View source for Synthetix Network Tokens (SNX)

[https://messari.io/report/state-of-synthetix-q4-2022 From] [[Messari]] (9-2-2023):{{Crypto_info_template|website = https://www.synthetix.io/|launch = 14-3-2018|total_supply = 140,384,615 SNX|type = ETH Token}}''"Synthetix is a [[decentralized]] [[Synthetic assets|synthetic]] asset issuance and [[liquidity]] protocol that allows users to trade synthetic cryptocurrencies, [[FIAT|fiat]] currencies, and commodities. Each synthetic asset tracks the price of an external asset through the use of [[Chainlink (LINK)|Chainlink]], Pyth, or [[Uniswap (UNI)|Uniswap]] V3 [[Time Weighted Average Price (TWAP)|TWAP]] oracles. Users can either trade in spot or in [[Perpetual Contract|perpetual]] [[Futures Contract|futures]] markets for synthetic assets. SNX is the native protocol token, responsible for governance as well as the primary collateral that backs the liquidity of the network. SNX can be [[Staking|staked]] as collateral for sUSD, the Synthetix stablecoin, which can be traded on Synthetix for any other synth (sAsset). The DAO uses a novel V3 Governance Module (V3GM), which uses councils of appointees who are voted on by SNX holders."''

== Basics ==
* Based in: [https://messari.io/organization/synthetix-network Sydney]
*Started in: 2018
* A [[decentralized]] platform on Ethereum for the creation of [[Synths]]: [[on-chain]] [[synthetic]] assets that track the value of real-world assets
*[https://messari.io/asset/synthetix#profile From] [[Messari]]:

"''Synthetix is a [[decentralized]] synthetic asset platform that provides [[on-chain]] exposure to real-world currencies, commodities, stocks, and indices. These [[synthetic assets]] (Synths) are backed by Synthetix Network Tokens (SNX) locked into a [[smart contract]] as collateral. Synths track the prices of various assets, allowing crypto-native and unbanked users to trade [[P2C]] (peer-to-[[contract]]) on Synthetix. Exchange without liquidity limitations. Previously, this project was launched as Havven (HAV), a decentralized [[stablecoin]] protocol."''

== History ==
* From this [https://en.cryptonomist.ch/2020/02/20/synthetix-ether-collateral/ article] (20-2-2020):
"''The project was initially more widely known as Havven and had its ICO in February 2018. The [[token]] was HAV. Havven’s goal was to test payment networks through the creation of a synthetic stablecoin backed by the HAV collateral made available by stakeholders. As a result of this experiment, the developers realized that much more could be done."''
* It [https://blog.havven.io/havven-is-transforming-into-synthetix-2fdf727b8892 rebranded] in November of 2018. 
* First planned out to launch on [[EOS]] but moved to [[Ethereum]] instead. They wrote a [https://blog.synthetix.io/cross-chain-infrastructure-revisited/ blog post] (27-8-2019) on why [[EOS]] (and [[Tezos]]) were unsuitable. 

== Audits & Exploits ==

*[[Bug bounty]] program can be [https://blog.synthetix.io/synthetix-bug-bounties/ found here]. Max payout is $100,000 ([https://consensys.github.io/blockchainSecurityDB/ 29-6-2020]).
*Scored [https://www.daometer.xyz/review/1 97%] on [[DAOmeter]] (21-2-2023), had zero of the categories scored perfect. Scored low on Security (multis-sig) and Proposal (no stored on-chain), and a little low on Community (manual payroll and no clear on and offboarding), Voting (no staking for voting, elections, no custom tooling), Documentation (no tokenomics documented), Security (multi-sig) and Treasury (multi-sig and no custom tooling).
*Got back to [https://www.defisafety.com/app/pqrs/419 97%] on [[DeFi Safety]] (25-5-2022):
''"Synthetix has been audited 20+ times, both before and after deployment. Audit history can be found [https://docs.synthetix.io/contracts/audits/ here]."''

With the [https://t.me/c/1453353094/9313 comment]:

''"Over the past two months, Synthetix has worked hard to achieve a 97% score, and is tied for the current top score with @LiquityProtocol! As such, it is time to syntherely congratulate the protocol and underline what went into this groundbreaking effort.''

''First, Synthetix has always had a rock-solid base. Its technical documentation is anything but artificial and does a great job at covering its entire [[Smart Contract|smart contract]] architecture. Moreover, the traceability of the source code implementations is excellent.''

''Speaking of source code, Synthetix has one of the most well-developed [[GitHub]] repositories that we have seen. Testing depth is commendable, and all unit testing is fully available. A [[Formal Verification|formal verification]] puts a cherry on top of these vast software development standards.''

''On the security side, Synthetix has to have some sort of audit record, as they have over 30 of them for nearly all releases. Although a larger bug bounty reward could benefit the score, we have no doubts that proper due diligence has been enacted.''

''Synthetix is also very transparent about its access controls. The protocol relies heavily on proxies, but each change needs to pass by two different [[governance]] models and MultiSigs: the Spartan Council, and the Protocol DAO. This ensures that upgrades are done in good faith."''
*Then [https://docs.defisafety.com/finished-reviews/draft-synthetix-review-for-v0.7#audits scored] 85% (10-5-2021), mainly went down due to [[Admin Key|Access Controls]] ''"The capabilities for change seem very high, but no limits are mentioned. There are no specifics, so score 10%"'' With the [https://t.me/c/1453353094/2994 comment]: ''"All [[near]] perfect except [[Access Controls]]. They say updated docs coming soon. Can't wait and will update."''
*Previously [https://docs.defisafety.com/finished-reviews/synthetix-process-quality-audit scored] a 96% (13-10-2020); ''"The audit history page shows regular d audits taking place. There were eight audits in 2020 alone (before mid-August) from two independent auditors. The audit results and documentation appears meticulous and complete."''
*[https://defiweekly.substack.com/p/defi-audit-1-synthetix From] [[DeFi Weekly]] (11-3-2020):

===''"Ownership''===
''The good news here is that there's 4 addresses that are required to make changes to the main contract.''

''The bad news here is that there's no time lock so if everyone signs off they can make the change instantly.''

===''Architecture''===
''Synthetix's entire architecture heavily relies on proxies. From an integration point of view, it means that the Synthetix system you interact with one [[block]] might actually look completely different the next block (if they push an upgrade). Even the tokens have their own proxies that they're deployed behind.''

===''Audits''===
''From digging through their code, it looks like they do use tests but one thing which stood out was that their tests are integration tests, not unit tests. The difference being that their tests check to make sure things work, not that they can work/defend against malicious or unintended inputs.''

===''General Commentary''===
''I'm being a bit opinionated here but I found Synthetix's developer tooling to be just okay. Their [[Javascript]] library relies on JSON ABI files to be updated rather than using [[Typescript]] typings which provides integration guarantees. [[Set]], [[dYdX]] & [[0x]] use Typescript and to great benefit. Their [[JavaScript|Javascript]] library doesn't have extensive testing to ensure that any ABI changes are breaking throughout their system. It's not a major deal but tells me more so about how much a team cares about developer experience and the ease of which to integrate their smart [[contracts]] in an external system."''

===''Oracles''===
''"The team does run some of their own [[oracles]] which you can view directly [https://developer.synthetix.io/tokens/ over here].''

''It's essentially just one address that publishes prices to a smart contract and updates it. I'm not sure the [[opsec]] would be on these but we know for sure it's connect to a [[hot wallet]]. In Synthetix's case having multiple [[private keys]] internally that are connected to the internet is a massive danger. I've faced this issue working as a developer in places I've worked but unfortunately there is no good answer at this point in time. My only recommendation to the team is to slow down and [[figure]] out a more robust opsec procedure before adding another 10 [[centralised]] oracle price feeds to your network as Synthetix will eventually become a [[CEX]] honey-pot. The team does have an aggressive [[roadmap]] they're trying to achieve, hopefully they know when to slow down, focus on the base and when to aggressively ship."''

* [[Blockchain Security DB]] (29-6-2020) shows 13[https://consensys.github.io/blockchainSecurityDB/ audits]. The latest was in 3-2020.

=== Bugs/exploits ===

* Stakers lost ~$2M on market manipulation of TRB.
*Synthetix logic error [https://medium.com/immunefi/synthetix-logic-error-bugfix-review-40da0ead5f4f disclosed], $150k bounty (9-7-2022).
*[[Samczsun]] [https://blog.synthetix.io/bug-disclosure/ found] (26-3-2020) a bug in the Synthetix release;

''"The code is deployed to [[mainnet]] but is not yet active, so no funds are at risk. The code requires an explicit switch from the protocolDAO and can only be activated at the end of the three month trial period which is two months away. Despite the code is not being active we have decided to pause new [[Ether]] Collateral loans until we can deploy a fix.''

''The Ether Collateral contract upgrades were audited by [[Sigma Prime]] there was a misunderstanding as to the intent of the liquidation process specced in the SIP. In addition this was put through code review internally unfortunately this issue was missed and was not covered by our internal tests, this lack of test coverage is something we will address moving forward to ensure we increase test coverage from 95%+ to 100%.''

''We will be working closely with our audit partners Sigma Prime and [[Iosiro]] in the future to ensure we minimise the possibility for future incidents such as this through clearer communication."''

*[[Certora]] [https://www.certora.com/blog/reentrancy.html found] (12-2019) a reentrancy bug, which has been fixed.

== Governance ==

*[https://cryptobriefing.com/top-defi-projects-the-6-most-decentralized-protocols/ From] [[Crypto Briefing]] (15-8-2020):

"''After two years and multiple pivots, Synthetix [https://blog.synthetix.io/synthetix-foundation-decommissioned/ decommissioned] its governing [[foundation]]. In its place, the core team set up three distinct [[DAOs]] to ensure the smooth sailing continues. The SNX token will soon be at the center of these DAOs, giving individual token holders power in the governance process. Token holders will be able to vote out elected DAO members, even overriding their decisions in certain circumstances."''

*[https://defiwatch.net/admin-key-config-and-opsec/project-reviews/synthetix From] [[DeFi Watch]] (9-3-2020):

"''The Synthetix smart contract ecosystem is fully upgradeable and very [[centralized]], according to the core team. The core team may have vast power to do just about anything, including adjusting user balances and draining funds. No specific information has been released about the power of Synthetix's [[admin keys]] or their security."''

* From their [https://blog.synthetix.io/transition-to-decentralised-governance/ blog] on [[decentralization]] (17-12-2020):

"''Currently the core team act as custodians. Token holders don’t have the power to remove or reassign aspects of control right now. However, while suboptimal, it is not dire, as the sole alignment between all token holders is the value of the network which is represented by the SNX token. The foundation does not capture value from activity in the network other than through holding SNX tokens. There is no privileged position for any particular entity in the network by design. Additionally all core team members are token holders, so the SNX token represents the upside in the success of the project for all participants."''

