How it Works
- Put SNX token into a liquidity pool and mint out sUSD (stable coin, e.g. like [dai])
- Use your sUSD to buy and sell synth tokens which follow the price of the chainlink oracles
- The total outstanding value in the system is considered debt and you as a SNX staker have to cover that debt So of all assets goes up (e.g. 1B –> 1.2B) the % ownership you had now requires you to pay off the debt accordingly. So if you bought in at 0.1% with $1M sUSD worth of SNX, now you need to go find $200k sUSD to cover the rest of the debt or you’ll eventually get liquidated.
However, non-stakers can freely buy/sell and don’t carry this counter-party risk.
# Method 1: Exchange (kwenta.io) ETH --> sUSD (exchange) --> sXXX (exchange) # Method 2: Stake Get SNX on an exchange --> staking.synthetix.io (stake) --> sUSD (mint) --> sXXX (exchange)
- 750% collateraliation ratio (determined by community governance)
- Collateral must then be managed by burning sUSD (to unstake) if ratio goes below 600%
- Debt is shared amonst all participants in one big pool (sUSD)
- Controlled by 3 DAOs
- protocolDAO controls protocol upgrades and Synthetix’s smart contracts
- grantsDAO funds community proposals for public goods on Synthetix
- synthetixDAO funds entities advancing the network’s development