Synthetix (SNX) is a decentralised finance (DeFi) protocol that allows users to create and trade synthetic assets on the Ethereum and Optimism networks. These synthetic assets, called “Synths,” track the value of real-world assets such as fiat currencies, cryptocurrencies, commodities, or indices. This means traders can gain exposure to different asset classes without owning the actual underlying assets.

The system is powered by the SNX token, which users stake as collateral to mint Synths. When SNX is locked in the protocol, it creates debt that corresponds to the value of the issued synthetic assets. The network uses oracles, primarily powered by Chainlink, to provide accurate real-time price data for all Synths. This ensures each synthetic asset remains pegged to its real-world counterpart.

Stakers earn rewards through trading fees generated on the Synthetix Exchange and from SNX inflationary rewards. However, they must also maintain a healthy collateralization ratio to avoid penalties or liquidation.

Synthetix operates without traditional intermediaries, offering open access to global asset exposure in a fully decentralised environment. It serves as a foundation for various DeFi applications, including derivatives trading and yield farming. Overall, Synthetix (SNX) combines blockchain transparency, collateralised debt mechanisms, and oracle technology to create a robust ecosystem for trading synthetic assets efficiently and securely.