=== Admin Keys ===

* [https://www.defisafety.com/app/pqrs/419 From] [[DeFi Safety]] (25-5-2022):
''"Synthetix' relevant [[Smart Contract (SC)|contracts]] (Synthetix, FeePool, Synths) are identified as upgradeable via its Proxy structure, as identified [https://docs.synthetix.io/contracts/#proxy here]. Synthetix mentions that the Proxy contract allows for [[state]] upgrades in their key [[smart contracts]]. The protocol further explains change capabilities as being [https://github.com/Synthetixio/synthetix-docs/blob/79b53c2bd94ba82890828e0a263f7c4baab7e075/content/contracts/source/contracts/Proxy.md#proxy-upgradability---protocol-dao essentially limitless]. However, each change must go through a rigorous voting process. Synthetix's pause control is documented and explained in [https://blog.synthetix.io/synthetix-foundation-decommissioned/ this location].  The author explains that the introduction of pause control will be iterated and tested regularly. However, no "fire drill" was visibly recorded in the past 3 months.''

''Synthetix no longer uses [[Timelock|timelocks]], as described [https://github.com/Synthetixio/synthetix-docs/blob/79b53c2bd94ba82890828e0a263f7c4baab7e075/content/contracts/source/contracts/Proxy.md here]. However, each improvement proposal has to go through a voting period as well as an implementation period which both require [[Multi-Signature|MultiSig]] votes. As such, the second [[MultiSig]] vote for implementation following the proposal approval vote essentially acts as the two-factor verification process that a [[timelock]] typically offers, since there are no other ways to upgrade the protocol. Furthermore, implementation can be further delayed in the event of an emergency, but this must also be voted upon by the MultiSig."''
*The following information comes from a [https://docs.google.com/spreadsheets/d/1b9KwXfPPEgvpy2nxlpnLhtPMd7S5KfIx-hf4Hv77kBk/edit#gid=0 spreadsheet] (4-2-2020) created by [[Chris Blec]].

''"Current [[Admin Key]] Config- Time Lock: unknown [no]'' 

''Current Admin Key Config- Multisig: unknown [Yes, 4 keys]''

''Claimed Admin Key OpSec: None''

''Verified Admin Key OpSec: Unverifiable''

''Is security of deposited funds dependent on opsec of [[admin key]]?: Yes''

''Admin Key Address: Unknown [Known]''

''Documentation on Admin Key Powers: None found [Some exist]''

''Additional Info (if any)? Currently advertised as [[centralized]]"''

=== DAO ===

* From a commissioned [[Messari]] [https://messari.io/report/state-of-synthetix-governance report] (14-2-2023):

# ''"The introduction of the V3 Governance Module (V3GM) marks another evolution of Synthetix’s governance structure and''  ''on-chain voting on the Layer-2 (L2) [[Optimism (OP)|Optimism]].''
# ''Over the past year, many Synthetix governance proposals focused on building out the Synthetix suite of revenue-driven products, i.e., atomic swaps and perpetual futures.''
# ''Synthetix governance communications could be improved to potentially enhance the quality of decisions and accountability of council members."''
*The three DAO's [https://blog.synthetix.io/synthetix-foundation-decommissioned/ are in control] of the protocol now (28-7-2020).
*[https://thedefiant.substack.com/p/we-have-zero-intention-of-following-725?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjo0NDkyMjMsIl8iOiJjOXhSbiIsImlhdCI6MTU4OTIwOTI3OCwiZXhwIjoxNTg5MjEyODc4LCJpc3MiOiJwdWItMTEyNTkiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.uAhbyia92c3lpsA0LtLEKY67iJzFdP_C2Fkpk438hio From] [[The Defiant]] (11-5-2020):

''"The current overview of protocol governance is as follows:''

''The grantsDAO is established and is actively funding Synthetix public goods. There are five members including core contributors in the grantsDAO. To date 200k+ SNX has been allocated to the grantsDAO from the synthetixDAO.''

''The protocolDAO is established and is currently controlling protocol upgrades, the last two upgrades, [http://email.mg2.substack.com/c/eJwlUNuOhCAM_ZrhbYzcHHzgYV_2NwxCUbIIBmp23K9fRpMmbU7Tnos1CEsup95zRXJUKFNwmvLxNfY9cVo4qqQioU6-AGwmRI3lALIfcwzWYMjpOqBMjmTV1lrGJTXOS29nPnDFlGCDd9xbI8cX-dBM5nABkgWdUzyvxyTqFXGvD_71YN-t5piXrp4JV8Dw7kJuWJufxq5QkinPAhFMhQaToFnP-l5SSoUcBetoN1TY13dStKiH6LeFdfWYKxr709m8kaL_XGyLvWTM6ePqgpupqfXtSAHPCZKZI7jbL94BXfLx3EEn-K0REKHcYAtBiJExThqTy-1n0k2wAx9Mwn8O53vq Achernar] and [http://email.mg2.substack.com/c/eJwlUNuOhCAM_Rp5GwMIIz7wsC_7G4ZLR8kiGKjZcb9-GU2atDlNey7OICy5nHrPFclRoczBazZM40Qp8Vp4pqQioc6vArCZEDWWA8h-2BicwZDTdcC4nMiqgSkA92RCDkKNYlKDHNQoR-osswwE-dDM5vABkgOdUzyvxyTqFXGv3fDV8e9WNualr2fCFTC8-5Ab1ubHarwpjwIRTIWGkaA55ZRKxhrpJHjP-meFfX0nxYrqBN0W3tfDVjTup3d5I0X_-dgWe8mY08fSBTdHc-vbkQKeMyRjI_jbLN7pXNrx3EEn-K0REKHcYEtAiInzgTQmn9vPpJtaD69gEv4DVyV5jw Hadar], were coordinated via the protocolDAO. We are currently working on a number of major upgrades to the protocolDAO to improve Opsec which will be published as SIPs shortly.''

''The synthetixDAO controls the protocol treasury and has been funding the operating expenses of the Foundation, specific projects and other operating entities since the token sale in 2018. The synthetixDAO is currently controlled by three key SNX stakeholders. We expect to expand this membership over time alongside the expansion of the protocolDAO and the handover of control of the protocol and treasury to token holders."''

* From their [https://blog.synthetix.io/transition-to-decentralised-governance/ blog] (17-12-2019):

"T''he governance of the SynthetixDAO. This is far more challenging than coordinating movement of funds. I have stated previously I believe pure [[on-chain governance]] is fundamentally flawed and will lead to far more project risk than the risk of a foundation being captured. So it is imperative that the cure not be worse than the disease. The solution is for SynthetixDAO V0 to act as a custodian, essentially a similar role to that of the current proto-DAO. SynthetixDAO V0 will have a small number of members with equal voting rights. Members will be initially be constituted with major SNX stakeholders, but will evolve to include other key token holders over time.''

''Both Mintr and Synthetix.Exchange are [[open source]] and the community is free to make changes and submit PRs, however, the core team maintains these repos and has control of which PRs are accepted. We must ensure the front end interfaces are accessible anywhere and that there is not a single point of failure. There are a number of solutions to this that are currently available and we expect that community frontends will be one of the areas  incentivised in the future via the grants process."''

*[https://tokentuesdays.substack.com/p/who-let-the-daos-out?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjoyMDU2NzAsIl8iOiJhOXdiNyIsImlhdCI6MTU3ODEzNjU1MiwiZXhwIjoxNTc4MTQwMTUyLCJpc3MiOiJwdWItMTU0MDUiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.y90ATSOraiMerQ3l_C6ivXA5T_ZGsm96wPqV7Anw_Ik From] [[Token Tuesdays]] (25-12-2019):

''"Synthetix, the industry’s largest synthetic asset issuance protocol, [https://blog.synthetix.io/transition-to-decentralised-governance/ announced] its plan to transition to a [[DAO]] earlier this week in order to create an inclusive mechanism for token holders to govern the protocol and its underlying treasury. With this in mind, the announcement outlines a few key components necessary:''

#''Legal & Operational -  In the past, it has been common practice to set up a non-profit foundation to coordinate protocol development within decentralized systems. This was due to the lack of robust frameworks for [[distributed]] fund management. Thanks to the rise of new DAO structures such as [[Moloch]], Synthetix can now leverage an audited foundation for distributed treasury management, grants, and governance.''
#''Protocol Changes - As it stands today, the Synthetix team is largely responsible for implementing protocol changes while receiving input from the community via Synthetix Improvement Proposals (SIPs). With that, the team is working on developing a protocol DAO to allow community members to be more involved with the SIP process.''

''While it would seem that protocol changes and product improvements are interchangeable, there’s actually a clear distinction between the two. To give you a better understanding, [https://synthetix.exchange/ Synthetix.Exchange] and [https://mintr.synthetix.io/ Mintr] are some of the products that exist on the Synthetix Protocol.<br><br>Drawing a parallel, [[Uniswap]]’s front-end exchange (the product) [https://www.reddit.com/r/ethfinance/comments/e72x6s/uniswapexchange_has_banned_10_countries_on_the/ geoblocked] a handful of countries while the core protocol itself remains censorship-resistant and accessible by anyone.  As such, the goal with Synthetix DAO is to [[decentralize]] and eliminate any single point of failure from the products that exist on top of the protocol. This can be accomplished through grants from [[the DAO]] and by ensuring that multiple products emerge outside of what’s been developed by the core team." ''

* From their [https://blog.synthetix.io/roadmap-update-h2-2020/ blog] (2-8-2020):

===''"protocolDAO phase 1 [https://github.com/Synthetixio/SIPs/issues/98 (issue-98)] — released''===
''As of phase 0, the protocolDAO is a [[Gnosis]] Safe [[multisig]] that is now the owner of all [[mainnet]] contracts for Synthetix, and phases 1 and 2 involve transferring ownership to a delegated migrator contract, which will be owned by the Gnosis Safe multisig. It also controls a system pause function to be used in situations concerning upgrades or security. Two circuit breakers have been implemented, the Synth circuit breaker and the [[decentralised]] circuit breaker both of which prevent trading in the event of a price shock.''

===''protocolDAO phase 2 ([https://github.com/Synthetixio/synthetix/issues/235 issue-235])''===
''Phase 2 of the protocolDAO will be the release of the delegated migrator and the veto contract. These will ensure that future upgrades to the system can be vetoed under certain conditions by token holders.''

===''synthetixDAO phase 1''===
''Phase 1 is the migration of all Synthetix treasury assets to an on-chain DAO. This is dependent on the [[Escrow Contract|escrow contract]] migration SIP ([https://sips.synthetix.io/sips/sip-60 SIP-60])."''

