WHAT SYNTHETIX ON THE APTOS BLOCKCHAIN WOULD MEAN
Table of Contents
Physical commodities like gold,silver,iron and even platinum are considered a hedge against world inflation. Investing in gold and silver are considered safer and more economically viable, but there is a problem: you can't walk into any store and buy a bar of gold, the low accessibility to pure gold bars amongst other commodities properly refined makes it difficult to invest in gold.
But what if you can actually buy gold without physically seeing it?
Thanks to the blockchain and the emergence of "Smart Contracts" you can buy a bar of gold and other commodities digitally on the blockchain and watch the price of your asset decrease and increase in value as with the original gold which you can also sell whenever you wish without paying different premiums and taxes involved. How do we then buy gold on the blockchain? Through the use of Synthetix...
WHAT IS SYNTHETIX?
Synthetix is an Ethereum-based protocol that makes it possible for you to trade synthetic assets, including synthetic commodities, synthetic crypto-currencies, synthetic crypto currencies e.t.c These are in the form of ERC-20 smart contracts known as "Synths." Synths can include you owning a physical asset digitally and being pegged to the value of the physical asset. For you to trade Synths, you will need the use of a Decentralized Exchange (DEX).
https://bit.ly/3ozfRav(Intro to DEXs)
Synthetix recognising this need, incorporated the dex platform called KWENTA which you can use to trade Synths. For digital assets to be traded there must be Liquidity and Synthetix also solved that need by issuing it's own token called the Synthetix Network Token which would be discussed at length to properly understand how synthetix works.
HOW DOES IT WORK
To continue, we need to understand the model used by Synthetix. The collateral for synths is provided in the form of the SNX token in-house.
Synths work basically by utilizing oracles in the blockchain (decentralized oracles) to track and provide live data of commodities, cryptos etc in order to provide an up-to-date price on the Kwenta DEX. This makes it possible to actually buy gold without the slippages, taxes and others at real market price from the comfort of your home.
https://bit.ly/3OLmOzL(Intro to oracles and smart Contracts)
Buying Synths is pretty easy and straightforward. Since Synthetix was deployed on the Ethereum network, we would follow these simple procedures for instance to buy gold.
1. Buy ETH and deposit to your Decentralized wallet.
2. Swap the Eth to sUSD on KWENTA and then use the sUSD to buy other commodities.
It's as simple as that and makes everything so straight forward. Users that also stake their sUSD can also earn rewards. Since they are digital assets, synths can also be sent to another smart contract to provide liquidity and earn rewards basically making it possible to earn rewards on digital assets that was not possible formerly.
KWENTA AND THE SYNTHETIX NETWORK TOKEN (SNX)
Kwenta makes the execution of the smart contract possible through the use of peer-to-contract trading which is a different form of executing transactions besides the peer-2-peer model. SNX as we mentioned before, is the collateral for Synths and this makes it a very unique model. You can track crypto indexes and up to 13 crypto currencies on Kwenta. When you stake SNX and mint sUSD, you take on debt reflecting the amount of sUSD that must be burned to un-stake your SNX. This debt, which also represents a proportion of all the debt on Synthetix, is denominated in sUSD and increases and decreases in accordance with the supply of Synths and their exchange rates. For example, if half of Synthetix’s Synths were synthetic ether (sETH) and the price of ether doubled, then the total debt and each staker’s debt would rise by one quarter.
Because the system’s total debt is distributed in this way, the stakers act as a “pooled counterparty” to trades. This means that you do not need counterparties when you exchange Synths, and instead convert them directly through a smart contract. This system mitigates counterparty risks and slippage, and ensures that there is sufficient liquidity for trading.
When you stake your tokens, you are eligible to receive two types of rewards if your collateralization ratio remains at 600%: staking rewards, denominated in SNX, and exchange fees from all Synth trades, denominated in sUSD. Exchange fees are distributed in accordance with the amount of debt each staker has issued. Linking rewards to the collateralization ratio ensures that Synths are always sufficiently backed by collateral. If you want to un-stake your SNX tokens, you must burn sUSD. And because the debt pool fluctuates, you may need to burn more or less sUSD than you initially minted.
Synthetix is proudly governed by three protocols that handles different parts of the project/program.
- ProtocolDAO handles Protocol upgrades and smart contracts on Synthetix.
- GrantsDAO funds proposals made by the community on public goods or assets on Synthetix.
- SyntheticDAO funds entities/corporations etc promoting the network's development and growth.
SYNTHETIX ON THE APTOS BLOCKCHAIN
Synthetix on the Aptos blockchain would be a game-changer which isn't possible now as Aptos is not an EVM chain but once possible, Synthetix would have some of these perks:
1. Gas fees on Aptos are way lower than that on the Eth blockchain, making it easier for end users to easily buy assets without paying high fees for assets.
2. The Aptos Blockchain has been able to build strategic partnerships with Venture Capitals strengthening the development of the blockchain so it'll be an added benefit to Synthetix If they bridge to the Aptos Blockchain.
<h5>PONTEM'S EVM LAYER FOR APTOS(ENABLING SYNTHETIX)</h5>