Synthetix is a decentralized synthetic asset issuance protocol built on Ethereum.

The scope for decentralized, on-chain derivatives trading is limitless, and Synthetix aims to become a leader in on-chain derivatives trading.

A synthetic asset consists of one or more financial derivatives whose value depends on the value of the underlying asset (financial derivative). Synthetic assets can provide trading in an actual asset without having to hold it, with advantages such as reducing friction when switching between assets (for example, from Apple stock to synthetic gold), increasing the accessibility of certain assets, and resisting censorship.

Synthetix is a decentralized synthetic asset issuance protocol that allows anyone to generate and trade synthetic assets through the protocol. The generation of synthetic assets is secured by Synthetix Network Token (SNX), which is locked in a smart contract to issue synthetic assets (Synths). This mortgage pool model allows users to perform conversions between Synth directly using smart contracts without the need for counterparties. Synthetix currently supports synthetic fiat currencies, cryptocurrencies (long and short) and commodities. Staking SNX is otherwise encouraged to hold and lock in a stake based on the user's contribution, with transaction fees generated on the Synthetix.Exchange proportionately paid to the holder of a synthetic asset that is issued by SNX. You do not need to own SNX to trade on Synthetix.Exchange.

SNX holders can cast sUSD by locking up their SNX as collateral through Synthetix smart contracts. The Synthetix Smart Contract adds the DEBT of the SNX mortgagor to the debt register when the SNX mortgage rate meets the casting conditions. The debt is the newly minted amount and is stored in sUSD. After assigning the debt to the mortgagor, the Synthetix smart contract instructs the sUSD Smart contract to issue a new amount, which adds the new amount to the total target Synth's supply, and then distributes the newly minted sUSD to the user's wallet. (The agreement stipulates that the sUSD is anchored at 1:1 with the U.S. dollar.) The new synthetic asset Synth destroys the original Synth (sUSD) before the smart contract processes its transactions, including reducing the sUSD balance of the wallet address and updating the total SUPPLY of sUSD; To determine the conversion amount (i.e. the exchange rate calculated according to the price of each currency); Collect a transaction fee, currently 0.3% of the transaction amount, and send the fee to the fee pool as sUSD (for all SNX mortgagor claims); The remaining 99.7% is issued by the smart contract of the target Synth (sBTC) and updates the wallet balance as well as the total sBTC supply. This process allows unlimited liquidity between Synths by eliminating the need for trading books or matchmaking. When the SNX mortgagor wants to exit the system or reduce the debt and unlock the SNX of the mortgage, the debt must be paid first. The process of reducing debt to zero is as follows: The Synthetix smart contract determines its debt balance and removes it from the "debt register"; Destroy the required sUSD amount and update the total sUSD supply as well as the sUSD balance in the user's wallet, while these SNX balances are set to transferable. (If the value of the collateral is lower than the original forged composite (sUSD), additional sUSD needs to be purchased in the secondary market.) In addition, the value of all synthetic assets in Synthetix is determined by a predictor that automatically pushes asset prices up the chain. There are five types of synthetic assets currently supported, Synths: fiat currencies, commodities, cryptocurrencies, reverse cryptocurrencies and cryptocurrency indexes.

Synthetic assets can be generated by collateral, and the platform trading fee dividends can be obtained by pledging, and the governance voting function can be used.

As SNX holders foundry or destroy Synths, the system keeps track of the debt pool (and the debt of each mortgagor) by updating the "cumulative debt increment ratio." This measures the proportion of the SNX mortgagor's debt in the debt pool when it was last minted or destroyed, as well as the change in debt caused by other mortgagors entering or leaving the system. The system uses this information to determine each mortgagor's debt at any future point in time without actually recording the change in each mortgagor's debt.

All synthetic assets (Synths) generated by this Agreement shall be secured by SNX as collateral to generate the corresponding synthetic assets (Synths). Synths are generated when SNX holders pledge their SNX as collateral using Mintr (a dApp that interacts with Synthetix smart contracts), which currently has a 600% mortgage rate. SNX mortgagors incur debt when they create Synth, and in order to exit the system (i.e., to unlock their SNX), they must destroy Synth to repay the debt. Depending on the exchange rate and supply of Synths in the network, the debt may increase or decrease independently of its original cast value. All SNX mortgagors become counterparties on all Synth exchanges; The mortgagor bears the risk of all debts in the system. They can choose to hedge against this risk by hedging outside the system. By assuming this risk, the mortgagor enables transactions to occur on Synthetix and receives a share of the transaction rewards generated by the system.

