Synthetix Surges 70% As Trading Volumes Explode
Crypto Briefing | Jun 21, 2022 01:34AM ET
Synthetix has become the third-largest protocol in crypto by trading fees consumed, and investors seem to have noticed. The decentralized synthetic asset platform Synthetix led a relief rally in the cryptocurrency market today, surging around 100% from $1.57 to $3.16 before correcting to $2.88. One of the earliest DeFi protocols looks like it’s making a comeback.
Synthetix, a decentralized platform for minting and trading synthetic assets has led a relief rally in the cryptocurrency market Monday. Its utility and governance token SNX jumped by around 70% on the bounce, significantly outpacing the total crypto market, which has rebounded by around 9% on the 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 launch on Ethereum, offering users a way to trade tokenized financial instruments that track the price of other assets such as stocks and gold.
Alongside a host of the leading cryptocurrencies, Synthetix also supports synthetic gold and Tesla (NASDAQ:TSLA) stocks.
While synthetic assets are the protocol’s bread and butter, the recent price action seems to be influenced by newer fundamentals strengthening the project, specifically the success Synthetix has seen with a new atomic swap function introduced with the SIP-120 proposal.
By integrating with the largest decentralized exchange for like-priced assets, Curve Finance, and the decentralized exchange aggregator 1inch, the feature helps users execute large-scale trades between different asset classes with minimal slippage.
While it’s been in effect since early November 2021, Synthetix upgraded atomic swaps with SIP-198 in May to significantly improve the user experience. This allowed users to execute large swaps between, for example, wBTC and ETH on 1inch in a single transaction by taking advantage of Synthetix’s zero-slippage trades and Curve’s deep liquidity and low fees.
Since Synthetix implemented the upgrade , atomic swaps have seen increasing adoption, accounting for most of its volume on Curve, 1inch, fixed forex, and other aggregators and integrators.
Get The News You Want
As a result, the protocol’s trading volumes have surged over the last week, consistently averaging above $100 million in daily trading volume and reaching an all-time high on Sunday, with the daily volume topping $396 million.
A spike in trading fees also means a surge in revenues or profits accrued to SNX stakers, which has propelled the staking yield for the token to 60.2% APY, with 12.4% of that coming from trading fees alone.
According to data from Token Terminal , Synthetix’s price-to-earnings ratio, calculated by dividing the SNX’s fully diluted market capitalization by the protocol’s annualized revenue, is currently around 7.7x after falling 74.7% over the last week.
A lower price-to-earnings ratio can indicate that an asset is undervalued, earning more in revenues on a per-token basis.
The improving fundamentals seem to have been noticed by value investors in the DeFi space, though Synthetix has some way to go to return to its peak. SNX is currently trading for around $2.86, down around 90% from the all-time high price of $28.50 recorded in February 2021.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.