Overview

Synthetix is based in Australia and it was launched as a seed funding round in September 2017. It was created to develop the concept of a self-contained stablecoin payment network. Later in time on around February 28, 2018, they kicked off their public ICO and by the end of the ICO on March 7, 2018, it achieved its goal of $30,000,000 USD. On November 30, 2018, Synthetix was rebranded from Havven. The project was founded by Kain Warwick, who also was a co-founder of blueshyft, while the CTO is Justin Moses, also serves as the Director of Engineering at MongoDB. 

Synthetix aims to address the problem of companies running centralized payment networks. Companies as PayPal, credit card networks, or the SWIFT banking network have “absolute control over the value within the network, so any transaction conducted within them may be blocked or reversed at any time.” As stated in the whitepaper of Synthetix, “Although this is ostensibly designed to protect users, it introduces systemic risk for all participants. If the network is compromised or its owners cease to behave benevolently, no party can trust that the value in their account is secure or accessible.” An individual that holds SNX tokens in escrow will be incentivized by Synthetix rewards which is derived from network transaction fees and it will be distributed “in proportion with how well each issuer maintains the correct Synths supply.” And when a Synthetix escrow user places their SNX in escrow, the USD-stabilized Synths will automatically be put up for sale on a decentralized exchange. However, to release escrowed SNX, the user has to buy back the Synths issued at which point the Synths will be burned. The system utilizes an algorithm to adjust network fees, and therefore dividends, to SNX holders to incentivize or disincentivize the holding of SNX in escrow smart contracts, and hence leads to the creation of Synths. The theory consists of the users to mint and burn Synths in the suitable amount which is based solely on supply and demand.