Price reaching nearly a 15-month high, deciphering the logic behind the rise of Synthetix token
Exploring the Synthetix Token's Soaring Price Decoding the Logic Behind its Nearly 15-Month High
The upcoming launch of Perps V3, incentive plans, and various factors such as staking dividends are stimulating the rise in price of Synthetix token SNX.
Written by: Nancy
After a long anticipation, Perps V3 is about to be released. On November 20th, the veteran DeFi protocol Synthetix announced that Perps V3 will be deployed on Base through the Andromeda version.
According to Synthetix, Perps V3 plans to introduce several new features, including support for various types of collateral such as sUSD, sETH, sBTC; simplifying the trading experience with cross-margining based on different positions; better control and flexibility through account-based access; liquidation upgrades such as smarter liquidation processes for large positions and partial liquidation delays; allowing developers to choose any on-chain oracles, and more.
It is reported that V3 is designed for derivative protocols and liquidity providers, aiming to provide infrastructure and liquidity for rapid creation of on-chain derivatives, and to provide derivative liquidity and rewards for LPs. Synthetix announced the launch of V3 as early as several months ago for the fourth quarter of this year and initiated a vote on the proposal to “deploy V3 to Base,” which received 100% support.
It is worth mentioning that the decentralized perpetual exchange Infinex will also be introduced alongside Perps V3. Infinex solves major pain points of DEXs such as high slippage/low liquidity, high fees, and high LP market risks. It can trade on Optimism and utilize Synthetix’s SNX token for governance, bringing more users to participate in the “missing component” of DeFi. Kain Warwick, the founder of Synthetix, once said, “From a trading perspective, DeFi’s features are quite similar to CeFi. We have liquidity, market, depth, and execution time. But we still lack a key component.”
Synthetix states that the launch of V3 is based on the tremendous success of V2, which brought a paradigm shift for on-chain perpetuals and introduced now-standard features such as dynamic financing rates and price impact. V2 has driven Synthetix’s trading volume to exceed $30 billion and generated millions of dollars in fees for liquidity providers.
According to Token Terminal data, as of November 20th, Synthetix’s trading volume reached $36.94 billion, an increase of approximately 209.9% in the past year. Furthermore, Synthetix currently generates an annual income of approximately $51.29 million, with a growth rate of 202% in the past 30 days alone, which all goes to SNX stakers. According to Dune data, as of November 20th, Synthetix has approximately 60,600 stakers and a total staked amount of over $680 million.
Source: Token Terminal
The significant increase in trading volume and revenue for Synthetix is largely due to its launch of the Synthetix Perps Optimism trading incentive program. In April of this year, Synthetix Perps announced the launch of the Optimism incentive program, which distributes 200,000 OP tokens per week based on trader scores and SNX staking for a period of 20 weeks. In September, Synthetix announced an extension of the program for an additional five weeks, with a distribution of 100,000 OP tokens per week, totaling 500,000 OP tokens. The rewards are capped at the total fees generated. Thanks to the subsidy incentive program, which is largely covered by transaction fees, the trading volume for Synthetix Perps has seen significant growth.
According to Dune data, in the past month, Synthetix Perps V2 achieved a daily trading volume of nearly $480 million, but the majority of it is contributed by the derivative trading platform Kwenta. However, with the end of the incentive program, there has been a significant decline in Perps V2 trading volume. As of November 20th, the daily trading volume is approximately $23 million.
When it comes to indicators such as trading volume and revenue, Synthetix is on par with competitors like GMX, but it lags far behind in terms of active users compared to GMX and dydx.
In addition, Token Terminal data shows that the SNX token has also performed well on the secondary market, with a price increase of approximately 83% and a trading volume increase of 152.4% in the past 30 days. In the past 24 hours alone, SNX has achieved a trading volume of $180 million and the price briefly reached a new high since September last year.
However, according to on-chain analysis platform Santiment data, as of November 20th, Synthetix’s DAA price is -24.08%. Typically, when DAA deviates and drops below zero, it suggests a “sell” signal and the asset may be manipulated by whales. In the past 24 hours, whale transactions with at least $100,000 worth of SNX have increased from 3 transactions to 10 transactions.
Overall, various factors such as the upcoming launch of V3, incentive programs, and staking rewards are driving the price increase of SNX.