazar That's a wrap!
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