SNX is the native cryptocurrency for the Synthetix protocol, a platform that allows users to create their own “synthetic” assets. Those are assets that act like derivatives, meaning investors can gain exposure to any kind of asset like gold, bitcoin and euros without having to actually own it.

Synthetix is an open-source, decentralized finance (DeFi) protocol that is based on the Ethereum blockchain and is powered by its SNX token.

Synthetix started as Havven (HAV) in 2017 as a collateral-backed stablecoin issuer. In March 2018, Havven issued 60 million of the project’s total 100 million HAV tokens for $30 million in an initial coin offering. The remaining assets were allocated as follows:

In February 2021, SNX reached an all-time high of $28.77 following a $12 million funding round that included Coinbase Ventures, Paradigm Capital and IOSG Ventures. Unlike with traditional funding rounds, the venture capital firms elected to purchase SNX tokens directly from the platform’s treasury rather than distributing funds to the platform.

Synthetix announced the launch of its layer 2 integration with Optimism in July 2021. The move was highly anticipated in the community and it resulted in a jump over nearly 20% in SNX’s price to a one-month high above $13.

In September 2021, SNX price jumped 10% to $13.34 following Lyra’s announcement of a blockchain-based rewards program using Synthetix’s sUSD stablecoin. At the same time, the number of addresses holding SNX reached an all-time high of 100,000.

Powered by the SNX token, the Synthetix asset platform enables users to create synthetic assets of fiat currencies, commodities and other cryptocurrencies. Synthetic assets (“synths”) on a blockchain are tokens that are created to replicate some other asset, giving the synth holder the benefit of the asset without having to actually hold it.

To create a synth, the litepaper specifies that a holder would lock SNX into a smart contract worth 750% times the value of the underlying synth asset. Once the SNX is fully deposited into the smart contract, a new synth token is minted. Users who lock their SNX are rewarded SNX transaction fees for their participation in the Synthetix network and their continued overcollateralization of the synth token. Not only do SNX holders create and issue synth tokens, they also maintain the price of the SNX token by locking their SNX into smart contracts.

Unlike the case with other decentralized exchange (DEX) platforms, trading synths on Synthetix doesn’t require a counterparty. That’s because the overcollateralization of SNX creates a collateral pool that enables the conversion of a synth to another based on the exchange rate and the value of SNX.

Havven was founded in 2017 by Australian Kain Warwick. It changed its name the following year to Synthetix to better represent its ability to create more synthetic assets than its flagship USD stablecoin.

Following the transition to SNX, the Synthetix team introduced the “Synthetix Improvement Proposal” (SIP), which enables SNX holders to vote on changes to the protocol. SNX was deflationary until March 2019, when the community voted to incentivize the minting of synths using an inflation mechanism.