Layer 2 (L2) solutions for the Ethereum (ETH) network have grown in importance over the past year due to the need for a scalable network that can provide low-fee transactions, and have spawned many competing blockchain networks to establish A project of cross-chain bridges.
One project benefiting from the growth of L2 scaling solutions is Synthetix (SNX), a decentralized finance (DeFi) protocol that creates synthetic assets and provides exposure to derivatives and futures trading on the blockchain.
Since hitting a low of $4.44 on April 11, the price of SNX rose 52.6% to a daily high of $6.78 on April 26, before falling back to $5.90 in a broad market slump, according to data from Cointelegraph Markets Pro and TradingView.
While most of the market is down, there are potential catalysts for further appreciation in the SNX price.
start up optimism
One of the biggest developments for the Synthetix protocol is its launch on Optimism, an L2 network that caused a stir this week thanks to the airdrop announcement. SNX staking began on January 16, and as the network grows, speculators are giddy about the prospect of future airdrops and staking incentives.
Recently, Synthetix used its launch on Optimism to get more involved in the “curve wars”, and it is currently offering top bribes to get veCRV voters to incentivize voting on the sUSD curve pool.
Synthetix is also partnering with Lyra Finance (LYRA) to provide 12,000 SNX and 50,000 LYRA per week as an additional incentive to veCRV voters.
L2 airdrop season could be a catalyst for SNX
The second reason SNX price is likely to appreciate further is traders anticipating a possible airdrop season for the L2 protocol.
There is a lot of speculation that Optimism and Arbitrum, the two most popular L2 networks in the crypto ecosystem, will eventually airdrop their protocol tokens to the network’s early adopters.
That speculation came true after Optimism released preliminary details of the Optimism Collective, a “large-scale experiment in digital democratic governance” “designed to drive rapid and sustainable growth in a decentralized ecosystem.”
With the launch of the Optimism Collective, so will the OP governance token, of which 5% of the initial supply will be airdropped to early adopters. For those who did not qualify for the first round of airdrops, there is still a chance to qualify for future airdrops by being active on the network using protocols such as Synthetix.
Synthetix offers futures trading on Optimism, a protocol that could benefit from users seeking to be active on the network, which could increase demand for SNX.
In addition to the potential for OP airdrops, SNX airdroppers are also attracted by the 81% staking rewards that the protocol currently offers.
Related: Optimism-Based Project Soars on Rumors of Token Airdrop
Climbing user base and transaction volume
Further evidence of Synthetix’s growing popularity can be found in the platform’s Optimism metric, which has been growing steadily over the past month, according to Dune Analytics.
As the chart above shows, the number of unique traders on the protocol has been climbing since the launch of futures trading in mid-March, with the protocol’s total trading volume now approaching $1.59 billion.
VOLTECS™ data from Cointelegraph Markets Pro began detecting a bullish outlook for SNX on April 23 ahead of the recent price surge.
Cointelegraph’s unique VORTECS™ score is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price action and Twitter activity.
As shown in the chart above, SNX’s VORTECS™ score climbed into the green zone and reached a high of 77 on April 23, with the price surging 28% the next day about 39 hours later.
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