How does Synthetix Network Token work?

Synthetix Network Token (SNX) is a decentralized finance (DeFi) protocol that enables users to create and trade synthetic assets, or Synths.

Synths are digital tokens that track the price of real-world assets such as stocks, commodities, and currencies. The Synthetix Network Token (SNX) is the native token of the Synthetix protocol and is used to pay for transaction fees on the platform. The Synthetix protocol works by using a system of smart contracts on the Ethereum blockchain to create and manage Synths.

When users want to create a new Synth, they must first deposit SNX into a smart contract. This SNX is then used to collateralize the new Synth, which ensures that its value remains stable over time. Once the Synth has been created, users can then trade it with other users on the platform in exchange for other Synths or Ether (ETH).

The Synthetix protocol also allows users to borrow funds against their SNX collateral. This feature allows users to access liquidity without having to sell their SNX tokens. In addition, SNX holders can also earn rewards by staking their tokens in a special staking pool.

These rewards are paid out in newly minted SNX tokens, which helps increase the overall supply of SNX tokens over time. Overall, Synthetix Network Token (SNX) provides an efficient way for users to access liquidity and trade synthetic assets on the Ethereum blockchain. By using SNX as collateral for new Synths and staking it in special pools, users can earn rewards while helping maintain the stability of the network.