=== Spartan Council ===

*[https://thedailygwei.substack.com/p/meta-governance-the-daily-gwei-117?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjoxODYwMzM3NiwiXyI6ImM5eFJuIiwiaWF0IjoxNjA1NDM5NDY5LCJleHAiOjE2MDU0NDMwNjksImlzcyI6InB1Yi01Mjg5MyIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.vWmLbDgs1u0xwY-C0u9sNcbquBS8mXwuafmQBLxDv7I From] [[Daily Gwei]] (13-11-2020):

''"Announced a new ‘[https://blog.synthetix.io/spartan-council-proposal/ Spartan Council]’ that very much looks like a typical board of directors. Basically, if this change is accepted by the community, a form of delegated governance would be introduced for Synthetix that allows SNX token holders to elect seven “council members” which elections happening every three months."''

* Has gone through, and the first council has been [https://blog.synthetix.io/the-spartan-council-has-now-been-elected/ elected] (10-12-2020):

''"The Spartan Council will be responsible for approving proposed changes to the Synthetix protocol. Initially, this will only include SCCPs (i.e. configurable changes on certain aspects on the protocol, such as changing exchange [[fees]] or the target C-Ratio), but the aim is to also include SIPs (i.e. more complex changes to the protocol) in the future.''

''The elected members will be on the Spartan Council for the first Council Epoch, which lasts until January 8 (0:00 UTC). That is, unless during that time SNX stakers amend their votes at council.synthetix.io so as to affect the placings — if one of the elected members drops out of the member placings, then they will be replaced by whoever took their place. If this occurs, this process will be carried out manually by the protocolDAO."''

*[https://ournetwork.substack.com/p/our-network-issue-54?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjozMTU1OTg0MSwiXyI6ImM5eFJuIiwiaWF0IjoxNjEwOTk0MzE4LCJleHAiOjE2MTA5OTc5MTgsImlzcyI6InB1Yi0yMTM2MiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.ORP6oN8tpRS0U7nf2Tha-wze7Fw From] [[Our Network]] (16-1-2021):

''"Council members received a [https://media.giphy.com/media/y4emI78hvJ6sjIXtaT/giphy.gif limited edition] NFT [https://www.samgilmore.com/ by] [[Sam Gilmore]], and if not re-elected, will be revoked and rewarded to the new council member(s)."''

*[[Kain Warwick|Kain]] [https://blog.synthetix.io/an-old-dictator-appears/ announced] (6-2021) that he will run for the Spartan Council in order to coordinating Synthetix core contributors.
*[https://medium.com/@SenateLabs/landscape-of-pro-delegate-next-wave-of-dao-governance-f239cd8537ea Has][[Gauntlet Networks|Gauntlet]] as some of their professional delegates (30-11-2022).

=== Aragon ===

* From [[Discord]] by Kain, the founder (12-5-2020):

''“We are just using the [[Aragon]] [[framework]]. They have a very flexible and robust governance tool set we can integrate into Mintr for our governance functions. It’s not [[forking]] just using the governance tooling not all of it requires ant/anj”''

=== Treasury ===

*[https://www.delphidigital.io/reports/a-look-into-public-defi-treasuries/ From] [[Delphi Digital]] (7-12-2020):

''"Synthetix’s treasury grew primarily as a result of SNX’s appreciation since 2019. The SynthetixDAO, currently managed by core team members, stakes SNX to generate more of the token. Eventually, as Synthetix grows, the DAO will be able sustain itself off trading fees earned by [[staking]] SNX."''

== Token ==
=== ICO ===
* [https://en.cryptonomist.ch/2020/02/20/synthetix-ether-collateral/ Had] its [[ICO]] in February 2018.
* [https://tokentuesdays.substack.com/p/synthetix From] [[Token Tuesdays]] (3-9-2019:
''"At inception, Havven [HAV] raised $250k in a [[seed]] round supplemented by a larger $30M [[ICO]] round priced at a reported base rate of $0.67/SNX. Lead by [https://www.synapse.capital/ Synapse Capital]"''
=== Token allocation ===
* [https://messari.io/asset/synthetix#profile From] [[Messari]]:
"''100,000,000 SNX were issued in March 2018. 60% were allocated to investors in the Main Sale and the [[EOI]] Sale and 40% was allocated to the project treasury, with 3% reserved for Bounties and Marketing Incentives, 5% reserved for Partnership Incentives, 12% allocated to the foundation and 20% allocated to the team and advisors. The foundation allocation vested quarterly for 12 months and the Team and advisors allocation is vesting quarterly for 24 months."''
=== Utility ===
* Token Use cases ([https://defiweekly.substack.com/p/defi-audit-1-synthetix from] [[DeFi Weekly]] 11-3-2020):
# ''"Inflation based [[staking reward]]s. By minting SNX assets, you effectively become a staker of the protocol. Because of this, you're eligible to [[earn]] more SNX tokens that come out of the inflation of the protocol.''
# ''Exchange trading feeds. Every time someone transfers a SNX-based asset they have to pay a fee. The aggregate of these fees can be claimed by stakers in the protocol.''
# ''[[Uniswap]] LP rewards. This is part of the first point but is important to note: anyone who mints sETH with SNX and provides liquidity for the sETH and [[ETH]] [[liquidity pool]] on Uniswap receives additional rewards. This is extremely important as it maintains price [[parity]] between sETH and ETH creating a liquid gateway between all of Synthetix's "synths" (synthetic assets)."''
* [https://tokentuesdays.substack.com/p/synthetix From] [[Token Tuesdays]] (3-9-2019:
"''SNX holders can lock their tokens as collateral to [[mint]] new synthetic assets (Synths), which track the prices of [[fiat]] currencies, commodities, stocks, and indices. Everytime a Synth is generated, a [[transaction]] fee of 0.3% is accumulated and ultimately distributed to holders with locked SNX in the form of sUSD (Synthetix’s native [[StableCoin|stablecoin]]). In the first year that Synthetix was live, only 300 users out of the 75,000 token holders were locking SNX into the system. While it still resulted in 40% of the total supply locked as collateral, the team realized that this small incentive was not large enough to spur widespread growth in the system.''

''Back in February, Synthetix announced that they will be implementing an inflationary monetary policy as an incentive to bootstrap network effects. Over the next five years, the total supply will increase from 100M to around 250M SNX with inflation diminishing over time."''
=== Token Details ===

*
* [https://messari.io/asset/synthetix#profile From] [[Messari]]:

"''A new monetary policy was introduced in 2019. This new policy introduces an inflationary supply to reward active [[stakers]]. Each year, for 5 years, the total rewards will be cut in half, starting at 75,000,000 SNX for the first year. The total supply will eventually reach 245,312,500 SNX by 2024."''
* Since that [[Token Tuesdays]] about SNX, Synthetix has seen a significant amount of growth in the protocol and has surpassed Token Tuesday's upper valuation of $1.20. The following is from [https://tokentuesdays.substack.com/p/evaluating-the-explosive-growth-in their follow up] (27-11-2019):
''"When we covered SNX back in September, the price was sitting at around $0.36 with [[total value locked]] hovering at around ~$40M USD. Now, Synthetix has soared past [[Compound]] to #2 on [[DeFi Pulse]] in terms of total value locked with over $166M in nominal value, representing a +315% increase in total value locked. In terms of token price, the current value of SNX sits at around $1.34, resulting in a +272% increase in price since September. SNX locked has increased a moderate amount in the past 3 months from 99.3M SNX locked to 123M SNX locked (+23.86% increase in the past 90 days). This can largely be due to a combination of new stakers and new SNX being minted as part of their new issuance policy. ''

''For those unfamiliar with Synthetix’s new issuance policy, there’s now a base issuance rate to SNX [[stakers]] on top of the fees accrued on the exchange. With that said, we can theorize that stakers are reinvesting their native issuance back into the protocol to compound their returns. As issuance continues to take place, we can expect that the total amount of SNX locked will increase in tandem as users continue to look to maximize their potential returns in the future."''
* From this [https://ethresear.ch/t/announcing-metacoin-the-governance-minimized-decentralized-stablecoin/6897/12 blog] (10-2-2020):
''"Incentivizing [[Uniswap]] pool liquidity is a high priority (especially considering the reliance), but using inflation to this extent initially as the method to achieve this will likely have pretty brutal effects on the [[META]] price – Using SNX as the example, there’s still yet to be <strong>any</strong> SNX unlocked from the incentivization pool - [https://blog.synthetix.io/snx-staking-rewards/ this starts in March], 2 note SNX price was $0.05 at that point last year, it’s now $1, my guess is there’s a large number of people who didn’t expect SNX to appreciate so much when they first locked their SNX - As this SNX is unlocked there’s going to be a continuous stream of SNX likely pointed towards the market."''

==== Inflation ====

* From a Messari commissioned [https://messari.io/report/synthetix-q1-2024-brief report] (9-4-2024):

''"The first full quarter of no SNX inflation saw little-to-no impact on the network staking ratio, and stakers earned an average 4.3% APY from trading fees. The number of stakers grew slightly to nearly 46,000."''
*Synthetix [https://weekinethereum.substack.com/p/week-in-ethereum-news-december-16 ended] SNX inflation (16-12-2023).
*SNX [https://sips.synthetix.io/sips/sip-23 announced] (24-9-2019) the smoothing of their inflation schedule.

=== Cost of minting an asset ===
* [https://defiweekly.substack.com/p/defi-audit-1-synthetix From] [[DeFi Weekly]] (11-3-2020):
''"Synthetix has their own spin where you're actually in competition with other traders.''
# ''John uses 7500 SNX to mint 100 sUSD.''
# ''Jill also uses 7500 SNX to mint 100 sUSD''
# ''The network now has 200 sUSD worth of debt, where John and Jill account for 50% of the debt each''
# ''John decides to be a [[degen]] trader and purchase 100 sLINK (worth $1 each) with his sUSD (on which he'll pay trading fees for)''
# ''Now the price of sLINK actually increases to be worth $4 each so John's 100 sLINK represents $400 worth of value and Jill's position is still worth $100 (sUSD)''
# ''The network's total debt is now worth $500 in total. Since John and Jill are responsible for 50% of the debt each, John owes $250 to the network and Jill also owes $250 to the network''
# ''The difference between John and Jill is that John made $300 from the price appreciation so he's up a pure $150 ($100 + $300 - $250) while Jill is down $250.''
''Synthetix's term staking can be quite misleading in this way since it's actually just a incentivising people to open a trade position while taking on the risk of debt accumulating. There are no free lunches.''

<em>Note: you can trade synths without holding SNX or ‘staking’."</em>

=== ETF's ===
* [https://thedefiant.substack.com/p/radical-money-is-here-dont-use-your From] [[The Defiant]] (10-4-2020):
''"Synthetix was one of the first to create a [[tokenized]] version of [[ETF]]s with sDEFI, a token tracking the price of a basket of tokens linked to different [[DeFi]] platforms."''

