The synthetix allows users to bet on crypto assets, stocks, currencies, precious metals.
And other assets in the form of ERC20 tokens. Also, synthetic assets and “Synths” copy the price of an investment in the “real world.”
And it brings onto the Ethereum blockchain giving that Synth all the properties of an ERC20 token.
Also, it holding the Synth is not the same as maintaining the asset. For example, the synthetic MKR token is the same price as the “real” MKR token.
Also, but without the voting rights, an actual MKR token holder can take. And the system allows users to bet on the price of an asset without holding the actual purchase.
What’s so Synthetix Special about it?
- Synthetix uses the multi-token infrastructure base on the system of collateral, staking, inflation, and fees.
- And the system uses two types of tokens–the main Synthetix Network Token (SNX) and synthetic assets and Synths.
- Also, the system is similar to MakerDAO’s, where ETH is locked up to create DAI.
- Also, in Synthetix, SNX is locked up. It creates USD (synthetic USD). The USD acts as the debt while SNX acts as the collateral.
- And the main difference between Synthetix and MakerDAO is SNX is staked as collateral to create any synthetic asset–not just sUSD potentially.
- And one of the core requirements of the Synthetix system is the ability to get accurate information from the “outside world.”
- Such as the price of the Japanese Yen – and eventually the price of stocks like Tesla.
- And get this price information, Synthetix previously using centralized price feeds or oracles, which were vulnerable to manipulation and exploitation.
What can we fix with Synthetix?
- The Synthetix platform primarily creates for users to trade Synths.
- Also, holders of Synths can go long on an asset – bet the price will increase. And they can short an asset – bet the price will decrease.
- By staking SNX, holders can create new Synths, collect rewards, and watch their holdings grow. It can why over 85% of the total SNX supply is currently locked up in the protocol.
Also Read: What is the Dash? – Understanding, Different, and More
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