What is Synthetix Network Token?

Synthetix is a protocol for creation and trade of digital assets. As many other DeFi projects, it is based on Ethereum. The assets are called Synths, and their prices track external assets such as the USD. The network is designed to support a limitless number of commodities, fiat, and cryptos.

To understand how to create an asset and give it value, one must first understand how the Synthetix network works. For one to make a digital product, they first have to offer collateral in the native token called SNX. The number of synths that one can offer must be equal to the number of tokens that they are willing to stake. This ensures that the collective pool of holders acts as a counterparty to the deal when converting minted synths to any real-world asset.

For context, if one wants to make a stable coin that tracks the U.S dollar, they would first use an SNX converter to move their other cryptos or fiat into SNX. They can then stake that amount and create a stablecoin.