== Coin Distribution ==

*[https://thedefiant.substack.com/p/lets-be-optimistic-synthetix-exchange?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjo0MzY1MTksIl8iOiJjOXhSbiIsImlhdCI6MTU4ODkyNDA0OSwiZXhwIjoxNTg4OTI3NjQ5LCJpc3MiOiJwdWItMTEyNTkiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.xE17cN84Ezllcp11Gk7plu2vjp_9V2yjmtzTumRpIZU From] [[The Defiant]] (6-5-2020):

''"Nine [[whales]] ([[addresses]] with more than 1% of circulating supply) own 65% of the total SNX tokens. 47.65% of SNX is in an address used for the Synthetix staking escrow and 6.61% for the Synthetix Foundation, according to data from [[Etherscan]]. Investors, addresses holding between 0.1% and 1% of circulating supply, hold almost 19% of SNX in circulation, while retail volume consists of only 15% of the current distribution."''

*[https://defiweekly.substack.com/p/defi-weekly-52 From] [[DeFi Weekly]] #52 (27-11-2019): [[a16z]] [https://synthetix.community/blog/2019/12/29/a16z-investment bought] $250k in Synthetix.
*[[Framework Ventures]] is the [https://www.forbes.com/sites/rorymurray/2020/08/27/public-blockchain-investors-behind-chainlink-and-synthetix-raise-8-million-for-startup-crypto-technology-laboratory/#513a539b3c9f largest staker] (27-8-2020) of the Synthetix protocol outside of the founding team.
*[[Kain Warwick|Kain]] has been open in saying he is the [https://blog.synthetix.io/an-old-dictator-appears/ largest holder] of SNX (6-2021).

== Tech ==

* [[Whitepaper]] can be found [https://www.synthetix.io/uploads/synthetix_litepaper.pdf here] (3-2020).
* Code can be viewed [https://github.com/Synthetixio/synthetix here] (14-5-2020).
* Built on: [[Ethereum (ETH)|Ethereum]] and [[Optimism]]. Also [https://messari.io/report/synthetix-q1-2024-brief moved] to [[Coinbase (COIN)|Base]] and [[Arbitrum (ARB)|Arbitrum]] and looking into [[Sui (SUI)|Sui]] and [[Solana (SOL)|Solana]] (8-4-2024).

=== How it works: ===

* [https://messari.io/asset/synthetix#profile From] [[Messari]]:
"''Synthetix is a decentralized trading platform for synthetic assets that looks to alleviate liquidity and slippage issues of [[DEX|DEX’s]] through a pooled collateral mechanism that enables users to convert from one synthetic asset (Synth) to another directly with the contract. Synthetix currently supports assets that track the price of [[fiat]] currencies, cryptocurrencies and commodities. Synths are backed by the Synthetix Network Token (SNX), which is [[staked]] as collateral to issue Synths. SNX holders who [[stake]] their [[tokens]] receive fees generated through trading activity on synthetix.exchange from which the value of the SNX token is derived.  All Synths are backed by SNX tokens. Synths are minted when SNX holders stake their SNX as collateral using our [[dApp]], [https://mintr.synthetix.io/ Mintr]. They’re currently backed at a 500% ratio ([https://tokentuesdays.substack.com/p/is-2020-the-year-of-staking?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjoyMDA1NjYsIl8iOiJmT0J1VSIsImlhdCI6MTU3Njc4MTYxNywiZXhwIjoxNTc2Nzg1MjE3LCJpc3MiOiJwdWItMTU0MDUiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.QIqvZMD7W58MD9mCrf4XCi5bkpfJbwhsb1zLHNsroTc Update] 17-12-2019: ''Users looking to create derivatives (Synths) must post 750% collateral in the form of SNX, and as of [https://www.synthetix.io/uploads/synthetix_litepaper.pdf 3-2020] it is 800%)'' to ensure the system is buffered from major price shocks, however, this may be raised or lowered in the future. SNX stakers incur debt when they mint Synths, and to exit the system (i.e. unlock their SNX) they must pay back the debt by [[burning]] their proportion of Synths they minted. ''
* From the [https://www.synthetix.io/uploads/synthetix_litepaper.pdf whitepaper] (3-2020):
"''SNX holders are incentivised to stake their tokens and mint Synths in several ways. Firstly, there are exchange rewards. These are generated whenever someone exchanges one Synth to another (i.e. on Synthetix.Exchange). Each trade generates an exchange fee that is sent to a fee pool, available for SNX stakers to claim their proportion each week. This fee is between 10-100 bps (0.1% - 1%, though typically 0.3%), and will be displayed during any trade on Synthetix.Exchange. The other incentive for SNX holders to stake/mint is SNX [[staking rewards]], which comes from the protocol’s inflationary monetary policy. From March 2019 to August 2023, the total SNX supply will increase from 100,000,000 to 260,263,816, with a weekly decay rate of 1.25% (from December 2019). From September 2023, there will be an annual 2.5% terminal inflation for perpetuity. These SNX tokens are distributed to SNX stakers weekly on a pro-rata basis provided their collateralisation ratio does not fall below the target threshold.''

''Minting, burning, and the C-Ratio ''

''The mechanisms above ensure SNX stakers are incentivised to maintain their Collateralisation Ratio (C-Ratio) at the optimal rate (currently 800%). This ensures Synths are backed by sufficient collateral to absorb large price shocks. If the value of SNX or Synths fluctuate, each staker’s C-Ratio will fluctuate. If it falls below 800% (although there is a small buffer allowing for minor fluctuations), they will be unable to claim fees until they restore their ratio. They adjust their ratio by either minting Synths if their ratio is above 800%, or burning Synths if their ratio is below 800%."''
* From this [https://medium.com/@galvanek.m/synthetix-the-battlefield-a15a7104587c blog] (13-2-2020):
"''Trading synths doesn't happen via [[peer-to-peer]] order matching like in majority of other DEX. It's [[Peer-to-Contract|peer-to-contract]] = traders do not exchange anything, they just swap one price oracle for other oracle and switch assets against the debt pool. The debt pool of synths is backed by SNX tokens staked by minters."''

=== Fees ===
=== Upgrades ===

* From a commissioned Messari [https://messari.io/report/state-of-synthetix-q1-2023 report] (4-5-2023):

''"The primary achievements of V3 can be summarized as:''

# ''The Liquidity Layer for DeFi Derivatives: protocols can leverage the existing liquidity in the Synthetix protocol to create pools/vaults/markets, which also gives stakers more optionality on where to allocate their credit.''
# ''Power to Stakers with Multi-Collateral Staking: increased optionality for stakers to target debt exposure, hedging ability, collateral type, and credit type through combining Vaults into Pools connected to one or more Markets.''
# ''A Composable, Developer-Friendly System: to simplify and improve the developer experience by making the system cleaner and increasing the tools available to builders.''
# ''The Future is Cross-Chain: allows assets to be teleported cross-chain using the shared liquidity layer."''
*From a commissioned [[Messari]] [https://messari.io/report/state-of-synthetix-governance report] (14-2-2023):
''"Synthetix launched Perps V2 on December 20, beginning with just an ETH perp option. Proposals have been approved to add assets. Thus far, the launch has been successful, with lower fees and strong uptake (more than 35% of perps volume between January 1 and January 28)."''
*Synthetix’s Achernar release [https://blog.synthetix.io/the-achernar-release/ is live] (20-2-2020), adding ETH as collateral and a bunch of other upgrades.
* Synthetix’s [https://blog.synthetix.io/the-hadar-release/ Hadar release] (24-3-2020) includes Brent Crude oil, FTSE100 and S&P Global1200.

*[https://thedefiant.substack.com/p/radical-money-is-here-dont-use-your From] [[The Defiant]] (10-4-2020):

''"Synthetix is exploring adjusting its [https://defirate.com/synthetix-uniswap-rewards-tutorial/ economic incentives] for [[liquidity providers]] across sETH and sUSD pools.''

''[https://sips.synthetix.io/sips/sip-51 SIP 51] proposes to divert 64,000 SNX from native inflation into [[Curve]] in order to incentivize liquidity providers of the sUSD/USDT/DAI/USDC/TUSD trading pair on [[Curve Finance|Curve]]. The diversion of native inflation towards the Curve stablecoin [[Liquidity Pool|liquidity pool]] will come at the cost of sETH liquidity providers on [[Uniswap]].''

''As a result, the Synthetix Improvement Proposal aims to reduce the Uniswap sETH liquidity incentives down to 32,000 SNX per week."''

* From their [https://blog.synthetix.io/synthetix-exchange-l2-demo/ announcement] (6-5-2020):

"''Synthetix and [[Optimism]] are extremely excited to announce a new demo of Synthetix.Exchange on OVM (Optimistic [[Virtual Machine]]), a [[Layer 2]] (L2) scaling solution. This integration demonstrates the power of OVM to deliver high-speed Ethereum [[transactions]] to supercharge the Synthetix trading experience."''

* Synthetix [https://blog.synthetix.io/galena-product-release/ released] Galena (23-7-2020). Frontend updates to the Binary [[Options]] section, updates to the simple search function, Index Synths now have a composition table.
*Synthetix V3 will [https://twitter.com/kaiynne/status/1348885843054772226?s=20 include] a [[Keep3r Network (KPR)|Keep3r]] implementation (17-1-2021).

=== Staking ===

* From a commissioned [[Messari]] [https://messari.io/report/state-of-synthetix-q2-2023 report] (7-7-2023):

''"SNX staker yield trended downwards over the last year, primarily due to the reduction in inflation rewards from summer 2022. More recently, yields have settled to 11%-16% for stakers. In addition, the makeup of yields has become more sustainable. Stakers cannot claim yield on their stake if they are below the required minimum 500% collateral ratio.''

''In April, Synthetix changed its inflation schedule by adjusting the target staking ratio response function. The staking ratio is the amount of SNX staked as a percent of the total amount outstanding. With SCCP 294, inflation will remain unchanged (currently 325,445 SNX each week) within a 12% band of the 70% target staking ratio. If the staking ratio moves below 58% or above 82%, inflation will increase or decrease by 10% each week. This function leaves inflation below a 5.5% annualized rate going into Q3."''
* From a commissioned Messari [https://messari.io/report/state-of-synthetix-q1-2023 report] (4-5-2023):

''"With the implementation of [https://sips.synthetix.io/sips/sip-255/ SIP-255], Synthetix changed how trading fees are paid to stakers. Instead of being distributed as rewards, trading fees (paid in sUSD) are now used to [[Burn Mechanisms|burn]] sUSD, the largest synth in the debt pool by USD value. This setup improves the health of the system by increasing the collateral ratio (no change in collateral but less debt) and still rewarding stakers who now owe less debt.''

''Stakers had their highest percentage of earnings from trading fees in Q1’23 compared to the last six quarters, with 56.3% of revenue coming from trading fees. The combination of inflation reduction and perps trading demand led to this new revenue mix. In the month of March, over 63% of staker revenue emanated from perps trading. As inflation continues to dwindle and the DAO adds trading pairs and increases open interest limits, the revenue source for stakers should continue to trend towards demand for the core product rather than inflationary rewards."''

