Synthetix price prediction: What is synthetix (SNX)?
By Peter Henn
Updated
Synthetix offers a different way to trade in cryptocurrencies and other commodities. So what is synthetix (SNX)?
Let’s take a look, and examine some of the Synthetix price predictions that were being made on 1 December 2022, too.
Synthetix explained
Synthetix is a decentralised finance (DeFi) protocol that gives people the opportunity to trade a wide range of cryptocurrencies, fiat currencies and commodities via tokenised derivative assets known as synthetic assets or “synths”. Synths do not require the user to hold the underlying asset.
The platform is built on the smart contract blockchain Ethereum (ETH) and the layer-2 scaling solution Optimism. Optimism exists as a separate system that is linked to Ethereum, but not actually part of it. The idea is that it allows people to carry out transactions on a separate layer before putting them back onto the main blockchain, thus – at least in theory – making things quicker and cheaper.
The protocol was originally called Havven, rebranding to Synthetix in 2018.
Synthetix says on its website that the “platform enables the creation of on-chain synthetic assets (Synths) that track the value of assets in the real world”.
It adds: “Some examples of assets that the platform supports are synthetic fiat currencies (sUSD, sAUD, sKRW, etc.), synthetic commodities such as gold (sXAU), as well as more complex assets such as equity indices.”
Users have to stake Synthetix’s native token, SNX, as collateral to borrow assets on the protocol. According to Synthetix’s litepaper, synths are currently backed by a 400% collateralisation ratio.
For example, a user will have to deposit $4 worth of SNX to borrow $1 worth of sUSD. Ether (ETH) deposits are also accepted as an alternative form of collateral to mint synths at a collateralisation ratio of 150%.
Synthetix aims to solve the liquidity and slippage issues experienced by traders on decentralised exchanges (DEXs) and centralised exchanges (CEXs). It does so with the help of its mechanism, where all the synths borrowed from the protocol are pooled together into one debt pool.
How does Synthetix work?
A user who has borrowed $1 worth of an asset does not pay $1 to redeem their staked SNX. Instead, the user has to pay their “share of the debt pool” at the time of redemption.
For example, if the protocol’s total debt pool, which consists of all assets borrowed on Synthetix, is worth $100,000, and User A has borrowed $1,000 of sUSD, User A will have to pay 1% of the debt pool to redeem their SNX deposit.
“The value of debt pool varies, as it’s the summary of all the minted virtual assets, comprising not only sUSD but also sBTC and other assets. It could be more than $100,000 or less, at any point of time. So borrowing sUSD is not exactly borrowing; it’s more like trading against the other borrowers,” explained Singapore-based DeFi protocol investment group Serenity Fund in a Medium post.
“With this feature, a user can swap his virtual assets any time to another virtual asset, with zero slippage, eg, from sUSD to sBTC. Zero slippage is due to the fact that users swap these virtual assets not against any individual or market maker; rather, it’s the user himself repaying partially his share of debt pool, and then borrowing the same amount in another asset. Only the composition of the debt pool changes; the value of the debt pool does not change.”
A number of DeFi protocols use Synthetix’s mechanism. Kwenta, a decentralised exchange, uses Synthetix’s debt pool to facilitate trading, while Lyra is an automated market maker that uses Synthetix for better pricing and liquidity.
Crypto research firm Messari said: “Synthetix has created a unique building block which provides DeFi with scalable access to liquidity for a nearly infinite variety of assets. Builders are taking advantage by creating products on top of the protocol to expand the financial products native to DeFi.”
Every blockchain-based system needs its own native token, and Synthetix has the conveniently named synthetix token, also known by the ticker handle SNX. This is used for staking, with holders able to stake the token in return for synthetic assets. It is also used for governance purposes, with people who hold SNX able to vote on changes to the network.
Synthetix was founded by Kain Warwick, an Australian crypto entrepreneur who set up the system in December 2016. Since it is based on the Ethereum blockchain, it is a token rather than a coin. You might see references to such things as the “SNX coin” or an “synthetix coin price prediction” but, technically speaking, these terms are incorrect.
Synthetix price history
Now let’s cast our eyes over the SNX price history. While past performance should never be taken as an indicator of future results, knowing what the token has done in the past can give us some much-needed context when it comes to either interpreting a synthetix price prediction or making one of our own.
When synthetix first came onto the open market in March 2018, it was worth about $0.45. It was around this time that the market entered a so-called crypto winter, following the bursting of the bubble that characterised the end of 2017 and the start of 2018. SNX was affected by the slow and low prices over the next two years or so, with the worst moment coming on 5 January 2019, when it fell to an all-time low of $0.03258.
At the start of 2021, the crypto market really started booming, and SNX was able to capitalise on the growth caused, at least in part, by American Covid-19 stimulus cheques entering the cryptoverse. The token reached an all-time high of $28.77 on 14 February 2021.
