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Synthetix is a token trading platform built on the Ethereum blockchain. The primary function of the platform is the issuing of synthetic assets. Synthetic assets are tokenized derivatives that mimic the value of another asset. This means that without holding assets such as gold or stock, a person can instead invest in a token representing the value and gain profits by trading in these tokens.
How Does Synthetix Work?
Synthetix works as a platform for exchanging tokens, representing real-life prices of commodities such as gold and silver. They use decentralized oracles, which are third-party decentralized systems that feed them with real-time data on the value of these commodities. These tokens are not backed by a real commodity, such as gold or silver bars.
These instruments are held in ERC-20 smart contracts ( also known as ‘synths’) as they are traded on the Ethereum blockchain system. Since they are traded on the Ethereum blockchain, you can deposit them on other Defi platforms such as Curve and Uniswap and liquify your assets or earn interest on them.
What Are the Use-Cases of Synthetix?
As a Trading Platform
Synthetix’s primary purpose is to act as a trading platform for tokens representing values of assets such as gold, stock, or silver. This allowed crypto holders to invest in real-life assets without holding them.
As a Method to Legitimize Cryptocurrency
Cryptocurrency is always looked at with a lot of speculation due to a lack of stability and exchange value. With Synthetix, cryptocurrency holders can now buy synthetic assets whose value is pegged to real-life prices of rather mature commodities such as gold and silver.
As an Avenue to Invest Cryptocurrency
With crypto constantly under the threat of being banned in several countries, investing a crypto asset into other secure commodity markets has become challenging. Through Synthetix, crypto holders can leverage the price stability of other markets by buying synths through crypto.
The future for Synthetix is looking up for the foreseeable future. The asset whose value started at less than $1 has now almost hit the $8 mark as of December 2021. There is a Prediction of the asset hitting possibly a possible all-time high of $28 by New Year. The future prediction for the asset has stayed bullish due to it still being in its infancy, with prices for 2022 reaching an all-time high of $36-40 before stabilizing or even dropping slightly as it enters 2023 at $35. According to financial pundits, predictions crown 2025 as the year that the asset sees its peak at $60. The market has shown great confidence following the performance of the asset. Investors should enter the market while maintaining its bullish nature before stabilizing or even falling off.