Synthetix (SNX) Q4 2024 Key Insights

Synthetix (SNX) is a decentralized derivatives protocol that offers users access to synthetic assets, perpetual futures trading, leveraged tokens, and vault strategies.

Key Insights

Primer

Synthetix (SNX) is a decentralized derivatives protocol that offers users access to synthetic assets, perpetual futures trading, leveraged tokens, and vault strategies. Its synthetic assets track the price of external assets via oracles like Chainlink, Pyth, and Uniswap V3 TWAP. Users can trade in both spot and perpetual futures (perps) markets for these assets. SNX, the native protocol token, is used for governance and as collateral to back the protocol’s liquidity.

Synthetix has two main versions, V2 and V3. V2, the original version, uses SNX as the primary collateral for staking and issuing synthetics. V3, launched in early 2024, is a more modular system that supports multiple collateral types. V3 was initially deployed to Base in Q2 and Arbitrum in Q3. The protocol has expanded the collateral to now include cbBTC, tBTC, cbETH, WETH, USDC, and yield-generating assets like static aUSDC, Lido’s wstETH, and Ethena’s USDe. Synthetix Perps is the protocol’s leading product. The DAO delegates governance to a seven-member council – the Spartan Council. Four of the seven members are elected by SNX holders, with the other three members being hired by the elected members.

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Key Metrics

Protocol Analysis

Perpetual Futures

Daily average perpetual futures volume increased 29% from Q3’s $55.7 million, with Q4 seeing an average of $71.7 million. As for YoY, daily average volume was down 50% from $143.2 million in Q4’24. Since launching in Q2, adoption of Synthetix V3 perps slowed in Q4, with V3 perp volumes decreasing 38% QoQ. This quarter, Synthetix’s perps volume remained flat QoQ as a proportion of all onchain perps, with $6.6 billion in volume representing approximately 0.9% of all onchain perps volume ($740.5 billion) in Q4.

Q4 solidified a shift in user preference regarding the preferred perp market to trade, with SOL’s perp volume increasing 53% and closing Q4 with $2.5 billion in volume. Last quarter, BTC edged out SOL as the top perp market on Synthetix by a 5% difference in perp volume. However, in Q4, the SOL perp market outperformed BTC by 13%. Additionally, other perp markets grew 74% on a linked-quarter basis, showcasing Sythetix users’ preference for more niche perp markets outside of BTC, ETH, and SOL.

In that vein, Synthetix had 68 new perp markets in Q4, up 19% from Q3’s 57 new perp markets. The majority of new perp markets already existed on Synthetix V2, however, 24 of them were completely new markets never before seen by either Synthetix version. The new markets are a result of the passing of SIP-387, which clearly defined a path for listing new assets: the asset must have a Pyth oracle price feed and be listed on Binance Perps. This ensures each market can be balanced via funding arbitrageurs to protect liquidity providers from imbalanced market skew.

Activity

Activity metrics trended higher collectively in Q4 after decreasing throughout 2024. The daily average number of perp trades increased 25% on a linked-quarter basis, rising from 1,400 to 1,700 in Q4. This growth was driven by 59% growth in the number of trades that occurred on Synthetix V2. On a year-over-year perspective, daily average trades decreased 33%, declining from 2,500 in Q4’23.

Average daily active users (DAUs) increased 14% on a linked-quarter basis, growing from 207 to 236 in Q4. Average DAUs are down 47% on a year-over-year basis, from 445 in Q4’23. Average DAUs increased across both Synthetix V2 and V3, with a 12% increase in V2 and a 19% rise in V3. This suggests that power users are performing a larger share of trades on Synthetix. It should be noted that Synthetix V3 has not yet been deployed to OP Mainnet and, as such, these figures represent different execution layers (Base and Arbitrum).

Total Value Locked

Total value locked (TVL) is a measure of the available onchain liquidity on Synthetix at a given moment. Synthetix TVL remained largely flat throughout Q4, with a 1