Updated: Dec 20, 2019
Synthetix is a crypto-backed network offering decentralized services, enabling developers to create on-chain synthetic assets. These Synths are backed by people holding SNX.
Synthetix Network Token (SNX) is an ERC 20 token, issued on the Ethereum platform. SNX was previously known as HAV, the ticker symbol for Havven. It was rebranded to SNX after Synthetix launched a fresh suite of crypto-backed asset tokens that are synthetic.
This guide will talk about the purpose for which, Synthetix Network Token is designed, the team behind it, the way it works and various uses and applications.
What Is Synthetix Network Token Designed For?
Synthetix Network is designed to be a decentralized payment network, where users are allowed to transact directly in a price-stable cryptocurrency. The platform is intended to allow on-chain synthetic assets (Synths), to be created for, effectively tracking the value of digital and real assets in the real world.
The team has already created certain Synths, including synthetic fiat currencies (sUSD, sAUD, sKRW) and synthetic commodities like gold (sXAU), supported by the platform. However, the team backing SNX hopes to create more complex assets in the future, such as equity indices.
Who Is the Team Behind Synthetix Network Token?
Synthetix was founded by Kain Warwick, in 2017. Warwick is also the co-founder and CEO of Blueshyft, which is a retail payment network spread across 1,250 locations throughout Australia.
Blueshyft has now managed to become the largest payment gateway, involving cryptocurrency in Australia. It processes tens of millions of dollars in transaction size daily.
Major backers of Synthetix Network include BlockAsset, BlockTower, GBIC, Astronaut Capital, and AlphaBlock Investments.
How Does Synthetix Network Token Work?
Synthetix Network works on a simple idea of providing stability and collateral, by ensuring that those using the stable coin are required to pay fees to the participants, involved in collateralizing the network. It is the collateral providers, who are in control of the money supply. All fees paid through SNX tokens are distributed proportionately among each individual’s performance, in terms of stabilization.
In this manner, Synthetix Network rewards the suppliers, offering stability and charges to the people who demand it. Synthetic assets primarily allow users to gain the benefit of holding real-world precious assets, without actually possessing it. There are many benefits to holding Synths, such as users who don’t have to worry about custody (like in gold) or liquidity (such as a foreign currency).
However, the primary benefit of holding Synths, as claimed by the team, is that the user gets all the benefits of (not) holding the underlying asset while enjoying the advantages of a decentralized platform.
Synthetix Network Tokens (SNX) is required by holders to enter smart contracts and mint an equal value of Synths. Currently, to protect the system, a user is required to lock in five times more SNX than minted Synths, into the smart contract.
What are Current and Future Applications of Synthetix Network Token?
SNX was first used as a stable coin. It could allow users to track the value of real-time fiat currency, without actually requiring holding the currency in hand. A major benefit to holders in such transactions is that the token allows value to be transferred, in a widely accepted denomination, which is agreed upon, without having to rely on any third party to hold the denomination as collateral.
Synthetix Network has opened the gates for the average user to feel comfortable in dealing with cryptocurrency, and to shift away from fiat currency. There are already wide-scale decentralized marketplaces in effect, involving SNX and offer users the confidence to comfortably possess any crypto asset. Users can convert fiat into SNX denominations, and then use it to pay for goods and services on the many decentralized platforms.
SNX is a highly tradable crypto commodity since it can be converted into numerous flavors, without involving counterparty. The Synthetix Network essentially acts as counterparty. This means that someone who is looking to trade sUSD with sAUD doesn’t necessarily have to find someone, holding sAUD to trade with.
While the platform was originally conceived as a stable coin that was singularly focused on USD tracking, it has since blossomed into other fiat currencies and precious commodities. The potential for SNX is far greater than what the team is ready to exploit.
It is believed by crypto experts that the use case of multi-currency stable coins, such as SNX that can be freely converted into various currencies, is much higher than single currency stable coins.