Created by Kain Warwick in 2017, the Synthetix protocol is an Ethereum based derivatives liquidity protocol for issuing synthetic assets. Synthetix finds its origin in the word “synthetics” and as the literal meaning suggests, it is a copy of real-world assets.
They offer two types of tokens:
- Synth: Synths are financial assets in the form of ERC-20 smart contracts that allow you to access the price of an external asset without the need of holding on to that asset. For instance, the price of U.S. dollars is tracked by the sUSD token. Thus they are similar to the derivatives in legacy finance.
- SNX: Synthetix Network Token (SNX) is Synthetix’s native token that provides collateral against issued Synths.
Connecting Your Synthetix Account To ZenLedger
- To import your transactions, log in to Synthetix and copy your receiving address.
- Paste the receiving address you copied from Synthetix into the wallet address field in ZenLedger.
- Select the proper coin from the dropdown list.
- Select if the wallet is based in the USA or not.
- Then hit add coin.
How To Generate Synthetix Crypto Tax Forms?
After you’ve connected your Synthetix account, completed your import, and confirmed that your transaction information and tax liabilities are correct, simply click to download your forms!
How To Use Synthetix DeFi?
1. Create An Account
Start by creating an account with a crypto broker that will support the purchasing and selling of SNX tokens. You can place an order on the broker’s trading platform where you can buy and sell tokens and coins. You might also be charged a fee for each transaction made on the platform.
2. Add A Crypto Wallet
Although there are two types of wallets, software wallets, and hardware wallets, it is recommended to get a hardware wallet considering its high level of security and protection. There are a plethora of crypto wallets out there, but before you choose yours, make sure you check on the availability of coins, fees, and accessibility.
3. Make A Purchase
Now that you have opened an account and set your wallet up, you can place your order through your exchange. The exchange will have an ordering system for requesting your order for SNX tokens. But before doing so check out the market price of SNX to gain a better understanding of the market movement.
Finally, your broker will fill in your order according to the set instructions. In case the order hasn’t been filled, it will be canceled by the end of the day and an email will be sent to you to notify you regarding the same.
How Does Synthetix DeFi Work?
In order to understand Synthetix, it’s essential to understand the Synthetix DeFi ecosystem.
Synths are smart contract-based protocols. They use a decentralized oracle which enables you to gain exposure to a wide variety of assets, which in turn allows you to hold and exchange your SNX tokens. Synths are issued on Ethereum and thus can be deposited on other Defi platforms as well. This not only provides liquidity but helps you earn interest as well.
How is Synthetix important for the growth of mature markets? Synthetix and other derivatives are crucial for markets that have already reached equilibrium as it helps facilitate price discovery and at the same time protects against market volatility.
The Bottom Line: Why Choose Synthetix?
Synthetix DeFi has provided a vast array of crypto assets and non-crypto assets. These assets let you be a part of the Synthetix DeFi ecosystem in a decentralized manner without having to hold on to these assets.
Other reasons to choose Synthetix include:
- Charging low fees
- No third party interference
- Supported by 600% collateralization ratio
- Use Synths to repay debts
Now that you know how the Synthetix DeFi works and why you should choose Synthetix, it’ll now be easier for you to make a decision.