Synthetix Surges 70% as Trading Volumes Explode


Keys to take

  • Synthetix SNX’s native government and utility token increased by about 70% today after the DeFi platform became the third largest protocol when trading rate consumption in cryptography.
  • The significant increase in prices can be related to the strengthening of the fundamentals of Synthetix and, in particular, to the significant increase in sales volumes and revenues.
  • Over the past seven days, Synthetix has consistently surpassed trading volume of $ 100 million a day, surpassing $ 396 million on Sunday.

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Synthetix’s decentralized synthetic asset platform today led a relief rally in the cryptocurrency market, rising around 100% from $ 1.57 to $ 3.16 before correcting at $ 2.88.

Synthetix increases in market rebound

One of the first DeFi protocols seems to be coming back.

Synthetix, a decentralized platform for coinage and trading synthetic assets today led a major demonstration in the cryptocurrency market. Its SNX utility and government token increased by around 70% on the rebound, significantly outpacing the total cryptocurrency market, which recovered by around 9% on the day. Aave and MakerDAO, two other DeFi projects often described as “blue chips” alongside Synthetix, also recorded 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 launch on Ethereum, offering users a way to trade with tokenized financial instruments that track the price of other assets such as stocks and gold. Along with a number of leading cryptocurrencies, Synthetix also supports synthetic gold and Tesla shares.

Although the synthetic assets are the bread and butter of the protocol, the recent price action seems to be influenced by the new fundamentals that strengthen the project, in particular the success of Synthetix with a new atomic exchange function introduced with SIP-120 proposal. By integrating with the largest decentralized exchange for similarly priced assets, Curve Finance, and the 1-inch decentralized exchange aggregator, the feature helps users conduct large-scale transactions between different asset classes with minimal slippage. Although it has been in effect since early November 2021, Synthetix has updated atomic exchanges with SIP-198 in May to significantly improve the user experience. This allowed users to run large exchanges between, for example, wBTC and ETH in 1 inch in a single transaction, leveraging Synthetix’s zero-slip operations and Curve’s deep liquidity and low rates.

Since Synthetix implemented the update, atomic exchanges have experienced increasing adoption, accounting for most of their volume in Curve, 1 inch, fixed currency, and other aggregators and integrators. As a result, the protocol trade volumes they have risen over the past week, steadily surpassing $ 100 million in daily trading volume and reaching an all-time high on Sunday, with daily volume exceeding $ 396 million.

Synthetix trading volume per day (Source: Dune.com)

By data of cryptofees.infothe increase in trading volume also pushed Synthetix to third place among the protocols that consume the most commercial rates, surpassing the likes of Aave, BNB Chain and Bitcoin for Sunday.

An increase in trading rates also means an increase in accumulated revenue or profits for SNX stakers, which has driven the betting performance for the APK 60.2% token, with 12.4% of that coming only from trading commissions. According to data from Tab terminal, Synthetix’s price-earnings ratio, calculated by dividing SNX’s fully diluted market capitalization by the protocol’s annualized revenue, is currently around 7.7 times after falling 74.7% over the past week. A lower price-to-earnings ratio may indicate that an asset is undervalued, earning more revenue per token.

Valuable investments in DeFi space seem to notice the improvement in fundamentals, although Synthetix has a long way to go to return to its peak. SNX is currently trading at about $ 2.86, 90% less than the all-time high of $ 28.50 on February 2021.

Disclosure: At the time of writing, the author of this piece had ETH and several other cryptocurrencies.

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