* [https://defirate.com/mintr-gas-fees/ From] [[DeFi Rate]] (14-5-2020)

"''At the time of writing, claiming SNX staking rewards on Mintr is estimated to cost $5.62. This means anyone staking less than ~1500 SNX (or roughly $1000) would be paying more to claim their rewards than the rewards are actually worth. The interesting thing about how staking rewards work on Synthetix today is that fees must be collected once every 7 days. If they are not collected, they are forfeited and rolled over into the fee pool.''

''This story is quite interesting because of the thought process behind changing the claims cycle. In the past, stakers originally had 4 weeks to claim. That was then changed to 2 weeks and is now down to its current cycle of one week. Looking at it from the Synthetix team’s perspective, the 4-week cycle resulted in [[MANY|many]] only checking Mintr ~once per month, largely meaning their C-Ratios (the amount of collateral to their sUSD minted when staking) was commonly unattended. By reducing the claims cycle, users would monitor their ratio more actively, providing a more adequately collateralized global debt pool.''

''While this intention is fantastic (and has been working quite well up until now) many community members are now being boxed out of collecting SNX rewards as it’s simply cheaper to purchase SNX on the open market than it is to claim staking rewards."''
* [https://tokentuesdays.substack.com/p/synthetix From] [[Token Tuesdays]] (3-9-2019:
"''In essence, synthetic assets represent a combination of securities to simulate the price of a different underlying asset. As such, users can gain exposure to any supported [[derivative]] without ever having to maintain custody of the underlying asset itself. This allows users to quickly swap between abstract assets (say [[ETH]] to APPL shares) without experiencing any slippage, delays or exchange withdraw fees.''

''By using [https://mintr.synthetix.io/ Mintr], synthetic assets called Synths are created by staking Synthetix Network Tokens (SNX) as collateral. Synthetix uses a private [[oracle]] to pull real-time information from credible financial market resources. As it stands today, the protocol currently supports synthetic [[fiat]] currencies, digital assets (long and short) and commodities.'' 

''As it currently stands, Synthetix has 94.8M SNX (~70% of the total supply) locked in the system, up from 37.36M since March 2019. ''([https://tokentuesdays.substack.com/p/is-2020-the-year-of-staking?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjoyMDA1NjYsIl8iOiJmT0J1VSIsImlhdCI6MTU3Njc4MTYxNywiZXhwIjoxNTc2Nzg1MjE3LCJpc3MiOiJwdWItMTU0MDUiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.QIqvZMD7W58MD9mCrf4XCi5bkpfJbwhsb1zLHNsroTc Update] 17-12-2019: 80% [https://dashboard.synthetix.io/ locked])

''Earlier this year, the staking rate sat at around 40% of total SNX. With the new monetary policy, SNX saw a surge of new stakers on the network looking to claim the newly minted SNX coming into the ecosystem. This resulted in nearly 70% of SNX staked, according to [https://defipulse.com/synthetix DeFi Pulse]. Over the next five years, we’re assuming that as the inflation rate continues to decrease, we will likely see a slight decrease in the overall percentage of SNX staked."''
==== Validator Stats====

* From a commissioned [[Messari]] [https://messari.io/report/state-of-synthetix-q4-2022 report] (14-2-2023):

''"Despite the smaller debt pool, the number of unique active stakers increased throughout 2022 and by 4.2% in Q4. The number is likely aided by Optimism Quest, the liquidity mining operation that incentivized users to use applications on [[Optimism (OP)|Optimism]] by offering OP token rewards.''

''With [https://sips.synthetix.io/sccp/sccp-208/ SCCP-208] in July, the DAO lowered the target staking ratio. When the actual staking ratio is above target, as per the mechanism design, inflation falls by 10% each week. After increasing over 34% in 2022, the SNX inflation rate is now below 10% on an annualized basis. The claims will be paid out next year after their one-year escrow. In 2022, 42 million SNX entered circulation after completing their vesting period.''

''A mirror of the inflation rate above, SNX rewards to stakers is escrowed for one year after claiming. Given the increase in the inflation rate in the middle of the year, 24 million and 23 million SNX will be released in Q2 and Q3, respectively – more than all of 2022. After the Q3 cliff, the lower inflation rate will mean fewer SNX entering the market with 11 million expected in Q4."''
*[https://ournetwork.substack.com/p/our-network-issue-54?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjozMTU1OTg0MSwiXyI6ImM5eFJuIiwiaWF0IjoxNjEwOTk0MzE4LCJleHAiOjE2MTA5OTc5MTgsImlzcyI6InB1Yi0yMTM2MiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.ORP6oN8tpRS0U7nf2Tha-wze7Fw From] [[Our Network]] (16-1-2021):

''"Staking activity has continued to grow steadily throughout the course of the year, with daily active stakers increasing ~187% over that same time period."''
===Liquidity Mining===

* [https://thedefiant.io/synthetix-perp-volume-ath From] [[The Defiant]] (17-3-2023):

''"Synthetix plans to distribute over $8M of [[Optimism (OP)|Optimism’s]] governance tokens to active users of its perpetual swaps platform. Daily trading volume on the protocol’s V2 iteration hit a record of almost $200M on Mar. 13, according to a [[Dune Protocol|Dune]] query. The program is scheduled to go live in the first week of April and run for 20 weeks."''

===Scaling===

* [https://yieldfarmer.substack.com/p/farm-2-3-digit-apys-on-blue-chip?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjozOTQ0MjI0NSwiXyI6IitrN3VtIiwiaWF0IjoxNjI3ODcwNTEyLCJleHAiOjE2Mjc4NzQxMTIsImlzcyI6InB1Yi0zODQ1MSIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.2YzpIm-dkbIkRn From] [[DeFi Pulse|Yield Farmer]] (28-7-2021):

''"Synthetix announces its synths can now be traded via Kwenta on the [[Optimism|Optimistic]] Ξthereum [[Layer Two|layer-two]] scaling solution."''

===Interoperability===

* From their [https://twitter.com/synthetix_io/status/1680971118700822528 announcement] (17-7-2023):

''"Synthetix now uses @chainlink [[CCIP]] for efficient, secure Synth liquidity transfers through the Synth Teleporter. CCIP paves the way for cross-chain Synthetix, expanding access to liquidity & markets across [[Ethereum Virtual Machine (EVM)|EVM]]-compatible chains."''

=== Other Details===
== Synth Peg ==
* From the [https://www.synthetix.io/uploads/synthetix_litepaper.pdf whitepaper] (3-2020):
''"The Synth peg is critical to a well functioning system, because traders require both liquidity and stability between a Synth/s and other cryptoassets to take profits from trading. Some Synths trade on the open market, so it is possible for them to fall below par with the assets they track. Incentives are required to ensure that deviations from the peg are minimal and that actors are motivated to correct them.<br>There are three methods to maintain the Synth peg:'' ''
# ''[[Arbitrage]]: SNX stakers have created debt by minting Synths, so if the peg drops they can now profit by buying sUSD back below par and burning it to reduce their debt, as the Synthetix system always values 1 sUSD at $1 USD. ''
# ''sETH liquidity pool on [[Uniswap]]: each week, a portion of the SNX added to the total supply through the inflationary monetary policy is distributed as reward to people providing sETH/ETH liquidity on Uniswap. This has incentivised liquidity providers to collectively create the largest liquidity pool on Uniswap (at time of writing), allowing traders to purchase Synths to start trading or sell Synths to take profits. ''
# ''SNX auction: Synthetix is currently trialling a new mechanism with the [[dFusion]] protocol (from [[Gnosis]]) in which discounted SNX is sold at auction for ETH, which is then used to purchase Synths below the peg."'' 

=== ETH Collateral ===
* Synthetix’s Achernar release [https://blog.synthetix.io/the-achernar-release/ is live] (20-2-2020), adding [[ETH]] as collateral and a bunch of other upgrades. Traders can obtain a sETH loan for 150% ETH collateral and pay a 5% interest fee. The provisional "[https://sips.synthetix.io/sips/sip-35 Skinny Eth]" period will only last three months and traders <em>must</em> repay their loans by the closing of the period. After the experimental Skinny ETH Collateral period ends in May 2020, the initiative will be revisited and reformed based on trader and community feedback, as well as an analysis of the mechanics of the system.
* From this [https://en.cryptonomist.ch/2020/02/20/synthetix-ether-collateral/ article] (20-2-2020):
''"With a 3-month trial period, Synthetix introduces ETH as collateral for the creation and exchange of synthetic tokens.''
# ''During the trial period, the maximum participation will be 5000 Ether. [they [https://blog.synthetix.io/ether-collateral/ changed] it to 1500]'' 
# ''The minimum participation position of the individual will be 1 Ether.'' 
# ''At the end of the trial period, all pending loans will be repaid.'' 
# ''The minimum collateral locked in the contract will have to represent 150% of the demand for synthetic products such as sETH, sUSD, sBTC.''
''The management of this new form of collateral has been introduced respecting the needs of SNX stakeholders, in fact, unlike collateralization with SNX, ETH stakers will not receive commissions or rewards as they run fewer risks associated with the fluctuation of the price of SNX.''

''Prior to this update, the SNX token linked to the project was the only one to provide liquidity to the platform with a 750% collateral to [[cover]] the tradable Assets. ''

''However, the previous model had a number of problems: by exposing users to SNX-related price jumps, the platform was pushing away a less risk-averse part of the market, limiting the liquidity of the project."''
* Some people had [https://github.com/Synthetixio/synthetix/issues/232#issuecomment-531445059 their critiques] beforehand (14-9-2020):
"''As an SNX holder, implementing ETH as collateral signals the SNX team is giving up on its main financial value proposition and saying, “Well, the market might think ETH is more stable, so we’ll implement ETH as collateral.” As an SNX holder, why would I want to hold an ECR20 token when the team itself is acknowledging it’s "safer" to stake with ETH? Is the prospect of future returns on the SynthetixExchange - a speculative value - enough to compensate my holding SNX over ETH and staking with ETH? By enabling collateralization with ETH, the SNX is basically validating those outside the system who question SNX’s value proposition of generating fees from the exchange."''
* From their [https://blog.synthetix.io/ether-collateral/ blog] (19-2-2020):
''"One other interesting implication is that it could have a positive effect on the sETH liquidity pool on Uniswap. At the moment, many LP’s are SNX stakers, who are providing the sETH they’ve minted through staking their SNX. In doing so, they’re sacrificing the liquidity of their Synth position in case of major market fluctuations. For example, if [[BTC]] [[Pump and Dump|pumps]] while you’re holding sETH you minted by staking SNX, your portion of the debt pool is exposed to that gain while you stay stuck in sETH. If the ETH stakers contribute to the liquidity pool instead, they take on less risk, as their debt will not fluctuate — they’ll be receiving the SNX rewards for sETH LP’s with less risk than SNX stakers."''

