The Ultimate Guide to Synthetix
Synthetix is a derivatives liquidity protocol, providing liquidity throughout DeFi and powering financial products and derivatives like perpetual futures, options, parimutuel markets, and more.
It powers a growing number of decentralised applications such as Kwenta, Toros, dHedge, Thales and more, which cover financial use cases like leverage trading, asset management and betting.
Synthetix liquidity
To power financial markets on the blockchain, Synthetix needs to attract liquidity — assets that power and backstop the financial markets where traders can take positions and place bets.
In Synthetix V3, liquidity providers can provide collateral to liquidity pools in the protocol, which allows them to obtain loans in the form of stablecoins, similar to protocols like Liquity and MakerDAO.
This can be done directly through the V3 LP App or through an aggregator or third-party protocol like Toros, that can automatically compound and reinvest rewards.
Liquidity providers earn their share of trading fees and incentives for providing liquidity. Currently, Synthetix distributes its fees based on the following ratio: 40% to LPs, 40% to SNX buyback and burn and the remaining 20% to integrators.
