key takeaways
- Synthetix’s native utility and governance token SNX surged nearly 70% today after the DeFi platform became the third largest protocol by trading fee consumption in crypto.
- The notable price increase can be attributed to the strong fundamentals of Synthetix, in particular, the significant increase in trading volume and revenue.
- Over the past seven days, Synthetix has averaged over $100 million in trading volume in a single day, topping a record-breaking $396 million on Sunday.
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Decentralized synthetic asset platform Synthetix led a relief rally in the cryptocurrency market today, correcting nearly 100% from $1.57 to $3.16 to $2.88.
Synthetics boom on market boom
One of the earliest DeFi protocols seems to be making a comeback.
Synthetix, a decentralized platform for mining and trading artificial property The cryptocurrency market has led a relief rally today. Its utility and governance token SNX jumped nearly 70% on the surge, far outpacing the overall crypto market, which rebounded around 9% that day. Aave and MakerDAO, two other DeFi projects often described as “blue chips” alongside Synthetix, also posted double-digit gains as the market showed signs of life for the first time in weeks.
Synthetix was one of the first DeFi projects to be launched on Ethereum, providing users with a way to trade tokenized financial instruments that track the price of stocks and other assets such as gold. As with many major cryptocurrencies, Synthetix also supports Synthetic Gold and Tesla shares.
While synthetic assets are the bread and butter of the protocol, recent price action seems to be fueled by new fundamentals bolstering the project, especially the success Synthetix has launched with a new atomic swap function. SIP-120 offer, By integrating with Curve Finance, the largest decentralized exchange for equal-valued assets, and decentralized exchange aggregator 1 Inch, this feature helps users execute large-scale trades between different asset classes with minimal slippage. Although this is effective from the beginning of November 2021, Synthetix has upgraded to Atomic Swap. SIP-198 In May to significantly improve the user experience. This allowed users to execute large swaps between WBTC and ETH at 1inch, for example, by taking advantage of Synthetix’s zero-slippage trades and Curve’s deep liquidity and low fees.
Since Synthetix has implemented this upgradeAtomic Swap has seen an increase in adoption, accounting for most of its volume on Curve, 1inch, fixed forex, and other aggregators and integrators. As a result, the protocol trading volume The rally has surged over the past week, consistently averaging over $100 million in daily trading volume and hitting an all-time high on Sunday, with daily volume reaching $396 million.
per data cryptofees.infoThe increase in trading volume has propelled Synthetix to third place among protocols that charge the highest trading fees, beating the likes of Aave, BNB Chain and Bitcoin for the day on Sunday.
An increase in trading fees also means an increase in the revenue or profits of SNX Stackers, which has staking yield 60.2% APY for the token, of which 12.4% comes from trading fees alone. according to the data of token terminalSynthetix’s price-to-earnings ratio, calculated by dividing SNX’s fully diluted market capitalization by the protocol’s annual revenue, is currently about 7.7x after falling 74.7% over the past week. A low price-to-earnings ratio may indicate that an asset is undervalued, earning more in revenue on a per-token basis.
The DeFi space seems to have seen a correction in fundamentals by value investors, although Synthetix has some way of returning to its peak. The SNX is currently trading at $2.86, which is almost 90% lower than the all-time high of $28.50 recorded in February 2021.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.