== Oracle Method ==

*[[Pyth Network|Pyth]] is [https://pyth.network/consumers mentioned] as [[oracle]] (7-3-2022).
*[https://www.defisafety.com/app/pqrs/419 From] [[DeFi Safety]] (25-5-2022):
''"The protocol's oracle source is [[Chainlink (LINK)|Chainlink]] documented at this [https://blog.synthetix.io/all-synths-are-now-powered-by-chainlink-decentralised-oracles/ location]. In addition, all synthetic tokens covered by these oracles are identified [https://docs.synthetix.io/tokens/list/ here], and data refresh rate is provided for each one. Synthetix documents all [[Frontrunners|front running]] mitigation techniques at this [https://sips.synthetix.io/sips/sip-6/ location]. [[Flash Loan|Flash loans]] are not applicable for Synthetix's synthetic assets. In addition, SNX could theoretically be flash loaned, but the only use case for those tokens would be to stake them. Since staked tokens enter a 7-day [[burn]] period, potential for [[flash loan]] manipulations is effectively mitigated."''
*[https://thedefiant.substack.com/p/we-have-zero-intention-of-following-725?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjo0NDkyMjMsIl8iOiJjOXhSbiIsImlhdCI6MTU4OTIwOTI3OCwiZXhwIjoxNTg5MjEyODc4LCJpc3MiOiJwdWItMTEyNTkiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.uAhbyia92c3lpsA0LtLEKY67iJzFdP_C2Fkpk438hio From] [[The Defiant]] (11-5-2020):

"''we will transition fully to [[ChainLink|Chainlink]], removing the central point of failure in the current Synthetix oracle."''

*[https://decrypt.co/40371/chainlink-now-powers-all-price-data-for-defi-exchange-syhthetix Update] (1-9-2020): After months of testing, Synthetix will use Chainlink price oracles to power all price feeds on the Synthetix exchange.
* From [https://github.com/linda-xie/defi-oracles this list] curated by [[Linda Xie]] on [[Github]] (8-4-2020):

=== "''Oracle Method''===
''[[Chainlink]] for FX and commodity price feeds with plan to integrate cryptocurrencies and indices in the future.''

''Other price feeds are determined by an [[oracle]] that pushes price feeds [[on-chain]] using an algorithm with a variety of sources to form an aggregate value for each asset.''

''The ExchangeRates contract (https://contracts.synthetix.io/ExchangeRates) will continue to be fed prices from the [[decentralized]] oracle. However, the logic for looking up prices will be extended with a mapping of Chainlink Aggregator contracts for each Synth.''

===''Contract Addresses''===

*''ExchangeRates: 0x9D7F70AF5DF5D5CC79780032d47a34615D1F1d77''

===''Source''===

*''https://blog.synthetix.io/chainlink-decentralizes-first-wave-of-synthetix-price-feeds''
*''https://www.synthetix.io/uploads/synthetix_litepaper.pdf''
*''https://sips.synthetix.io/sips/sip-36''
*''https://sips.synthetix.io/sips/sip-32"''

=== Oracle attack ===

*[https://defiweekly.substack.com/p/defi-audit-1-synthetix From] [[DeFi Weekly]] (11-3-2020):
*''"During the early days of Synthetix, an [[oracle]] [https://www.theblockcrypto.com/linked/28748/synthetix-suffers-oracle-attack-potentially-looting-37-million-synthetic-ether went down and someone used it] (3-2019) to mint 37m SNX. This was a large shake up in people's confidence however the team aggressively moved to using [[Chainlink]] oracles instead."''

== Compliance ==

* From this [https://www.emergingpayments.org/article/regulation-of-decentralised-finance-defi-in-europe/ article] (13-10-2020):

''"In summary, the Synthetix platform does appear to potentially offer a multi-lateral trading venue for derivative contracts that could be considered within the scope of MiFID i.e. enabling multiple parties to buy/sell derivatives in a manner designed to result in binding contracts. However, the absence of matching individual participants in a trade and the algorithmic nature of the trades complicate this picture and mean it could still be outside of scope depending on the interpretation of each Member State regulator, national law and ESMA. EU law is also very fragmented and much in need of updating in respect of the definition and supervision of regulated derivatives.''

''In addition, the lack of a legal person operating the trading venue would make the regulation or prohibition of the platform very difficult and, to the extent that the regulators wish to capture it, will require looking through the DAOs for one or more individuals that the regulator believes is the effective controller of the venue. Failing that it is difficult to see what regulators can do other than an outright ban on such a platform and product (with all of the novel difficulties that arise from seeking to prohibit smart contract interactions and settlements not mediated through financial institutions).''

''To the extent that Synthetix is used to create asset-referenced tokens (including [[stablecoins]]) then, subject to consideration of whether they are potentially algorithmic tokens, it could be fully within scope of the proposed EU MiCA regime subject to territoriality requirements."''

== Their Other Projects ==

=== Aelin Protocol ===

* From the Synthetix [https://blog.synthetix.io/a-little-dash-of-hopium/ blog] (18-5-2021) of Kain:

''"I am working on a small side project that will enable anyone to raise a pool of capital to pursue a specific deal. This could be purchasing tokens from a treasury [[Over The Counter (OTC)|OTC]], and then distributing them with a vesting schedule, which happens regularly. It could be access to an early stage VC round into a new project, or any number of other one-off deals. It is usually very hard to get access to these kinds of deals unless you are a major fund with significant capital to deploy. The opportunity space for what's possible once this structure gains momentum is vast and potentially quite creative.  It delivers on crypto's promise of open and transparent access while also helping fund quality projects through a novel mechanism. The governance token for this protocol (AELIN) will be distributed 50% to SNX stakers."''

=== Kwenta (KWENTA) ===
* Has spun out and '[https://blog.kwenta.io/kwenta-independence/ declared independence]' (15-6-2021).
*[https://ethhub.substack.com/p/ethhub-weekly-134?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjo2OTA5OTI4LCJfIjoiYzl4Um4iLCJpYXQiOjE2MDIwNzc3MjMsImV4cCI6MTYwMjA4MTMyMywiaXNzIjoicHViLTM5MTAiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.k_ojYreKprb79X8EPS7zxvVxWcsoALuAARXWzIhzmmI From] [[EthHub]] #34 (5-10-2020):
"''This October, the Synthetix team will be launching the next generation of Synthetix.Exchange called [[Kwenta (KWENTA)|Kwenta]]. Kwenta is a new [[derivatives]] exchange designed for users looking for multi asset trading and infinite [[liquidity]]."''

* From the Synthetix [https://blog.synthetix.io/a-little-dash-of-hopium/ blog] (18-5-2021):

''"Jordan came up with a plan to spin out Kwenta as a distinct team that will be able to govern and manage itself outside the larger Synthetix governance framework. In addition, it will likely launch a token that will be distributed to SNX holders and allow for its own distinct community to form. The plan is for Kwenta to have a dedicated team, initially consisting of existing Synthetix core contributors, as well as a number of additional contributors. The sDAO will provide support to ensure that the project is funded for several years, ensuring there are no resource constraints on the development of a crucial user interface for the protocol."''

=== Synthetic Futures ===

*[https://blog.synthetix.io/synthetic-futures-primer/ Created] a primer for it's [[futures]] (21-8-2020).

=== Synthetix sDeFi ===

*[https://bankless.substack.com/p/the-best-defi-indices-for-your-crypto?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjoxNzAyMDQzMiwiXyI6ImM5eFJuIiwiaWF0IjoxNjA1MTY5NzIyLCJleHAiOjE2MDUxNzMzMjIsImlzcyI6InB1Yi0xNjAxNSIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.JBcP7lwHbKy8IdsNS2LcyMTPHXI9HQoItoezjaWPOYc From] [[Bankless]] (11-11-2020):

''"With 12 assets featured in the index, Synthetix’s sDeFi is the oldest and most diversified index in the field. The index was recently updated a few weeks ago adding [[YFI]], [[UNI]], wNXM and [[CRV]] into the mix while removing [[ZRX]], [[REP]], [[LRC]] and [[BNT]]. That said, the sDeFi index includes a few other assets not featured in the [[DPI]], namely [[NXM]], [[UMA]], and CRV.''

''In addition, unlike the DPI index, sDeFi’s index is a synthetic asset which tracks the price of the underlying assets rather than having all assets redeemable — this is an important distinction for those who may be interested in redeeming their index for the underlying assets."''  

== Roadmap ==
* From a commissioned [[Messari]] [https://messari.io/report/state-of-synthetix-q4-2022 report] (14-2-2023):
''"In 2023, the Synthetix DAO is primarily focusing on the [https://rattle-ticket-183.notion.site/PUBLIC-Synthetix-v3-62d169ecf4144f789b6f42bf96653acc launch] of Synthetix V3, an updated architecture for the liquidity provisioning protocol. V3 is a drastic change to the protocol and implementation, with no change at all to the intention or service to be provided. It strives to give lenders (SNX stakers) control over what they collateralize along with [[permissionless]] asset listing. The transition will include migrating sUSD to snxUSD and turning the current V2 protocol into a pool on V3. V3 is a drastic change to the protocol and implementation, with no change at all to the intention or service to be provided. It strives to give lenders (SNX stakers) control over what they collateralize along with permissionless asset listing. The transition will include migrating sUSD to snxUSD and turning the current V2 protocol into a pool on V3.''

