Derivatives trading in Defi permits investors to get exposure in a range of asset types. Synthetix is a decentralized asset issuance protocol on Ethereum.
Synthetix helps in the creation of synthetic assets by staking SNX. These Synths are traded for each other directly using the Synthetic smart contracts on the Dapps like the Kwenta.
There are 2 kinds of rewards received by the SNX stakers. The rewards are created by the inflationary monetary policy. There are also Synth exchange rewards that are denominated as sUSD and it is generated by all of the peer-to-contract Synth Trades.
It is important for all the Synths to be backed by staked SNX at a specified target collateralization ratio. This is configurable by the community governance. The SNX stakers will have to manage their own ratio to be above the target collateralization. They will be able to do this by burning sUSD to increase their minting of sUSD. Thus, they will be able to collect weekly rewards.
Any time the SNX stakers stake, they are creating a debt. The debt accumulates as sUSD and anytime the price fluctuates according to the gains and losses made by other Synth holders the value fluctuates. When the value of the Synth appreciates in value, the gains are shared proportionately among stake holders. Before the stakers can unlock their staked SNX, they need to repay their debts.
SNX users stake their SNX to earn SNX rewards every week. SNX users will be able to trade a vast range of assets which are unique to Ethereum like Unique Indices, Forex, Traditional Equities, cryptocurrencies, commodities and short positions.
Synthetix (SNX) in Trading
The unique trading features are infinite liquidity, zero slippage, and Synthetic futures. Every kind of trading is a peer to peer contract done using Synthetix Protocol’s pooled liquidity model. There is no counterparty matching and therefore infinite liquidity for the traders.
Traders need not worry about being affected by slippage. The sooner the futures is built on the Synthetix Protocol it will get supported on the Kwenta providing for perpetual future contracts on the non-custodial Permissionless platform.
And, all of these happen without the limits of a centralized trading system. There are no trading pair restrictions. Kwenta makes the entire thing possible without creating an account without deposits or withdrawals and without surrendering custody of funds. There is no need for the traders to worry about p2p trading models like liquidity, slippage and order books.
With just a web3 wallet with ETH for gas users can acquire sUSD or any other Synth and make use of Kwenta to trade a wide range of Synths.
