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.

Synthetix (SNX) is a decentralised finance (DeFi) protocol built on Ethereum that allows users to create and trade synthetic assets, known as “Synths.” These Synths mirror the value of real-world assets such as cryptocurrencies, fiat currencies, commodities, and indexes. The system uses the SNX token as collateral to back the creation of these synthetic assets. When users stake SNX, they can mint new Synths, which are then freely tradable on decentralised exchanges. The value of the Synths is maintained through an over-collateralization mechanism and a system of smart contracts that track asset prices using reliable oracles. This structure allows users to gain exposure to various assets without actually owning them, providing liquidity, accessibility, and diversification within the DeFi ecosystem.