''Pools will have managers that can set rules on which assets are accepted as collateral, known as vaults. They can choose which markets they offer the liquidity to – perps, spot, atomic, etc. Pools can also target rewards to different collateral types depending on their preference or on the debt pool. There is no launch date for V3 yet, but updates will likely come throughout Q1’23."''
*Roadmap has been [https://blog.synthetix.io/roadmap-update-h2-2020/ released] (2-8-2020). It includes futures, BTC as collateral and trading incentives. Updated one for 2022 can be read [https://mirror.xyz/kain.eth/uM1hi6YIcjOfYAY4FwWqvW9u2uDywv3sv38cLX73jEE here]. Focussing mainly on synths for [[Cross Chain|cross-chain]] movements.
* [[Roadmap]] [https://messari.io/asset/synthetix#profile found] on [[Messari]]:
{| class="jss540"
|September 2019
|Additional Synths
|Adding long and short synths for [[XTZ]], [[TRX]], and [[MKR]] as well as equity and indices Synths
|-
|September 2019
|Lending Partnerships
|Partnering with a lending platform to allow people to borrow [[Susd|sUSD]] for [[ETH]] or [[Dai]]
|-
|December 2019
|Decentralized Oracle
|Partnering with [[Chainlink (LINK)|Chainlink]] to decentralize the [[oracle]] for price feeds
|-
|December 2019
|Leveraged Trading
|Allow users to make up to 10x leveraged trades on synthetix.exchange
|}
* [https://tokentuesdays.substack.com/p/synthetix From] [[Token Tuesdays]] (3-9-2019:
''" In the [[NEAR|near]] future, the core team has announced expanded Synth sets including S&P 500 indices, [[DAI]] to [[sUSD]] conversions and [[Open Source|open-sourced]] lending on protocols like [[Compound]]."''
* Synthetix came with a roadmap [https://blog.synthetix.io/product-roadmap-update/ update] (10-3-2020), more detail on each provided in the [[LINK|link]]:
# "''Traditional asset classes - Equities, ETFs, Indices and more (Q2, 2020)''
# ''New crypto synths (Q1, 2020)''
# ''Leveraged Synths (Q2, 2020)''
# ''Binary options (Q3, 2020)''
# ''Advanced order types (Q2, 2020)''
# ''Trading incentives (Q2, 2020)''
# ''sX interface enhancements (Q1, 2020)''
# ''Optimistic [[Rollups]] (Q3, 2020)''
# ''Synthetic futures (Q3, 2020)''
# ''Ether/DAI/BTC collateral (Q2, 2020)''
# ''Trading delegation (Q1, 2020)''
# ''Mobile interfaces (Q2, 2020)''
# ''Differential fees (Q2, 2020)''
''The work required to support each of the above features is listed below:''
# ''Asset listing framework with continuous risk monitoring''
# ''ProtocolDAO expansion''
# ''Market closure handling (for traditional assets)''
# ''Price change circuit breakers''
# ''[[Chainlink]] migration"''
* [https://thedefiant.substack.com/p/we-have-zero-intention-of-following-725?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjo0NDkyMjMsIl8iOiJjOXhSbiIsImlhdCI6MTU4OTIwOTI3OCwiZXhwIjoxNTg5MjEyODc4LCJpc3MiOiJwdWItMTEyNTkiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.uAhbyia92c3lpsA0LtLEKY67iJzFdP_C2Fkpk438hio From] [[The Defiant]] (11-5-2020):
"''Over the next few months we will continue to make aggressive moves to [[decentralise]] the protocol with two large changes coming soon, the migration to protocolDAO v2 which will enable several new features including timelocks on upgrades and token holder upgrade veto power. In addition, we will transition fully to Chainlink, removing the central point of failure in the current Synthetix oracle.''

''We are confident that by the time we reach the middle of the year, the protocol will be almost maximally censorship resistant, with the removal of all of the unilateral controls the team currently administers.''

''Below is a high level plan for the continued transition to token holder control:''
# ''grantsDAO''
#* ''Additional capital allocation from synthetixDAO''
#* ''Expansion of membership''
# ''protocolDAO''
#* ''Delegated migrator contract launch''
#* ''Migration to Aragon''
#* ''Timelocks on contract upgrades''
#* ''Tokenholder veto power launched''
# ''Australian Foundation''
#* ''Entity windup'' 
# ''synthetixDAO migration to Aragon''
#* ''Membership expansion''
#* ''Transition to representative democracy"''

== Revenue ==

* From a commissioned [[Messari]] [https://messari.io/report/synthetix-q4-2023-brief report] (5-1-2024):

''"Synthetix Perps had its best quarter by volume traded. Without any incentives, it powered over $13 billion for the second consecutive quarter. SNX stakers earned record fees in Q4’23, taking in nearly $10 million in the quarter. Over 95% of fees come from the Synthetix Optimism deployment."''
* From a commissioned [[Messari]] [https://messari.io/report/state-of-synthetix-q4-2022 report] (14-2-2023):

''"In 2022, users paid $37.5 million in fees to access liquidity on Synthetix. In aggregate, the fees were split nearly perfectly 50/50 between Synthetix’s L1 and L2 instances. However, in Q4’22, Synthetix’s Optimism instance earned 83% ($2.8 million) of all trading fees on the platform, likely aided by the launch of perps V2 on Optimism and Optimism Quests. Trading '''fees were dwarfed by the $231 million of SNX incentives paid out''' in 2022.''

''After $22 million in liquidations in the first half of the year, the second half of 2022 saw $11 million in liquidations of Synthetix. Liquidations on Synthetix reward other stakers by dispersing a percentage of the collateral staked (SNX) to active and healthy stakers"''

== Usage ==

* From a commissioned [[Messari]] [https://messari.io/report/state-of-synthetix-q2-2023 report] (7-7-2023):
''"The quarter brought record-setting volumes for the protocol. This growth was attributed to a variety of factors: consistent product traction from Synthetix Perps; enhancements in front-end platforms such as Kwenta and Polynomial; improved UX from reduced execution delay; more underliers than any competitor (now 42 listed perps);  increased market activity; the cost-reducing Optimism Bedrock upgrade; reductions in trading fees to competitive levels with CEXs; and the OP incentives program. '''Despite the record volumes''' and OP rewards program, Synthetix experienced a '''downward trend in daily active users''' (DAUs) over the quarter."''
*[https://thedefiant.io/synthetix-perp-volume-ath From] [[The Defiant]] (17-3-2023):

''"Synthetix plans to distribute over $8M of [[Optimism (OP)|Optimism’s]] governance tokens to active users of its perpetual swaps platform. Daily trading volume on the protocol’s V2 iteration hit a record of almost $200M on Mar. 13, according to a [[Dune Protocol|Dune]] query. The program is scheduled to go live in the first week of April and run for 20 weeks."''
*From a commissioned Messari [https://messari.io/report/state-of-synthetix-q4-2022 report] (14-2-2023):
''"Volumes peaked in Q3 2022, led by atomic swaps. So far, all atomic swaps on Synthetix since the [[1inch Network (1INCH)|1inch]] fusion have been beneficial to stakers, with more integrations coming soon. Fourth quarter volume was just under $623 million, down 86.5% from Q3. Perps V2 was launched on December 20 and is still in alpha (only ETH perps trading on select front-ends). However, in the final 11 days of the year, it accounted for 15% of volumes.''

''Synthetix is a liquidity solution. The protocol and collateral pool can be infrastructure for partners to use. The partnership with 1INCH drove tremendous volume to Synthetix in 2022 as the leading solution for large trades to avoid slippage on traditional DEXs. [[Kwenta (KWENTA)|Kwenta]] is the leading perpetual futures protocol that uses Synthetix, and in times of volatility, Kwenta tends to dominate volumes driven to Synthetix. Decentrex is a recently launched perps protocol that will be leveraging Synthetix Perps V2."''
*[https://ournetwork.substack.com/p/our-network-issue-54?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjozMTU1OTg0MSwiXyI6ImM5eFJuIiwiaWF0IjoxNjEwOTk0MzE4LCJleHAiOjE2MTA5OTc5MTgsImlzcyI6InB1Yi0yMTM2MiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.ORP6oN8tpRS0U7nf2Tha-wze7Fw From] [[Our Network]] (16-1-2021):

''"Synth exchange volume broke its all-time high (ATH) of ~$57M on December 26th reaching $64.9M, which was quickly surpassed on January 3rd with daily volume spiking to $186M. This spike in daily volume could be attributed to the price action of SNX, which broke its ATH of $8.77 that same day. The stickiness of volume is further supported by the [https://blog.synthetix.io/the-new-volume-incentive-program/ Volume Program] that kicked off this past September, which incentivizes native integration of the Synthetix protocol across [[Defi|DeFi]] platforms and protocols."''
*User numbers are [https://ournetwork.substack.com/p/our-network-issue-47?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjoxODYyNTc3OCwiXyI6ImM5eFJuIiwiaWF0IjoxNjA1NDM5NDkwLCJleHAiOjE2MDU0NDMwOTAsImlzcyI6InB1Yi0yMTM2MiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.NC-1KqQdrpJ3PUwu67Ib0rhn897hM8OzV2aBsVvThMU still low] on Synthetix (13-11-2020):
''"While the exchange currently has 50 traders per day and nearly 5500 Ethereum [[addresses]], the protocol hopes to attract more traders as they [[move]] to [[Optimism]]."''
*From this [https://twitter.com/mhonkasalo/status/1313516528122425344 tweet] (6-10-2020):
"''Synthetix's $sUSD has a supply of 74.7 million — 3x growth since July 1st. Despite clearly being an innovator -- e.g. 1st to integrate w/ [[L2]] [[Optimistic Roll-Up|Optimistic]] Ethereum, Synthetix still has a relatively low number users. $sUSD minters peaked at > 1,000 in August."''

* According to [https://twitter.com/spencernoon/status/1231270219093381121 this] (23-2-2020)  [[tweet]] by [[Spencer Noon]] sETH pool is 26% of total liquidity on Uniswap.
* [https://ournetwork.substack.com/p/our-network-issue-9-part-2 From] [[Our Network]] #9 (21-2-2020):

"''sETH has the largest Mcap of any Synth (synthetic asset) inside the Synthetix network and has demonstrated how effective a well designed incentive can be to drive desired behaviour. The incentive directs 5% of the weekly inflationary supply to those who add liquidity to the [[Uniswap]] sETH/ETH pool. Uniswap shows the steady increase of sETH supply over the past 5 months. The pool is now 26% of Uniswaps total liquidity and at one stage was closer to 50%.''

''The weight of sETH (currently 65%) as a distribution across all Synths is artificially high as a result of the incentive and is now seen as likely too heavy relative to the overall open interest across the network. The project will introduce a similar sUSD incentive to [[balance]] out the open interest and create a more natural distribution of Synths."''
=== Projects that use or built on it ===
*[[Aelin (AELIN)|Aelin]]
*[[Curve Finance (CRV)|Curve]]; "''Curve [https://twitter.com/CurveFinance/status/1350815884521185280 now] allows you to use [[Synthetix]] to do cross-asset [[swaps]] with minimal slippage and fees."'' (19-1-2021).
*[[Decentrix]];  perps protocol that will be leveraging Synthetix Perps V2 ([https://messari.io/report/state-of-synthetix-q4-2022 14-2-2023]).
*[[dHedge]]; [https://medium.com/dhedge-org/dhedge-mainnet-is-live-72ed2c356d32 live] on [[mainnet]], a social trading platform built on Synthetix.
*[[Kwenta (KWENTA)|Kwenta]]
*[[Lyra]]; options protocol [https://twitter.com/defi_airdrops/status/1412091153680371714 which will] [[airdrop]] tokens to SNX stakers (5-7-2021).
* [[Melon (MLN)|Melon]]; [https://medium.com/paradigm-fund/defi-in-ether-aave-v2-on-mainnet-yearn-merges-defi-looprings-zkrollup-amm-is-here-gnosisdao-2e707a419e3d From] [[Paradigm]] (8-12-2020):
"<em>Melon [https://medium.com/@meloncouncil/melon-integrates-synthetix-19f08f99953 integrates] Synthetix: Melon approved the proposal ([https://github.com/enzymeprotocol/MFP/blob/660c88d1aab30435405ddf810c9d384658f303ac/Pending/synthetix_integration.md MFP#4]) made by [[Simone Conti]] and Emiliano Bonassi for the integration of Synths within the Melon Protocol. The full proposal you can find [https://github.com/enzymeprotocol/MFP/blob/660c88d1aab30435405ddf810c9d384658f303ac/Pending/synthetix_integration.md here].</em>

* [[Thales (THALES)|Thales Market]]; binary markets [https://twitter.com/defi_airdrops/status/1412091153680371714 which will] [[airdrop]] tokens to SNX stakers (5-7-2021).

