Synthetix Network Token (SNX), the native token of Synthetix — a decentralized finance derivatives protocol — has been surging throughout the past week and is now worth over $7.87 as of Dec. 23.
The primary catalyst behind SNX has been a listing on Coinbase. On Dec. 16, Coinbase officially announced the listing of the Aave protocol's AAVE token, Bancor Network Token (BNT) and Synthetix Network Token.
Other factors include the rapid increase in total value locked and user interface improvements via its latest software upgrade on Dec. 22.
Why is Synthetix seeing a massive increase in user activity?
Synthetix is a protocol that mints new synthetic assets with cryptocurrencies, such as Ether (ETH), as collateral. This allows users to borrow and trade various assets with many cryptocurrencies on a DeFi derivatives platform.
Staking is another feature that is likely attracting users due to its relatively high annualized percentage yield based on the protocol’s cash flow mechanism. Essentially, the fees that occur from trading on Synthetix are collected and distributed pro-rata to SNX stakers.
The combination of a spike in interest in Synthetix from the Coinbase listing and the platform’s overall rise in user activity likely triggered the 100% rally since late November.
According to DeFi Pulse, which tracks the total value locked in the DeFi ecosystem, Synthetix now ranks fifth, just behind Uniswap. Over $1.2 billion worth of assets are now locked in or staked in the Synthetix ecosystem, posting massive growth over the past month.
On Nov. 3, the total value locked (TVL) in Synthetix was around $421 million, which means the TVL has almost tripled in less than two months.
Favorable technicals for SNX
Lastly, some traders pinpointed the favorable technical structure of SNX in November when it was trading at around $4.
On Nov. 26, a pseudonymous trader known as “Benjamin Blunts” spotted an inverse head-and-shoulders (IHS) bottom pattern. He said:
“Textbook IHS forming on $snx, 0.618 wicked all stops below support were taken out and stop hunted plus all the volume is in the right shoulder which is EXACTLY what i want to see in an IHS bottom, got spooked today but im dipping my toes back in and long targeting 80-100% higher.”
Since then, the price of SNX has more than doubled at the day’s peak on Dec. 23, reaching as high as $8.48.
The ongoing rally of SNX is particularly noteworthy because the altcoin market has suffered a steep correction in the last 24 hours following XRP's sharp pullback.