Synthetix has become the third-largest crypto platform in terms of trading fees consumed, and investors have taken notice.
Synthetix, a decentralized synthetic asset platform, led a relief rally in the cryptocurrency market today, rising over 100% from $1.57 to $3.16 before settling at $2.88.
Today’s relief surge in the cryptocurrency market was driven by Synthetix, a decentralized platform for minting and trading synthetic assets. On the comeback, its utility and governance token SNX soared by around 70%, much surpassing the overall crypto market, which had recovered by around 9% on the day.
Along with Synthetix, Aave and MakerDAO, two other DeFi projects sometimes referred to as “blue chips,” also saw double-digit rises as the market began to show signs of life for the first time in weeks.
Synthetix was one of the earliest DeFi initiatives on Ethereum, allowing users to trade tokenized financial instruments that monitor the price of other assets like stocks and gold. Synthetix supports synthetic gold and Tesla stocks in addition to a number of popular cryptocurrencies.
While synthetic assets are the protocol’s bread and butter, recent market action appears to be affected by newer fundamentals bolstering the project, particularly Synthetix’s success with the SIP-120 proposal’s new atomic swap capability.
The tool allows users make large-scale trades between diverse asset classes with minimum slippage by integrating with Curve Finance, the largest decentralized exchange for like-priced assets, and 1inch, a decentralized exchange aggregator.
Synthetix updated atomic swaps with SIP-198 in May to greatly improve the user experience, which has been in place since early November 2021. By combining Synthetix’s zero-slippage trades with Curve’s deep liquidity and low fees, users were able to make significant swaps between, say, wBTC and ETH on 1inch in a single transaction.
Atomic swaps have grown in popularity since Synthetix implemented the upgrade, accounting for the majority of volume on Curve, 1inch, fixed forex, and other aggregators and integrators. As a result, the protocol’s trading volumes have increased dramatically over the previous week, frequently exceeding $100 million in daily trading volume and reaching an all-time high of $396 million on Sunday.
The rise in trading volume has also pushed Synthetix to third place among protocols consuming the most trading fees, surpassing Aave, BNB Chain, and Bitcoin for the day on Sunday, according to statistics from cryptofees.info.
A rise in trading fees also means a rise in income or profits for SNX stakers, pushing the token’s staking yield to 60.2% APY, with trading fees accounting for 12.4% of that. Synthetix’s price-to-earnings ratio, measured by dividing the SNX’s fully diluted market capitalization by the protocol’s annualized revenue, is currently around 7.7x, according to data from Token Terminal, after plunging 74.7% in the last week.
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