Synthetix Research Report (Brief)


8 min read
Synthetix Research Report (Brief)

Purpose of this write-up will not be to do a complete project analysis like what you see us cooking up with KNC (Kyber Network Protocol).

However, we are going to take a deeper look at what to expect for Synthetix in the future moving forward since this is one of the "horses" that we're riding on our way to...more profit, I suppose.

Our History With Synthetix

Brief summary here on why we even care about Synthetix vs. Everything Else.

We Made a 'Pick' For This Project a Little While Ago

The screenshot above is from July 3rd, 2020 (visit the #cryptomedication channel in the Discord for reference or use the 'search feature' if you need to).

Per the screenshot, our entry was at $2.48 (just to be clear so that we can keep track of our ROI in relation to where the price is at currently).

Checking On the Current Price (At the Time of Writing)

According to cmc.io, the price of Synthetix at the time of writing is approximately $2.76 (July 11th, 2020):

So our delta thus far (from entry) is approximately +11.2% to date. Not bad. Let's see what's in store for us in the future moving forward for Synthetix.

What is Synthetix?

We're not going to go too deep here (in this report), but the purpose of this section will be to give everyone a 'brief overview' for the project, Synthetix.

Synthetix is One of the 'OG' DeFi Projects in the Blockchain Space

By 'OG", we mean that Synthetix has been around for quite some time.

Intro: 'Havven'

Remember a project called 'Havven' from back in the day? (From way back in the day).

No? Don't blame you. They were a flash in the pan (for good reason) before rebranding to Synthetix in 2019 (and cleaning up their image, core purpose, etc., simultaneously).

Below is the announcement (still available on their Medium page):

(source: https://blog.havven.io/havven-is-transforming-into-synthetix-2fdf727b8892)

More (curious) information regarding the background of Synthetix's transition from Havven Protocol (same article here):

Havven/Synthetix Whitepaper

This section is pretty short because we're not going to cover the Havven Protocol whitepaper (which should essentially dictate the same structure as what Synthetix has now).

But there are a few important tidbits that readers definitely need to keep in mind.

Before we get into that, though, its worth prefacing those excerpts with a re-post from the team's Medium post announcing their transition from Havven to Synthetix (https://blog.havven.io/havven-is-transforming-into-synthetix-2fdf727b8892):

Isolated Whitepaper Information

URL = https://havven.io/uploads/havven_whitepaper.pdf (yup, its still out)

Meaningful Excerpts Worth Noting:

Breaking Down the Profit Driving Factor for Synthetix

There is a lot packaged in the whitepaper, so let's break down this rather convoluted structure:

Synthetix is 'DeFi', specifically a 'DeFi' exchange, which means that it uses these 'loans' / 'borrowing' mechanisms to essentially facilitate an exchange of value between one party to another.

In order to facilitate #1, assets are "collateralized" (in the same way that these other DeFi protocols 'collateralize' their assets).

"Those who use the 'stablecoin' pay fees to those who collateralize the network" ; those who collateralize the network = lenders.

"Collateral providers control the money supply" and "fees are distributed in proportion with each individual's 'stabilisation performance'. "Thus, Havven / Synthetix rewards suppliers of stability and charges those who demand it."

Synths are the network's stablecoin. They also have a floating supply.

Synthetix (the token itself) has a fixed supply and is used as collateral. According to the whitepaper, its, "Market Capitalization reflects the system's aggregate value." Also, "ownership of Synthetix grants the right to issue a value of synths proportional to the dollar value of 'havvens' placed into escrow."

Quick (Intermediate) Conclusions

A) The token is designed to provide incentives going "every way" (in other words, whether the price of the asset increases / decreases / remains stagannt - there is an opportunity for users to benefit)

B) Price increases in the underlying asset provide an indisputable benefit for 'lenders' on the protocol.

C) The incentives favoring the 'lenders' on the protocol result in an ecosystem where there is a perpetual demand for the token itself (Synthetix) as well as a disincentive to sell the token (obviously purposeful - favorable for the price though)

We'll cover more about the dynamics of this protocol's ecosystem in due time though.

Brief ICO Facts / Information

According to 'ICODrops' (take it for what it is - although the information is verifiable) - but Synthetix raised > $30 million in early 2018 for their ICO (when they were 'Havven Protocol' at the time):

Below are some of the images that were passed along regarding Token Issuance and other details of Havven Protocol (now Synthetix):

Synthetix Token (itself) = https://etherscan.io/token/0xc011a73ee8576fb46f5e1c5751ca3b9fe0af2a6f

Synthetix Token Balances (By Address) = https://etherscan.io/token/0xc011a73ee8576fb46f5e1c5751ca3b9fe0af2a6f#balances

(Other relevant contract addresses will be filled in here when we double back and take a closer look at the token metrics on the protocol - especially in accordance with how they described they would split things up [to their users and in their ICO marketing] back in 2018).

Recent Binance Addition

This is another major 'green light' that the protocol has received in recent days.

