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Welcome to our deep dive into DeFi with our report on Synthetix, a decentralized synthetic token issuance and trading platform.
Key Takeaways
- Synthetix is a platform that allows trustless, on-chain issuance and trading of synthetic assets called Synths, which currently include synthetic cryptocurrencies and commodities;
- SNX stakers earn fees and inflationary rewards in exchange for providing the essential function of maintaining sufficient levels of collateral to absorb Synth price fluctuations;
- The protocol’s debt pool mechanism can be difficult for new users to understand, which could lead to unintended risks and losses;
- Synthetix Exchange gives users unlimited liquidity and no slippage on trades up to the value of SNX collateral in its systems;
- The SNX token’s inflation scheme is well-designed to give active participants a decent incentive to help the system grow;
- Although our view of the protocol is positive in general, there are significant risk factors at play, namely price oracle risk, insolvency risk, and extreme SNX volatility
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Read the full PDF version of the Synthetix Report here.