Review on Synthetix Network Token by francis fernandez
Synthetix Network Token: Derivative Assets Linked to External Assets via Ethereum Blockchain
Synthetix Network Token is a digital asset that operates the decentralized platform for the creation, transfer and trading of synthetic assets or tokens linked to an external asset.
Token:
The SNX cryptocurrency is an ERC-20 token whose function is to track the value of an external asset.
The Synthetix network acts as a programming language to generate liquidity on the Ethereum blockchain to achieve the issuance and trading of synthetic assets or tokens linked to external asset prices.
Synthesizer or derivative tokens offer linkage to assets such as dollars, gold, Bitcoin or other within the Ethereum network.
Technology:
Synthetix is a decentralized platform operated by Ethereum to mint synthetic assets under blockchain technology.
The network uses ERC-20 tokens and must generate ERC-721 tokens or synthetic tokens (mintable coins). For this conversion process, the Synthetix network uses the algorithm called peer to contract or P2C through the implementation of a smart contract. This is how exchange transactions take place within a smart contract and not between users.
Functioning:
Synthetix uses a smart contract encoding for the maintenance of native currency values.
The guarantee of value is the responsibility of the SNX token that requires executing proportional value bets to generate or mint synthesizers. In this process, users obtain a portion of the fees generated by the network as part of their reward. In this sense; the price of SNX is directly proportional to the use of the parallel network.
Pros
- It allows the exchange of assets linked to other external assets of more value.
- It allows access to a secure platform to market a wide portfolio of assets
- Used to obtain rewards by providing assets as collateral to create derivative assets
Cons
- Its value is very low and variable.