See Below

https://www.binance.com/en/support/articles/a1372c69cb3a4a8088247afdcf75a24b

Truthfully, this was not anticipated (directly - but it makes sense in the grand scheme).

I'm not going to touch on this too much (because I don't have much to say about this addition).

What's more important, however, is the impending Coinbase addition (yes, this statement is being made with 'certainty' on purpose and you will see why in a second).

Impending Coinbase Addition

June 10th (just a month and a day ago from the time of writing), Coinbase published a blog post on Medium titled, 'Coinbase continues to explore support for new digital assets'.

As you may have guessed from the title of the article, the blog post announced Coinbase's intentions to explore additional lists on their platform at some undisclosed point in the future (they didn't provide any approximate dates / times when we can expect these additions to be made).

However, they were careful to list the projects that they were considering (without commitment / guarantee).

Those projects were as follows:

Aave

Aragon

Arweave

Bancor

COMP

DigiByte

Horizen

Livepeer

NuCypher

Numeraire

KEEP Network

Origin Protocol

Ren

REnder Token

Siacoin (with the caveat that Coinbase would not include 'Siafunds' on its platform alongside Siacoin if Siacoin is listed)

SKALE Network

Synthetix

VeChain

Strong Clues That Synthetix Will Be Listed on Coinbase Soon

Clue #1: Coinbase Already Supports DeFi Products on it Platform

If you were worried about the murky legal foundation upon which DeFi projects are built, have no fear - for this appears to have no bearing on whether Coinbase will list the project or not.

For reference, a complete list of cryptocurrency projects that Coinbase currently supports can be found here: https://help.coinbase.com/en/coinbase/getting-started/general-crypto-education/supported-cryptocurrencies

Among That List, the Following Projects Are Considered to be 'DeFi':

$COMP

$DAI / $MKR (we'll count these as one in the same)

$KNC

$REP

$ZRX

And the performance of each one of those assets has been nothing short of excellent (for bulls; there are no short options - so only bulls), since their addition.

That's not to say that their addition on to the platform prompted / caused the subsequent increases in price (especially in instances such as $ZRX, which was added quite some time ago - and stagnated for a while before benefiting from its recent price surge).
But there are a few things that are worth noting about a Coinbase addition.

Benefits of a Coinbase Addition

Coinbase is once again aggressively targeting the American blockchain investor market. The impact of this has been negligible over the past few months (up until this point), due to the fact that interest in blockchain investing (and investing in general - due to COVID) has largely dissipated. But should this ever reverse course (even among just the demographic of investors that are already in this space), then Coinbase is placing itself in prime position to be the primary benefactors from said surge.

Coinbase has tied mutual interests in the success of the projects it lists on its platform (in any capacity ; we'll get more into this further down).

Coinbase's recent 'testing the waters' announcement re: potentially filing for an IPO (https://cointelegraph.com/news/coinbase-reportedly-preparing-for-ipo-later-in-2020), indicates that its looking to make more aggressive moves in the near future for market share (as to what that looks like when considering the backdoor partnerships among certain exchanges remains to be seen).

Clue #2: Synthetix Conflicts of Interest

In a normal setting - 'conflicts of interest' could be considered deterrents to business partnerships and collaboration.

But in the land of crypto, this couldn't be further from the truth.

In fact, if there is a conflict of interest, then one should consider that to be a major indicator that there WILL be a future announcement between entities re: partnership / listing / etc.

Paradigm Fund

Paradigm Fund is a Venture Capital firm that was created by Fred Ehrsam.

For those that don't know, Fred Ehrsam is a co-founder of Coinbase (and still sits on its Board of Directors).

Back in 2018, Fred decided to 'step away' from Coinbase to start Paradigm in collaboration with Matt Huang (formerly Sequoia Capital).

Since then, the pair have received >$400 million in investment.

Notably, Paradigm has made substantial investments in the blockchain (specifically, DeFi) space since their inception.

And, to no one's surprise, most of those additions have ended up at Coinbase at some point in time.

Brief Look at Paradigm's Portfolio

You'll probably struggle to find any comprehensive list of Paradigm's investments in the blockchain space (for whatever reason), but below is a healthy sample from Crunchbase (https://www.crunchbase.com/organization/paradigm-b23a):

Not Listed Above

Orchid (listed on Coinbase)

Chainlink (listed on Coinbase)

Synthetix (in consideration currently)

Polkadot

ICON

Cosmos (all over the place; primarily Binance)

Enigma

Tezos (listed)

ORBS

Theta

Ethereum (listed)

Not to Mention Fred Ehrsam is Also Invested in the Following:

As well as:

A) $ZEC (listed on Coinbase)

B) $ZRX (listed on Coinbase)

Conclusion

The links / evidence / reports / amounts re: Paradigm's investment in the blockchain space can be found with relative ease on the internet.

We'll leave that to all readers as 'homework'.

Enjoy!

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