SNX holders are encouraged to hold SNX and foundry Synths in a number of ways: trading rewards. Every transaction fee made on Synthetix.Exchange is saved into the fee pool. SNX mortgagors may claim SNX per week in the fee pool on a pro rata basis as a transaction reward. The usual transaction fee is 0.3% (between 0.1% and 1%). (Fees are distributed weekly and can be applied for up to 6 weeks. Unclaimed fees will be added to the next fee pool.) New token rewards. The inflationary policy of the agreement will be to issue additional SNX tokens on a weekly basis, and these additional SNX tokens will be distributed pro-rata weekly to SNX mortgagees whose SNX mortgage rate is at least below the target threshold (currently 600%). (SNX earned through collateral is non-transferable during the first year of issuance.)

The model of [Collateral-backed asset + Predictor] of Maker, Kava and others is simple to use and liquidity is concentrated, but capital efficiency is not high, available leverage ratio is limited, external predictor is needed, and due to the lack of arbitrage cycle, the anchor cannot be maintained. UMA's [Priceless Contract] model is more capital efficient, but the predictor is slow and cannot be used for real-time cascading clearing. Opium's cash settled futures model is highly capital efficient and provides high leverage, allowing option makers to hedge positions and miners to lock in hedging maturities. But liquidity is spread over different maturities, requiring external prognosticators that do not necessarily track the index price for the duration of the contract. Synthetix's model of perpetual swaps based on debt pools. Traders do not need to wait for counterparties, do not need market makers, and are highly leveraged, but are capital inefficient and unfriendly to SNX pledgers.

Users can bet on many assets on Synthetix. Assets such as stocks, cryptocurrencies, precious metals and currencies can all be bet on Synthetix. Synthetix simulates real world assets, and The Synths (Synthetic Assets) simulates and brings real world assets to The Ethereum blockchain. The Ethereum blockchain gives Synth the properties of an ERC-20 token. However, owning Synth does not mean owning a real real asset. The Synthetix platform only allows its users to bet on the value of real-world assets, and it does not grant full or partial ownership of real assets.

Without liquidation, collateral worth less than the value of the synthetic asset could remain unclaimed for weeks without liquidation; Predictor price manipulation risk, as well as contract vulnerability risk, market price plunge risk.

Synthetic assets represent derivatives in the form of digital tokens, such as futures and options. In DeFi, any asset can be synthesized and introduced into the blockchain market, potentially of huge scale. Since the end of 2018, Synthetix has been transformed into a liquidity protocol for synthetic assets in the Ethereum network. So far, Synthetix has promoted the generation and trading of all kinds of assets on the chain. The trading platform has included fiat currencies (sUSD, sAUD, sEUR, sCHF), bulk commodities (sXAU gold, sXAG silver), Cryptocurrencies (sBNB, sBTC, sETH, etc.), reverse cryptocurrencies (iBNB, iBTC, iETH, etc.) and cryptocurrencies index (sCEX, sDEFI, sFTSE) and other five types of 45 assets. Tokens that track the price of such assets can be bought and sold within the Synthetix ecosystem, with a mix of collateral, collateral and transaction fees. Moreover, the Synthetix ecosystem has been transformed into the governance of DAO structure, and SNX token is the core of the ecosystem.

Synthetix, the head of the synthetic asset circuit, continues to lead in platform transactions and technology updates (2018 to date). Synthetic assets represent derivatives in the form of digital tokens, such as futures, options and other derivatives. Synthetic assets are tokenized of these derivatives. Thus, the protocol could theoretically mark any asset pair to the Ethereum blockchain for issuance and trading. In addition, through its debt pool mechanism, the agreement token SNX will be given value support and practical application scenarios such as transaction fee dividend and pledged issued assets. At the same time, at the end of July 2020, the management team will completely delegate power after nearly three years of steadily advancing the project, and the agreement will be transformed into the DAO community governance mode, effectively avoiding legal risks. It has a good performance in market potential, user base, management operation and technical iteration, which can be paid long-term attention to.