Synthetix (SNX) is a decentralized finance (DeFi) protocol built on the Ethereum blockchain that enables the creation and trading of synthetic assets. Formerly known as Havven, Synthetix was founded by Kain Warwick in 2017, and aims to provide users with exposure to a wide range of real-world and digital assets without the need for intermediaries or centralized exchanges.
One of the key features of Synthetix is its synthetic asset issuance platform, which allows users to mint synthetic assets that track the value of various assets, including fiat currencies, cryptocurrencies, commodities, and indices. These synthetic assets, known as Synths, are ERC-20 tokens that derive their value from price feeds provided by decentralized oracles.
The native cryptocurrency of the Synthetix platform, SNX, serves as the primary means of collateral to generate synth tokens. Synthetix employs a collateralized debt position (CDP) system to maintain the stability and solvency of the platform. Users who wish to mint Synths must first lock up a certain amount of SNX tokens as collateral. The value of the locked SNX tokens must exceed the value of the Synths minted, ensuring that the system remains overcollateralized at all times.
On its decentralized exchange (DEX), users can trade Synths directly against one another. This enables users to gain exposure to various assets and markets without the need for traditional financial intermediaries or centralized exchanges.
