How can Synthetix succeed as a bit stock?
The price of tokens soared 40-fold, the heat soared DeFi first, and the value of the dollar locked in was more than Compound only second to MakerDAO. Synthetix has been on fire recently.
So what is Synthetix, and why does it fire? I believe you will be more clear after reading the interpretation of BlockBeats.
A one-sentence explanation for Synthetix
In short, Synthetix allows users to pass an over-mortgage & NBSP;SNX tokens,To synthesize all kinds of assets in the chain.
For example, you can overpledge 750% of your SNX tokens to make sUSD, a stable currency anchored to the dollar, or exchange it for a long token of ethereum, sETH, or a short token, iETH. Of course, the asset class is not limited to the us dollar and ethereum. It can also be other tokens (BTC, BNB, XTZ, TRX, etc.) and other tokens (MKR, LINK, etc.).
In turn, Synthtix and all asset transactions on DEX generate fees, which are distributed to SNX holders. More innovatively, Synthetix decided to encourage early expansion by introducing staking, which distributes the proceeds of inflation based on the ratio of synthetic assets generated by users' mortgages in Synthetix.
In essence, Synthetix is taking excess high-volatility assets on the block chain to replace various low-volatility assets.
Why Synthetix stands out
BlockBeats summarized the reasons for Synthetix's popularity into three points: larger imagination, the extensibility of DeFi's composability, and the speculation of hot money. Each of these will be analyzed later.
If you think about it, Synthetix can expand almost any financial scenario without taking into account capital efficiency and the implementation of the predictor. Synthetic tokens sETH and iETH have enabled users to take long or short positions in Synthetix, and in the future, with leveraged price anchoring and delivery terms, they can theoretically make BitMex in DeFi.
The assets generated by Synthetix can be classified as commodities, U.S. stocks and other assets in addition to cryptocurrencies. For example, the assets generated by Synthetix can be sAPPL, a token of apple stock, or iNASDAQ, a token of short selling on the nasdaq index.
If different synthetic tokens are packaged horizontally, such as sBTC, sETH, sXRP and sBNB are integrated into a sETF, a transaction target similar to Index Fund can be formed. Other users can directly buy sETF to invest in mainstream COINS.
In addition, Synthetix can have some more detailed DeFi applications. In the PoS public chain, the return rate of staking and DeFi products will affect each other. If the return rate of staking is significantly high, users will have no incentive to store the main chain tokens in the DeFi of this chain. On the contrary, if staking's return rate is too low, the security of the chain may be affected.
This problem can be solved by shadow tokens. Regardless of the cross-chain, Synthetix is used to generate sATOM, the synthetic asset of ATOM. SATOM varies with the number of ATOM tokens pledged by users, so that users can use DeFi on the sATOM experience chain, enjoy staking and get rid of the 21-day lockup limit on opportunity cost through DEX.
Beyond imagination, the trend in composability in DeFi is Synthetix's advantage in Timing.
Why do you say that? In fact, Synthetix isn't the first to use its native tokens to generate stable COINS and synthetic assets. The idea came from Bitshares, another early project of EOS founder BM.
However, when Bitshares started the project, there was not even a fire of centralized derivatives trading. Why would there be a DeFi concept and the need to synthesize assets? Everyone can use bitUSD is already good.
However, the financial application of blockchain has been very different till today. With the popularity of MakerDAO and Compound increasing the attention of the cryptography world to DeFi and even blockchain finance, and with the emergence of converged products such as InstaDAPP and PoolTogether, Synthetix's explosion is certainly in the background of The Times.
BlockBeats learned that Synthetix, formerly known as Havven, was a two-currency payment network that pledged digital assets to generate stable currency, and had been tepid. Synthetix became an instant hit after it expanded the project's positioning from stable currency payments to DeFi financial products and asset classes from USD to ETH.
Synthetix can now use a more sophisticated predictor, Uniswap to bring relatively precise quotes and more liquidity to synthetic assets.
That's all, and we have to face the fact that Synthetix's popularity is tied to money speculation.
Block beat BlockBeats was in October this year"SNX founder responds to 'team transfers tokens to a16z to pull' : conspiracy theory"Linda Xie, co-founder of KOL and Scalar Capital, said on twitter: "theoretically, a big player can send tokens to some celebrity or institution and then (wait for the market) to interpret it as a buy signal. If the big player's return is greater than the value of the token, it is possible." This seems to allusion to the $250,000 worth of SNX on the ethereum address of a16z crypto, the top cryptographic capital.
On the other hand, although the price of SNX tokens has increased by more than 40 times, the turnover of SNX is not satisfactory. The whole network is only about $1.3 million (note: the turnover in Uniswap should also be calculated). The nominal turnover rate is only 0.65%. However, few people actually trade in the market behind the crazy price rise, which fully demonstrates the strong price manipulation of SNX tokens.
Synthetix shortcomings
After discussing Synthetix's history and application prospects, BlockBeats came up with a sharp question: what are Synthetix's shortcomings?
It has to be pointed out that the biggest risk for Synthetix is its dependence on SNX tokens, which will not only cause the hidden danger of run in the extreme market, but also inhibit the scale of synthetic assets.
As an Altcoin, SNX is very vulnerable to the impact of cyclical market conditions. If SNX token prices collapse in a short period of time, this will lead to a decline in synthetic asset size, and users' excess mortgage rate is close to the bottom, which will lead to users' liquidation and low trading volume. A decline in platform performance would eventually affect investor confidence, again affecting SNX token prices and synthetic asset sizes, creating a death spiral.
At present, SNX prices have been rising and synthetic assets are limited, so this problem is not exposed for the time being, but this does not mean that it will not happen in the future.
Some people may say, if the ETH and other large market value mainstream currency mortgage, the situation will not improve?
Remember, SNX tokens and a higher mortgage rate would have been Synthetix's trade-off. MakerDAO USES ETH, BAT (or other MCD supported currencies) as collateral, which brings more platform security, but also limits the use of MKR tokens to governance and fee buybacks.
Synthetix, which is over collateralized by 750%, sacrificed the security of collateral stability and limited the total market value of synthetic assets, but it also brought an irreplaceable use to SNX tokens -- mortgage, and thus derived the mechanism of staking.
Therefore, how to balance the value capture of native tokens and reduce the systemic risk of the platform is a dilemma, and BlockBeats is also expecting more innovative solutions.
Other defects of Synthetix include all aspects mentioned above, including low capital efficiency, difficulty in price capture of prediction machine, difficulty in compliance with traditional asset token, difficulty in cross-chain communication, and limited depth, etc. Due to limited space, BlockBeats will not be discussed one by one.
In general, Synthetix, which inherits the earlier generation blockchain financial platform and has some innovations, has an open project idea, and also conforms to the singularity of DeFi trend, which deserves attention. At the same time, investors need to be sober and rational about the rising price of tokens and the risks of projects.
Reading:
1.DeFi project Synthetix received a $3.8 million investment from Framework Ventures
2.Synthetix was attacked by oracle and lost more than 37 million sETH
4.SNX founder responds to "team transfers tokens to a16z to pull the plate" : conspiracy theory
Silver block rhythm BlockBeats reminded, according to the circ and other five departments issued in August 2018 on the guard against in the name of the "virtual currency" "block chain" illegal fund-raising risk warning "file, please the public rationality block chain, don't blindly believe in reduction commitment, set up correct concept of money and investment philosophy, effectively raise the risk consciousness; To the illegal crime clue that discovers, can report to concerned branch actively reflect.
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