Altcoin SNX was trading at 4.62 cents on April 1, but has now surged to 31.8 cents, with the market cap exceeding $33 million.
That’s fast closing in on the $39 million Synthetix Exchange (formerly known as Havven) raised in Australia’s most successful ICO last year.
The synthetic altcoin project doubled in price in less than a day after it was added to the DeFi Pulse leader-board at number four, with $18.7 million worth of US Dollars locked up.
That’s three places higher than Lightning Network which has just $8.8 million locked up – and Synthetix Exchange’s figures have now increased to $23.5m locked up which could put them in 3rd place.
Synthetix Exchange has also blown past its own internal volume projections by a factor of five.
The platform is still essentially in beta to iron out the bugs and launched with about $5000 a day trading volume.
Internal projections in April suggested about $2 million worth of volume for the month of June.
But in May alone they came in at just a shade under $11 million in volume, with several days towards the end of the month topping $1 million in 24 hours.
Not bad for a project that doesn’t even intend to start a marketing campaign for another three months.
Formerly known as the stablecoin project Havven, Synthetix radically altered direction last year and now offers a range of ‘synthetic’ derivatives that offer an easy way to profit from market price moves without actually owning the underlying asset.
The headline product is Inverse Bitcoin – possibly the world’s easiest way to short Bitcoin.
Simply buy iBTC, and for every dollar that Bitcoin drops, iBTC holders make a dollar. There are inverse tokens for Ethereum and Binance Coin too.
Founder Kain Warwick – who is also behind BlueShyft which has processed $100 million in payments for exchanges including Binance Lite and CoinSpot – said the price rise was a mixed blessing.
“We’re still below our original (ICO) price so we need to be realistic,” he said, pointing out they were still about 20% below ‘first day pricing’.
“We took the long view from the beginning that we wanted to deliver something really interesting and to have that validated has been great.
“Price action in crypto somewhat determines what people think of a project, but the project is no better or worse than a month ago, it’s just the market has caught up. We’re cautiously optimistic.”
A decentralized project based on Ethereum, Synthetix offers stablecoins, long and short positions on BTC, ETH and BNB as well as synthetic commodities. Tokens representing the price of Apple and Tesla are in the works.
Warwick says the exchange blends the best aspects of Bitmex and Uniswap by combining derivatives with a pooled collateral model. Users can swap between synthetic assets without requiring a counterparty.
Token holders purchase SNX and then ‘stake’ it in exchange for fees and SNX dividends – about 1.4 million SNX is paid out per week to those who stake it, on its way to a total supply around 250 million.
Around 73.5% of the supply is currently staked.
The recent surge in popularity has created a few headaches.
“There’s a lot of rough edges with the project, and we thought we’d have more time before project jumped up so much,” he said.
The user documentation is pretty light on, and their dApps won’t connect to Ledgers if you’re using a Chromium based browser.
And they need to refine their risk management strategies, given they offer complicated financial products that are interacting with unpredictable investor behavior and market forces.
To take one example, when the Inverse Bitcoin token was issued Bitcoin was around $5000. Gains and losses were both capped, with forced liquidation at $2500 and $8000.
Within three weeks BTC had blown past eight grand.
“We expected it to last three months, but crypto can exceed expectations very quickly. That’s why a risk management strategy is so important. ”
It took about three weeks to get another iBTC token up – but with optimism for the BTC price sky high at present, it hasn’t seen a lot of market interest just yet.
The team are also hard at work fixing the perverse incentives that has seen their US dollar stablecoin slip to 94 cents.
“We’ve tried to be as clear as possible, this is experimental and the more complex the system, the more experimental it is. It’s hard to understand complexity in a real world system, you can model as much as you like but people do irrational things and you may not get results you expect.”
Liquidity of SNX remains an issue, with only about $80,000 changing hands each day on mainstream exchanges. Warwick says the best place to buy it is UniSwap (number five on DeFi Pulse) which has about $1.2 million available.
Warwick says having the project added to DeFi Pulse helped visibility, but people shouldn’t read too much into the fact Synthetix is three places higher than Lightning.
“I think it speaks more about Lightning than it does about us. But it seems bizarre that only $8m or $10m is locked in the Lightning Network, it’s not much and it really should be a lot higher.
‘But 2% of all Ethereum is in Maker, so that’s one of the big success stories in adoption.”
Warwick says Synthetix.io now has enough users testing out the platform, which will provide essetial data to refine the products further before pushing it out to the wider public.
“We can improve the platform significantly and obviously want to go 10x from there,” he said.
DISCLAIMER: The author (now) owns SNX tokens.
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