Is Synthetix Network Token (SNX) a Good Investment?
With the prospects of 2020’s DeFi-fueled bull run, the community looks towards platforms that have jump-started the decentralized finance industry. In this case, is Synthetix Network Token (SNX) a good investment? Considered to be the project that started it all, many investors recently became interested in purchasing SNX swiftly and smoothly.
The blockchain-based derivatives liquidity protocol quickly became the backbone of DeFi this year. To help you invest in a project that provides one of the main infrastructures for decentralized finance, I wrote a simple overview of SNX and what it does. Moreover, you will also have the chance to read about where to buy the protocol’s token and how.
What is Synthetix Network Token (SNX)
Synthetix is both a protocol and an ecosystem for the rising DeFi industry. Basically, Synthetix offers ‘synthetic’ assets, which mirror financial instruments in the real world such as derivatives. Since DeFi aims to convert every legacy finance option into a decentralized form, Synthetic is crucial for the market’s development.
For a better understanding, derivatives are a class of assets that derive their value from underlying assets. These include swaps, options, futures, and other instruments. Do note that the derivative itself has absolutely no value and that its value is based on the asset it mirrors instead. Stocks, currencies, and bonds are one of the primary underlying assets that derivatives imitate. But to trade on multiple financial instruments, investors must use synthetics.
Synthetics are financial instruments composed out of more than one derivative. Therefore, you could trade both an option and a swap in one single contract. So in DeFi, an investor would use the Synthetix platform in order to be exposed to multiple instruments at the same time.
The SNX protocol provides not just an exchange for this asset class. On the Ethereum-based SNX, users can both mint and trade synthetics. By doing so, they can speculate on the value of real-world assets while staying in the cryptocurrency ecosystem. Synthetic assets are created in the form of ERC-20 tokens, called Synths.
To create Synths, users first have to own the SNX token. With it, they can create a variety of new assets supported by different underlying stocks, bonds, etc. Or if they wish, holders can also use SNX to collect fees and rewards from the exchange. However, creating and treading Synths is still the main goal.
The Synthetix Network protocol arrived relatively early to the cryptocurrency scene. Launched in 2019, the project progresses by far the most compared to any other platform. In less than a year, SNX matched with several liquidity partners. These include Framework, Parafi Capital, XBTO, DTC Capital, Spartan, and many more.
The main incentive for SNX holders is to use the Mintr dApp, where they can either mint new Synths or just stake their tokens and collect exchange fees. This way, the protocol ensures that holders are always incentivized to use their tokens for something, rather than just holding them in a wallet. While it does take a significantly large portfolio to stake enough SNX tokens to create a new Synth, investors showed that it is a worthwhile effort. As the protocol progresses, users can expect a more complex Synth offering.
Is Synthetix Network Token a Good Investment?
As you have seen, the SNX token is far more than just a simple utility token. Not only can users utilize SNX for creating new Synths, but they can also stake SNX to earn exchange fees over time. The token works similarly to the system Maker has, where ETH is used as a form of collateral to issue DAI. Interesting, right?
And it takes no technical skills to issue Synthetics or stake tokens. With the help of the official Mintr dApp, holders can interact with the protocol’s smart contracts directly. This helps the state of SNX’s circulating supply in one specific way. When a person wishes to unstake SNX, he must burn the minted Synth tokens to unlock the staked SNX tokens.
Based on this information, you know exactly what makes Synthetix Network Token (SNX) a good investment. The SNX token has unlimited potential throughout the entire platform. And as more people utilize Synthetic contracts, they will boost the project’s capabilities and token’s price. However, there is one bad aspect behind the Synthetix Network that bothers most investors.
According to some blockchain developers, the main roadblock SNX has is the protocol’s centralization. Experts believe that the platform is fully controlled by developers, especially when compared to protocols such as Ethereum. One more issue is that the project can potentially be targeted as an unregulated securities issuer. On that account, SNX investing can become limited in the future if governments and regulatory bodies decide to strike down on similar Synth-issuers.
Despite these fears, it is still too unlikely for regulations or not enough decentralization to become a strong problem for SNX holders. In the end, investors can decide by themselves if the protocol is worth investing in as the staking returns and fee rewards speak for themselves.