== Pros and Cons ==

=== Pros ===
* Has been open about its [[centralization]] and worked towards 3 DAO's to be decentralized.
* Uses [[multisig]] for core contracts
* [https://defiweekly.substack.com/p/defi-audit-1-synthetix From] [[DeFi Weekly]] (11-3-2020):
"''One area which I was highly impressed with was Synthetix's documentation. They've got diagrams showing inheritance structures, easy to access contract addresses and plenty more which you don't usually find from DeFi teams."''
* From the [https://www.synthetix.io/uploads/synthetix_litepaper.pdf whitepaper] (3-2020):
"''Trading on Synthetix.Exchange provides many advantages over centralised exchanges and order book based [[DEX|DEX’s]]. The lack of an order book means all trades are executed against the contract, known as P2C (peer-to-contract) trading. Assets are assigned an exchange rate through price feeds supplied by an oracle, and can be converted using the Synthetix.Exchange [[Dapp|dApp]]. This provides infinite liquidity up to the total amount of collateral in the system, zero slippage, and [[permissionless]] [[on-chain]] trading."''
* [https://defiweekly.substack.com/p/institutions-vs-community-84c?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjo3OTMyNDgsIl8iOiIwb3pkOCIsImlhdCI6MTU5NjE5ODk4OCwiZXhwIjoxNTk2MjAyNTg4LCJpc3MiOiJwdWItNTQwMiIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.Xm2FvDCwiE6N66yT0zebYJQBSQlm-dRqwCqooSoV0T4 From] [[DeFi Weekly]] (31-7-2020):
"''synthetic asset protocol, did an [[ICO]], saw prices crash, allowed many people to get ownership of the network, price increased. Largest incentivised parties: thousands of token holders, team, foundation"''
* When [[KuCoin]] got [https://cointelegraph.com/news/freeze-pause-reboot-projects-react-differently-to-200m-kucoin-hack hacked] (28-9-2020), many projects showed their [[centralized]] powers, however the Synthetix DAO [https://bankless.substack.com/p/an-acid-test-for-decentralization-0da?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjo1MTQxODI5LCJfIjoiMG96ZDgiLCJpYXQiOjE2MDEzODgxMjMsImV4cCI6MTYwMTM5MTcyMywiaXNzIjoicHViLTE2MDE1Iiwic3ViIjoicG9zdC1yZWFjdGlvbiJ9.p8VK-QthHmQSOTMECA7ejlxnehWUqPfAhsHo0P4kh20 voted against] any action.

=== Cons ===
* Has no time lock on their multisig (2020).
* [https://defiweekly.substack.com/p/defi-audit-1-synthetix Neither] (11-3-2020) [[Nexus Mutual]] or [[Opyn]] [[COVER|cover]] Synthetix's contracts.
* Will have competitors who tackle the same problems (2020).
* Demand for [[blockchain]]-based synthetic assets is still relatively small. ''"As it [https://tokentuesdays.substack.com/p/synthetix currently] stands, the assets being represented on the platform are ones which are relatively easy to acquire through traditional mediums such as secondary exchanges like [[Binance]]."''
* [https://defiweekly.substack.com/p/defi-audit-1-synthetix From] [[DeFi Weekly]] (11-3-2020):
''"However this is where I realise that Synthetix's model isn't really sustainable in the long run unless they manage to overcome some really hard challenges.''
# ''As noted earlier on, Synthetic assets are <strong>kind of guaranteed</strong> to have the collateral they claim since there's no liquidations - only debt that needs to be repaid. The system faces potential under-collateralisation issues (although at 750% it's quite far away). Future SIPs propose to fix this issue although implementation is to be seen.''
# ''Holders of Synthetic assets are holding something that <strong>isn't exactly redeemable </strong>for stable collateral. Should the price of SNX start dropping rapidly, many positions start becoming undercollateralised and even if you could redeem SNX it would be facing a bank run of sorts.''
# ''Due to staking incentives, only 20% of SNX supply is not actively being staked which begs the question that how will organic, healthy liquidity originate elsewhere if most of it is being sucked up? Remember: you actually need healthy demand for SNX outside of an incentive mechanisms for the synthetic assets to have true value."''
* Has had problems with [https://medium.com/@galvanek.m/synthetix-the-battlefield-a15a7104587c front running] (13-2-2020). [https://bankless.substack.com/p/how-to-value-crypto-capital-assets From] [[Bankless]] (13-5-2020):
''"In the case of Synthetix, front-runners manipulated the price of an asset on the spot market and then traded it on sX before the oracle updated the price, effectively creating significant arbitrage opportunities at the cost of SNX stakers. Ultimately, the [[front-running]] attacks plagued the Synthetix network creating a disproportionate amount of earnings for the derivatives protocol. Fortunately, the front-running issues have largely been subdued and Synthetix back on track for reporting accurate earnings."''

* [[Kain Warwick|Kain]] has been open about having had a burn out, but due to coordination issues within the core contributors, has [https://blog.synthetix.io/an-old-dictator-appears/ run] for the Spartan Council (6-2021).

== Competitors ==
* [https://tokentuesdays.substack.com/p/synthetix From] [[Token Tuesdays]] (3-9-2019:
"''[[Market Protocol]] and [[Fortuna (FOTA)|FOTA]] are the first projects that come to mind, each with slightly different variations on services offered and how their respective tokens play into their ecosystem."''
* [[UMA]] and [[Abra]]

== Team, Funding, partners, etc. ==

=== Team ===
* Full team can be viewed [https://www.linkedin.com/company/synthetix/ here] (5-2-2021).
*[[Kain Warwick]]; founder, is [https://twitter.com/econoar/status/1190785436072808448 friends] with [[EthHub]]
* [[Jordan Momtazi]]; ''"[https://ournetwork.substack.com/about?utm_source=menu-dropdown has been] a core member of the Synthetix team from day one"''
* [[Justin Moses]]; CTO ([https://weekinethereum.substack.com/p/week-in-eth-news-may-3-2020-thanks 5-5-2020])
*[[Adam Cochran]]; [https://thedefiant.io/unsecured-defi-lenders-look-shaky-post-ftx contributor] (15-11-2022).
*[https://medium.com/@SenateLabs/landscape-of-pro-delegate-next-wave-of-dao-governance-f239cd8537ea Has][[Gauntlet Networks|Gauntlet]] as some of their professional delegates (30-11-2022).

=== Funding ===
* Invested in by [[SVK Crypto]]
* ''"At inception, Havven [https://tokentuesdays.substack.com/p/synthetix raised] $250k in a seed round supplemented by a larger $30M [[ICO]] round priced at a reported base rate of $0.67/SNX. Lead by [https://www.synapse.capital/ Synapse Capital]"''
* [https://www.theblockcrypto.com/linked/44994/defi-project-synthetix-raises-3-8m-from-framework-ventures From] [[The Block]] (29-10-2019)
"''Has raised around $3.8 million in new funding. Announcing the news on Monday, Synthetix said [[Framework Ventures]] has purchased 5 million Synth (SNX) tokens from the Synthetix Foundation’s treasury, toward the funding."''
* [https://vitalik.ca/general/2020/10/18/round7.html Is one of the funders] (18-10-2020) of [[Gitcoin]] Grant round 7 (and possibly continues to do so).
*[https://cointelegraph.com/news/synthetix-announces-12-million-raise-led-by-paradigm-coinbase-ventures-and-iosg From] [[Cointelegraph]] (14-2-2021):

''"Announced a $12 million dollar fundraise led by venture capital firms [[Paradigm]], [[Coinbase (Company)|Coinbase Ventures]], and [[IOSG]]. The funds purchased SNX tokens directly from the [[DAO]] treasury, and “will contribute where possible by providing [[liquidity]] in the form of SNX collateral, and also participate in its rapidly evolving community governance system,” the announcement reads."'' [[DeFi Prime]] goes further [https://defiprime.substack.com/p/the-defiprime-post-29-your-weekly?token=eyJ1c2VyX2lkIjoxMzk3OTAwLCJwb3N0X2lkIjozMjU2OTcyMiwiXyI6InFmb2Z2IiwiaWF0IjoxNjEzNjMwNDg1LCJleHAiOjE2MTM2MzQwODUsImlzcyI6InB1Yi05MDAwIiwic3ViIjoicG9zdC1yZWFjdGlvbiJ9.BWDFvX2etS0WEZ2JZ saying] they ''"have joined Synthetix’s Spartan Council"''.

* [[Compound (COMP)|Compound]], [[Kraken]], [[Lido (LDO)|Lido]], Synthetix, [[The Graph (GRT)|The Graph]], and [[Uniswap (UNI)|Uniswap]] have donated [https://twitter.com/ethereum/status/1430124634104545288 $250,000 each] to support [[Ethereum (ETH)|Ethereum]] execution-layer [[client]] teams (8-2021).

=== Partners ===

* From a commissioned Messari [https://messari.io/report/state-of-synthetix-q1-2023 report] (4-5-2023):

''"[[Polynomial]], formerly an options vault, launched a perps trading front end using Synthetix Perps in Q1. Mux, Nested, Unidex, and Conduit.lol are new Synthetix partners working on integrating Synthetix liquidity to their protocol solutions."''
* Part of the [[DeFi Network]].
* [https://defiweekly.substack.com/p/defi-audit-1-synthetix Uses] [[Chainlink]] as an [[oracle]].
* Partners with [[Groundhog]], according to their [https://groundhog.network/ website] (21-4-2020).
* Synthetix, have [https://blog.synthetix.io/synthetix-exchange-l2-demo/ partnered] (6-5-2020) with Ethereum [[Layer Two|layer-2]] research team [[Optimism]] to launch a demo deployment of Synthetix Exchange on the Optimistic [[Virtual machine|Virtual Machine]] (OVM).
* [https://www.coindesk.com/why-kyber-network-tokens-tripled-to-100m-despite-the-coronavirus-recession Member] (21-5-2020) of the [[Chicago DeFi Alliance (CDA)]].
* [https://twitter.com/synthetix_io/status/1286123390193922048 Announced] that institutional liquidity providers such as [[DTC Capital]], [[Three Arrows Capital]] and [[ParaFi]] have joined the platform. (23-7-2020)
* Is [https://cointelegraph.com/news/curve-aave-synthetix-and-7-others-join-global-defi-alliance part of] the Global [[DeFi Alliance]], created by [[Huobi]] (15-9-2020).
* Is [https://skale.network/blog/skale-network-ecosystem-for-ethereum-scaling/ mentioned] as a protocol that will work with [[Skale (SKL)|Skale]] (10-8-2020).
*Is a founding member of [[Asia DeFi Network (ADN)]] according to the [https://www.asiadefi.network/ website] (13-7-2021).

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