The price of SNX, the native token of Synthetix, a decentralized finance (DeFi) protocol that provides on-chain exposure to a wide variety of crypto and non-crypto assets, has rallied over 100% to start the week as Bitcoin rallies above $20,000 after falling to trade below $18,000 over the weekend.
Synthetix is popularly known as a layer-2 scaling solution and it recently collaborated with liquidity provider Curve Finance to create Curve pools for sETH/ETH, sBTC/BTC, & sUSD/3CRV, allowing investors to cheaply convert synths such as sETH to Ether (ETH).
The rally in the token price is not only attributable to positive sentiments around Bitcoin to start the week but also investors’ willingness to hold tokens instead of synths and the protocol also making over $1 million in trading fees, overshadowing Bitcoin’s (BTC) daily performance by five times.
What You Should Know
- Synthetix, one of the top Ethereum-based DeFi protocols has gotten the attention of the cryptocurrency community, after witnessing a sudden increase in trading activities and an unprecedented comeback of its in-house token, SNX, during an unforgiving bear market.
- As a direct result of the massive trading volumes, the SNX token, too, witnessed a momentary surge of 105%, bringing up its value to over $3 based on data from CoinMarketCap.
- The platform has seen its trading volume surge by over 1,000% in the last 24 hours and seen its volume to market capitalization ratio currently stand at 1.13. This shows that investors are piling in money to buy the token as the token has gone on bid despite the dismal performance last week.
- Sharing his thoughts on the development, Synthetix founder Kain Warwick, released a blog post that highlighted the difficulty of DeFi protocols to absorb Bitcoin’s volatility if the price drops even further.
- He stated, “This is critical to understand, Synthetix is an over-collateralised crypto-backed suite of stablecoins, it CAN implode.” However, he attributed Synthetix’s recent success to the responsiveness of the community to difficult circumstances and a willingness to experiment with novel mechanisms to provide stability.
- On May 31, Warwick revealed that SNX tokens contribute to 99% of his overall liquid portfolio.
- On the flipside, on-chain metrics revealed the intentions of shorting the SNX token across numerous exchanges.
- A twitter user, napgener, disclosed that 15 million SNX tokens maintain a short position on popular exchanges including Binance, FTX, ByBit and OKX.
While only 20 million SNX tokens exist on exchanges, the revelation points to an oncoming price hike, which might see SNX breach a value of $10. The Twitter user also alleged that the Celsius network is offering a 300% Annual Percentage Rate (APR) to users for shorting their SNX holdings. SNX currently ranks #90 with a market capitalization of $326 million.
