Synthetix Surges 70% as Trading Volumes Explode

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Synthetix Surges 70% as Trading Volumes Explode
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key takeaways

Synthetix’s native utility and governance token, SNX, surged about 70% today after the DeFi platform became the third-largest protocol through crypto transaction fee consumption. The significant price surge may be related to the strengthening of Synthetix’s fundamentals, particularly the significant growth in trading volume and revenue. Over the past seven days, Synthetix’s daily average volume has consistently surpassed $100 million, hitting a record $396 million on Sunday.

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Decentralized synthetic asset platform Synthetix led the cryptocurrency market rally today, surging about 100% from $1.57 to $3.16 before correcting to $2.88.

Synthetix soars on market rebound

One of the earliest DeFi protocols appears to be making a comeback.

Synthetix, a decentralized minting and trading platform synthetic assets Leading the relief rally in the cryptocurrency market today. Its utility and governance token, SNX, rose about 70% in the rally, significantly outpacing the entire crypto market, which rallied about 9% on the day. Aave and MakerDAO, two other DeFi projects often referred to as “blue chips” along with Synthetix, also posted double-digit gains as the market showed signs of recovery for the first time in weeks.

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One of the first DeFi projects to launch on Ethereum, Synthetix offers users a way to trade tokenized financial instruments that track the price of stocks and other assets like gold. In addition to many leading cryptocurrencies, Synthetix also supports synthetic gold and Tesla stock.

While synthetic assets are the foundation of the protocol, recent price action appears to have been influenced by new fundamentals that strengthen the project, especially Synthetix’s success by introducing a new atomic swap feature. SIP-120 proposal. By integrating with Curve Finance, the largest decentralised exchange for same-price assets, and 1inch, a decentralised exchange aggregator, this feature helps users trade at scale across different asset classes with minimal slippage.Although it has been in effect since early November 2021, Synthetix upgraded atomic swaps to SIP-198 The user experience was significantly improved in May. This allows users to perform large swaps between 1 inch of wBTC and ETH in a single transaction, taking advantage of Synthetix’s zero-slippage trading and Curve’s deep liquidity and low fees.

As Synthetix implements upgrade, Atomic swaps are seeing increasing adoption, accounting for most of their volume on Curve, 1inch, Fixed Forex, and other aggregators and integrators.Therefore, the agreement Trading volume It surged last week, with daily average volumes consistently surpassing $100 million, before hitting an all-time high on Sunday when daily volumes topped $396 million.

Synthetix Daily Volume (Source: Dune.com)

each data from cryptofees.infothe surge in transaction volume also propelled Synthetix to the third place among the protocols with the highest transaction fees, surpassing protocols such as Aave, BNB Chain, and Bitcoin on Sunday.

The spike in transaction fees also means a surge in revenue or profit for SNX stakers, which drives Pledge income The token’s APY is 60.2%, of which 12.4% comes from transaction fees only.According to data from Token Terminal, Synthetix’s price-to-earnings ratio (calculated by dividing SNX’s fully diluted market capitalization by the protocol’s annualized revenue) is now trading at around 7.7 times after falling 74.7% last week. A lower P/E ratio may indicate that the asset is undervalued, earning more income on a per-token basis.

Value investors in the DeFi space seem to have noticed the improvement in fundamentals, although Synthetix has some way to go before it returns to its peak. SNX is currently trading around $2.86, down about 90% from its all-time high of $28.50 set in February 2021.

Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.

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