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Synthetix, the derivatives liquidity protocol |
{% hint style="info" %}
- Some v3 functions are yet to be enabled, see development-progress.md
- If you were looking for V2, visit the V2 documentation here. {% endhint %}
Synthetix is an open source, decentralized finance (DeFi) protocol written in Solidity, which can be deployed on EVM-compatible blockchains. The protocol is governed by DAOs, including the Spartan Council which votes on upgrades and configuration changes (SIP/SCCPs). See the current deployments' Addresses + ABIs.
The protocol allows liquidity providers (LPs) to delegate collateral to liquidity pools. LPs can then take out a loan of snxUSD stablecoins. This mechanism is similar to other DeFi protocols which implement collateralized debt positions, such as Liquity.
Unique to Synthetix is the ability for liquidity pool managers to configure these pools to extend credit to derivatives markets. These markets generally rely on decentralized oracle networks (such as Chainlink and Pyth) to retrieve the price of off-chain assets and issue on-chain derivatives of these assets. Analogous to Uniswap, in exchange for extending credit to markets (allowing them to always fill orders for traders), markets can collect and deposit fees. This creates an incentive for liquidity providers by reducing the debt of their positions.
Anyone can interact with the Synthetix V3 core system and the Synthetix V3 market implementations.
