Synthetix Rallies as DeFi Protocol Announces Layer 2 Launch

While bitcoin, the crypto market leader, remains in a deep slumber, some coins continue to see news-driven price moves. One such coin is SNX, the native token of the decentralized finance (DeFi) protocol Synthetix, which allows market participants to trade Ethereum-based synthetic contracts linked to traditional financial assets, including crude oil as well as stocks like Apple, Tesla, Facebook, Google, and Coinbase.

Per Messari data, SNX reached one-month highs above $13 early today and was last seen changing hands near $12.90, up 17% on a 24-hour basis. The DeFi token has gained 75% this month, while bitcoin is down 2%.

SNX's move to four-week highs comes as the protocol readies to launch its long-awaited exchange powered by Optimistic Ethereum, an Ethereum layer 2 scaling solution aimed at boosting transaction throughput and bringing down fees.

SNX holders can lock their SNX as collateral to stake the system. Synths are minted against the value of the locked SNX.

"SNX's upside is in part supported by the latest update from the team in relation to the planned collaboration with Optimism," Denis Vinokourov, head of research at Synergia Capital, told CoinDesk in a Telegram chat.

Synthetix founder Kain Warwick published a blog post over the weekend, announcing the launch in the week beginning July 26 and calling it one of the most important milestones in the project's history. "We announced the upcoming launch of Synth trading on L2 (Optimism) which could be a catalyst for significant trading volume growth by the end of this month," Jordan Momtazi, Synthetix's core contributor, told CoinDesk.

The new layer 2 exchange will initially support synthetic ether (sETH), synthetic bitcoin (sBTC), and synthetic link (sLINK) and will add more assets, with natural shorts on all Synths, according to the official blog post.

Aside from the layer 2 launch, the impending Thales token airdrop to SNX stakers seems to have fueled the recent price rise.

"SNX's recent surge is also inspired by the launch of binary options platform Thales, where Synthetix was a seed investor, which came with a sweetener deal for SNX stakers who will get 35% of all Thales tokens," Vinokourov added.

The binary options platform Thales secured seed funding from Synthetix in May. As a part of the deal, Thales agreed to distribute 35% of the 100 million Thales token supply to SNX stakers (not holders).

"35% of tokens will be claimable by SNX stakers with minted debt. An SNX staker's pro-rata share of the global synth debt pool will be the primary scaling factor used for calculating how many of the 35,000,000 Thales tokens a Spartan may be able to claim," Synthetix's blog post dated May 20 said. "15,000,000 are slated for retroactive distribution with linear unlocking, and 20,000,000 will be claimable weekly over 12 months."

Momtazi said that Thales airdrop will likely happen in August-September, but the distribution will have a "retrospective and forward-looking portion" which will reward previous, current, and future SNX stakers.

While SNX is trading higher at press time, bitcoin is trading 1% lower on the day near $33,800. The cryptocurrency remains coiled in the broad range of $30,000 to $40,000.

Also read: Traders Make Money Selling ‘Strangles’ as Bitcoin Goes Quiet