Snx Coin: A Smart Investment Decision?

Synthetix (SNX) is a cryptocurrency that has been making waves in the world of decentralised finance (DeFi). SNX is the native token of the Synthetix Network, which allows users to issue synthetic assets on the Ethereum blockchain. These synthetic assets, or synths, are derivatives that enable traders to track the price of an asset without actually holding the underlying asset. This means that investors can gain exposure to the prices of real-world assets, such as gold, silver, or real estate, simply by holding synths. SNX tokens are used as collateral against the synthetix assets that users create. With its innovative technology and growing community, is SNX a good investment?

SNX's price history and future projections

SNX, the Synthetix Network Token, was founded by Kain Warwick and made its debut in the crypto realm on 14 March 2018 at a price of $0.49 per token. The price of SNX fluctuated between $0.27 and $0.68 until the end of July 2018, before falling to $0.07 by September. The token ended 2018 at a price of $0.04.

In 2019, SNX started the year at $0.03 and continued to fluctuate between $0.04 and $0.08 until mid-May. The cryptocurrency saw a significant increase to $0.35 by the end of June and ended the year on a bullish note, trading at $1.22 in December.

The year 2020 saw SNX resume exchanging at around $1.20 at the beginning of the year. However, the crypto market crashed in mid-March, causing the price of SNX to drop below $0.40. The token gradually recovered and reached $7.10 by the end of August, but failed to maintain this level, ending the year at $7.42.

SNX began 2021 with a positive influx of buyers, helping it claim a new all-time high of $28.77 on 14 February. However, the token experienced a steady decline throughout the rest of the year, closing at $5.50.

In 2022, SNX reached a high of $8.11 in late March but was impacted by the depegging of the UST stablecoin and the collapse of the associated LUNA cryptocurrency. The token ended the year at $1.44, a year-on-year loss of nearly 75%.

As of 6 March 2023, SNX was trading at around $3.20, with a total supply of 315,256,998 tokens and a market cap of about $806 million, ranking it as the 62nd-largest crypto by that metric.

Looking at future projections, CryptoNewsZ predicts that SNX could reach $5.50 in 2023 and trade at $9.05 in 2025. CoinPriceForecast, on the other hand, forecasts SNX to close the decade at about $19.11. LongForecast predicts a less favourable outcome, with SNX potentially falling to $1.74 in 2024 and recovering to $2.27 by the end of 2025. Wallet Investor takes an even gloomier stance, projecting SNX to be worth a mere $0.335 by early March 2024.

It is important to remember that cryptocurrency markets are extremely volatile, and price predictions often end up being incorrect. As such, it is recommended that investors conduct their own thorough research and never invest more money than they can afford to lose.

Synthetix's use case and tokenomics

Synthetix is a decentralized liquidity provisioning protocol built on Ethereum and Optimistic Ethereum. Synthetic assets and associated products are collateralized by stakers via the Synthetix Network Token (SNX). When locked in a staking contract, SNX enables the issuance of synthetic assets (synths). This pooled collateral model allows users to perform conversions between synths directly with the smart contract, avoiding the need for counterparties. This solves the liquidity and slippage issues experienced by DEXs.

Synthetix liquidity powers a range of derivatives and on-chain financial instruments. There are two types of synthetic assets that protocols will integrate to create on-chain derivatives:

• Synthetic Assets: These are financial instruments that enable traders to track the price of an asset without holding the underlying asset. For example, a synthetic MKR token is the same price as a "real" MKR token, but without the voting rights of an actual MKR token holder.
• Synths: These are ERC-20 tokens that copy the price of an asset in the "real world" and bring it onto the Ethereum blockchain, giving the Synth all the properties of an ERC-20 token. Synths can be used to bet on the price of crypto assets, stocks, currencies, precious metals, and other assets.

Synthetix serves two essential functions:

• Creating Artificial Versions of Assets: Users can create artificial versions of assets like stocks or gold, which match the actual asset's price.
• Decentralized Exchange: Anyone can trade these synthetic assets and the platform's native SNX token.

To create new synthetic assets, users must lock up SNX tokens as collateral. Collateral means providing something to match or back the value of the new asset being created. The requirement to become a synth issuer is at least 750% of the value of the new asset as collateral in the form of SNX tokens. This high collateral requirement ensures that there is sufficient room for both asset prices (SNX tokens and the synth token) to oscillate without the risk of collateral falling below the price of the asset.

While users provide SNX as collateral, they can also stake those tokens and receive rewards. These staked tokens provide liquidity to run the decentralized exchange. Stakers are rewarded directly with trading fees collected from the Synthetix decentralized exchange. Currently, stakers are eligible to receive 0.30% of each transaction in fees. This is added to a staking pool, and when the pool is distributed, the percentage of the pool that goes to each staker corresponds to the percentage of the total staked SNX tokens they own.

In addition to exchange fees, SNX also provides income to stakers via an inflation schedule. As an inflationary currency, new tokens are created regularly and distributed among stakers. The current schedule is set to distribute an additional 160 million tokens by August 2023. The amount of new tokens received corresponds to the number of tokens already staked.

Pros and cons of investing in SNX

Pros

• SNX is a native token of Synthetix, a DeFi protocol built on Ethereum, which issues synthetic assets.
• SNX can be used to create new synthetic assets, or "synths", that mirror financial instruments in the real world, such as derivatives.
• SNX holders can stake their tokens and collect exchange fees.
• SNX tokens can be used as collateral to issue synths, similar to how ETH is used as collateral to issue DAI in the Maker system.
• SNX has a dedicated and active community, a solid team, and well-designed tokenomics, all of which increase the probability of the token's price going up.
• SNX has the potential to reach a wider audience as it allows users to trade a variety of assets, including gold, silver, crypto, forex, equities, and commodities, without actually owning the underlying assets.
• SNX solves the infamous liquidity and slippage issues common on decentralized exchanges.
• SNX does not require users to complete the KYC process, unlike traditional financial platforms.
• SNX has a total supply of 250 million, with a distribution schedule in place to increase the supply gradually until 2024. This controlled supply can help prevent a sudden drop in token prices.
• SNX has been working on integrating Layer 2 scaling solutions to address the scalability issues faced by the Ethereum blockchain.

