The central theses
- SynthetixDAO has decided to create new synthetic stocks that will track the price of leading tech stocks.
- These stocks are known as FAANG stocks, short for Facebook, Amazon, Apple, Netflix and Google.
- The trading platform rewards users who add liquidity to their balancer pools by paying out SNX tokens.
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DeFi trading platform Synthetix has added support for new synthetic assets that track the price of popular US technology stocks.
Synthetix offers FAANG trading
Synthetix’s community governance body, synthetixDAO, voted to create new synthetic assets that track the price of FAANG shares – an acronym for Facebook, Amazon, Apple, Netflix and Google.
The newly added synthetic tokens come just months after Synthetix added a synthetic Tesla share in February.
Synthetix’s assets can be traded against the stable sUSD coin or other crypto-backed synthesizers such as sETH. Because of their decentralized nature, Synthesizers allow DeFi users to take price risk on favorite stocks without the need for a traditional brokerage account.
Although prices are tied to stock performance, Synthetix’s assets, like many other crypto tokens, are based on Ethereum’s ERC-20 standard.
The assets maintain their pegs using price data feeds generated by Chainlink oracles. At the same time, synths have an automated mechanism to stop trading when the oracle is not active. This can happen when the underlying market closes.
Trading possible on Balancer and Kwenta
Synthetic asset trading has now gone live on Kwenta, a Synthetix powered dApp, during US market hours (9:30 am – 4:00 pm ET).
For 24/7 trading, Synthetix has also made decentralized markets available on Balancer, a popular automated market maker (AMM) that relies on pools of liquidity.
“Stocks are not subject to price movements outside of market hours and therefore cannot be traded via the Synthetix protocol during this time,” the Synthetix team wrote in a blog post. “Therefore, offering liquidity through an AMM like Balancer means that outside of this time frame you can still discover prices and access the assets.”
To create an incentive for adequate liquidity in Balancer AMMs pools, the team pays additional rewards in Synthetix Network Token (SNX).
It has reserved 50,000 SNX tokens valued at $ 750,000 for liquidity incentives, offering variable returns of up to 600% APR.
Disclosure: The author did not have any crypto mentioned in this article at the time of going to press.
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