If you are interested enough to invest in this amazing project, now would probably be a perfect time. The SNX token recently rebounded from a monthly support level. Technical analysis experts believe that now may be a good moment to become a part of the Synthetix community. Since you may have issues figuring out where may be the perfect spot to buy, I decided to write a little guide just for you!
Where to buy Synthetix Network (SNX) Token?
Before you invest in the Synthetix Network (SNX) Token, it is important to first figure out which exchange supports SNX trading. But far beyond that, you also have to see which exchange is worth your time. If you want to be a successful trader, you must conduct all your trading activity on an exchange that offers three things: low fees, minimal KYC requirements, and a simple UI.
With these three aspects, you ensure that your trading experience is fast and simple. So, where would you do that? Based on my personal research, I discovered one intuitive cryptocurrency exchange that proved itself as a notable choice. The name of that exchange? Coinuma.
Based in Spain, the Coinuma cryptocurrency exchange offers an innovative approach to centralized exchanges. To attract liquidity to its platform, Coinuma rewards you with maker fees each time you create an order. Called inverse fees, the exchange offers 0.1% to all users whose new order is not instantly filled. Furthermore, you provide almost no important KYC information to the platform, ensuring that your identity remains anonymous. And the most important thing, Coinuma supports the Synthetix Network Token!
Coinuma account registration
Interested in trading SNX? Start now by creating an account on Coinuma. In this guide, I will show you a step-by-step process on how to invest in this innovative DeFi platform. Begin by visiting the official Coinuma exchange homepage and click on the ‘Start Now’ button. From there, you will be redirected to the registration page.
At this point, you only need to insert two important pieces of information: an email and a password. Note that you must create a secure and complex password to ensure that no one can steal your assets. Once you register, you will need to verify your account by visiting your email provider. Click on the verification link that Coinuma sent you and you are already done. Now, you are ready to trade. But first, transfer your cryptocurrencies to the new account on the exchange.
Depositing BTC or USDT to Coinuma
Before you trade the SNX token you must have a viable coin or token that can be traded for SNX. On Coinuma, the currently supported trading pairs are SNX/BTC and SNX/USDT. Therefore, you must deposit either BTC or USDT to your Coinuma account to successfully invest. To do so, simply visit the ‘Finances’ tab via the main homepage.
Here, you will find an extensive list of all the cryptocurrencies supported. But in this case, you only need Bitcoin and Tether. To deposit, find either of the two assets by using the search box. Click on ‘Deposit’ and Coinuma will show you the unique asset for each asset. Transfer your crypto by opening your crypto wallet and withdrawing. If you do not have any cryptocurrencies, you must trade any kind of fiat currency for Bitcoin via a P2P trading protocol or another centralized exchange.
Once you make the deposit, check the transaction hash to see how many confirmations it has. After a few minutes, enough miners will confirm your deposit for the assets to become available in the balance section at Coinuma. After you complete this step, feel free to visit the trading section to start trading.
Investing in SNX
You already arrived at the final step! To finally invest in the Synthetix Network Token, select the SNX trading pair based on which cryptocurrency you deposited. In the case that you deposited Bitcoin, pick SNX/BTC. You can directly visit the trading pair by visiting this link or this link for the USDT pair. The list of trading pairs should be available on the left part of the screen.
Upon selecting the correct trading pair, Coinuma will show you the trading screen for SNX. Here, you can see the current price of SNX, as well as historical price data. Now, decide whether you wish to purchase the tokens at the current price or buy lower. If you want to invest straight away, select a market order, and select the amount of BTC you wish to spend. If you believe that the price can go lower, click on the ‘limit order’ option and choose at which price you wish to buy SNX. If you make a market order, market participants will instantly fill it.
See? Using Coinuma to purchase SNX tokens was not hard at all. And with the help of my project overview, you had the chance to learn if the Synthetic Network Token is a good investment or not. If you found this guide easy and simple to follow, feel free to continue using Coinuma for all your other investments. Remember that the exchange rewards you for each order you make, bringing you a source of passive income every time you trade.
As I previously mentioned, you can also earn more money by staking SNX on the protocol’s official Mintr dApp. There, you can both stake and mint new synthetic assets. By staking, you earn a significant amount of the network’s exchange fees, which will further contribute to the platform’s growth.