Cons

• SNX is considered a risky investment, like all other cryptocurrencies.
• SNX may face regulatory challenges in the future as the Synthetix platform could potentially be targeted as an unregulated securities issuer.
• SNX may suffer from centralization issues as the platform is believed to be fully controlled by developers, unlike decentralized protocols such as Ethereum.
• SNX tokens are subject to price volatility, and their value can be affected by various factors, including market sentiment and the performance of the broader cryptocurrency market.

SNX's long-term future

SNX is the native token for the Synthetix Network, a decentralised system that allows users to mint, trade and hold a broad variety of derivatives. SNX is used as collateral against the synthetic assets that users create.

Synthetix was created in 2017 and managed by team leader and founder Kain Warwick, who had previously built Australia’s largest crypto-monetary payment network.

SNX has demonstrated strong growth and innovation in the decentralised finance (DeFi) space, attracting attention for its synthetic asset platform.

Synthetix has a good use case, well-designed tokenomics, an active community and a solid team behind it. All of these are prerequisites for success.

The Synthetix rebranding in 2018 rejuvenated the ecosystem, which has grown continually with multiple listed synths. Despite concerns over the stability of its stablecoins, SNX, the native token, is set to mark new records.

The Synthetix network experienced an enormous increase in user involvement and an associated spike in the value of a token of the SNX after an inflationary approach was introduced in March 2019.

The Synthetix token is compatible with Ethereum’s ERC20 standard. It is secured through PoS consensus.

The corporate mission of the Synthetix network is not to lead solely on the growth path. The corporate has planned big for the future, including various partnerships and collaborations. Being listed on eminent cryptocurrency exchanges like Coinbase and Binance, SNX offers a safe and dependable platform to its traders and enables lower fees, and a plethora of digital and synthetic assets to pick and choose.

The Synthetix platform is a decentralised system to issue synthetic assets, enabling users to mint, trade and hold a broad variety of derivatives like commodities, fiat currencies, equities, and possibly cryptocurrencies. Users may acquire a shorter and longer exposure to all assets on the platform and are now considered to be one of the De-Fi initiatives of great interest in the crypto space. Synthetix also provides binary options for buying a yes or no result over a predetermined timeframe.

The Synthetix token has achieved returns of 74% this year. The recent price momentum has been strong due to several positive developments. The total value locked in the network jumped to more than $1.5 billion. It was just $1 billion a few months ago. In comparison, it started with just $1 million in locked value.

The price predictions for SNX are mixed. Wallet Investor expects SNX's price to go down over the one-year period. It sees a decline of 12% for SNX during this period and expects it to remain flat in the next five years. It considers SNX to be a “bad long-term investment”.

Digital Coin Price is bullish on SNX and thinks that it can grow by 260% by 2025. Gov Capital expects SNX's price to grow more gradually and sees 15% gains in one year and 50% in five years.

According to Cryptopolitan’s price prediction, SNX will reach the $10 level by the fourth quarter of 2026. The last time SNX was seen at the $10 level was November 2021.

According to Cryptopolitan’s price prediction, SNX may not reach the $100 level in the next ten years. Considering the current market cap of the token, it seems like $100 is too far-fetched.

However, SNX is nearing an oversold position, which means the token is undervalued compared to its actual worth, which makes it a perfect time for buyers to enter the market. Considering the low price and a good future evaluation of $23 by the end of 2030, the asset is worth buying.

Synthetix is, just like all other cryptocurrencies, a risky investment. It does have a higher probability of going up than down because of the good use case, well-designed tokenomics, active community and a solid team behind it.

How Synthetix works

Synthetix is a software that allows users to mint new crypto assets that mimic both real-world assets (like the U.S. dollar) and crypto assets (like Bitcoin). It is one of a growing number of decentralised finance (DeFi) cryptocurrencies.

Synthetix is built on the Ethereum network and enables users to issue and trade synthetic decentralised assets. It allows users to mint, hold and trade a wide range of derivatives, including commodities, fiat currencies, and even stocks. It can also be used for certain cryptocurrencies, the most popular being Bitcoin.

Synthetix uses two cryptocurrencies to offer its synthetic asset minting service: its native cryptocurrency, SNX, and synths, which can mimic any asset. To generate synths, a user must acquire SNX and deposit it on the Synthetix platform. In return, Synthetix creates a new synth token of the user's choice. The value of SNX locked would then need to remain at or above 750% of the value of the synth created, according to software rules.

For example, if a user wanted to mint a synthetic U.S. dollar, they would deposit $1,000 worth of SNX cryptocurrency and receive $133 worth of sUSD. As SNX is a cryptocurrency, its value is determined by the open market. This means the amount of synths in circulation may change as the price of SNX fluctuates.

Synths are then able to track the value of other assets using special data feeds, called oracles, which enable users to gain exposure to gains or losses in those markets. This is known as collateralization.

Synthetix was initially governed by a non-profit foundation but it was dissolved in June 2020 and replaced by three decentralised autonomous organisations or DAOs. These DAOs are the mechanisms by which holders of the SNX cryptocurrency can now vote on changes to the protocol and make decisions about its future.

Frequently asked questions