There was, inevitably, a fallback after that, but the crypto still performed well enough, until the great crypto day crash of 19 May 2021 saw it sink back down. The summer of 2021 was a weak time for crypto but, while SNX dropped below $7 in June, there was a recovery of sorts in July, with SNX topping $10 at some points in the middle of the month.
Things were back on a more even keel in August, as the market benefited from a growing interest in non-fungible tokens (NFTs). Following that, though, not even bitcoin (BTC) reaching new heights in November could arrest a decline and SNX closed the year at $5.50.
In 2022, SNX has, on the whole, performed poorly. While the token started the year looking positive, reaching $7.43 on 5 January, it sank to a low of $3.36 on 24 February 2022 after Russia’s invasion of Ukraine. There was some recovery, with a bullish phase in late March culminating in a periodic high of $8.11.
In May, the depegging of the UST stablecoin, which caused the collapse of the associated LUNA cryptocurrency, saw the SNX price drop to $2.22 on 12 May. June saw the cancellation of withdrawals on the Celsius (CEL) crypto platform confirm the bearishness of the crypto market and, on June 18 2022 SNX fell to a periodic low of $1.45, its worst price for about two years.
After that, there was some recovery, with the token reaching a high of $4.33 on 11 August. Since then, though, the price has fallen back down and by 7 November it was worth just $2.77. But if investors thought it was time for the token to make a fight back, they were wrong, because the collapse of the FTX (FTT) exchange saw the market crash and SNX sink to a low of $1.55 on 14 November.
There was some halting recovery after that, with the token reaching a high of $2.01 on 6 and 7 December, but after that it fell down again to close the year at $1.44, a year-on-year loss of nearly 75%.
2023 started positively, with the token breaking past $2 on 14 January and hit $3, its best price since the middle of September, on 8 February. There was then a slight fallback, but the price then recovered to $3.23 on 5 March in the wake of the news that a new version of the protocol had launched. On 6 March 2023, SNX was worth about $3.20.
At that time, there were 253,102,048 SNX in circulation out of a total supply of 315,256,998. This gave the token a market cap of about $806, making it the 62nd-largest crypto by that metric.
Synthetix price predictions
Let’s now take a look at synthetix price predictions as they stood on 6 March 2023. It is important to keep in mind that price predictions, especially when it comes to a commodity as potentially volatile as cryptocurrency, are often wrong. We also need to mention that long-term crypto price forecasts are often made using an algorithm, which can change at a moment’s notice.
CryptoNewsZ made synthetix crypto price prediction. The site thought that the token could reach $5.50 in 2023. The site argued that SNX could be worth $6.75 in 2024, before it made a synthetix price prediction for 2025 that thought the token could trade at $9.05 that year. The site also argued that it could trade at somewhere between $9.50 and $10.54 in 2026.
CoinPriceForecast made an synthetix price prediction for 2023 which said synthetix could get to $7.40 by the end of the year before hitting $8.56 the following year and $11.10 the year after that.The site thought that SNX could close the decade at about $19.11.
Meanwhile, LongForecast had a synthetix token price prediction which argued that the token could close at $3.70. The site said that 2024 could be a bad year, with SNX potentially closing the year at $1.74, before experiencing something of a recovery to $2.27 in December 2025. The site went on to suggest that, by December 2026, the token could fall to $2.03 before recovering to $3.26 in April 2027.
Finally, Wallet Investor was a lot more gloomy and bearish in its SNX price predicition. It said that, by early March 2024, SNX could be worth a mere $0.335.
When considering an SNX token price prediction, it is important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin or token’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and algorithm-based forecasters can and do get their predictions wrong.
If you are considering investing in cryptocurrency coins or tokens, we recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns, and never trade with money that you cannot afford to lose.
FAQs
Is synthetix a good investment?
It is hard to say. A lot will depend on how the market as a whole performs going forwards, as well as what new developments become available on the Synthetix platform.
Remember, you should always carry out your own thorough research before making an investment. Even high market cap cryptocurrencies have proved vulnerable to the current bear market, so investors should be prepared to make losses and never purchase more than they can afford to lose.
Will synthetix go up or down?
It is difficult to tell. While some sites like CryptoNewsZ were positive about the future as of 6 March 2023, others such as WalletInvestor struck a more downbeat note. It is important to remember that price predictions often end up being wrong, and that prices can go down as well as up.
In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether SNX is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors.
Keep in mind that past performance is no guarantee of future returns, and never invest money that you cannot afford to lose.
How many synthetix are there?
According to data from CoinMarketCap, as of 6 March 2023 there were 253,102,048 synthetix (SNX) tokens in circulation, out of a total suppy of 315,256,998.
Should I invest in synthetix?
Before you do so, you should do your own research, both on the market as a whole and on synthetic tokens in particular.
Ultimately, though, this is a question that you will have to answer for yourself. Before you do so, however, you will need to conduct your own research. Never invest more money than you can afford to lose, because prices can go down as well as up.
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