Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


What Value does the sUSD Stablecoin have?

Mr. Market is showing some interest in the sUSD (SUSD) stablecoin. For example, sUSD was CoinMarketCap’s 375th largest cryptocurrency on 7 February 2022.

Moreover, CoinMarketCap gave sUSD a Market Capitalization of $117.203 million, a Fully Diluted Market Cap of $142.594 million, and a 24-Hour Market Volume of $36.882 million on 7 February 2022. They based those numbers on a Circulating Supply of 117.043 million SUSD, a Maximum Supply of 142.400 million SUSD, and a Total Supply of 117.043 million SUSD.

So what is sUSD and why does Mr. Market think it is worth up to $142.527 million? sUSD is one of 15 Synths, or derivative tokens, they built with the Synthetix derivatives liquidity protocol. The sUSD tracks the price of a single USD dollar. They claim the price of the sUSD remains constant at $1 USD.

The Synthetix Protocol

Synthetix creates derivatives, or Synths. The Synths are synthetic assets they base on cryptocurrencies, fiat currencies, stocks, commodities, and other assets. The hope is to create asset-based tokens you can spend and trade like cryptocurrencies.

For example, Synthetix users can stake Synths and earn profits from them as people stake cryptocurrencies. For example, the Synths generate a small fee the Synthetix ecosystem pays to all SNX collateral providers. The SNX is the Synthetix cryptocurrency.

On 7 February 2022, CoinMarketCap named Synthetix (SNX) the 111h largest cryptocurrency with a $5.84 Coin Price. CoinMarketCap gave Synthentix a $670.324 million Market Capitalization, a $1.240 billion Fully Diluted Market Cap, and a 24-Hour Market Volume of $68.052 million on 7 February 2022. They based those numbers on a Circulating Supply of 114.842 million SNX, a 212.424 SNX Maximum Supply, and a Total Supply of 215.259 million SNX.

The Synthentix Ecosystem

They claim Synthetix creates decentralized perpetual features. Those features include best price execution by leveraging the Synthentix debt pool and liquidity framework.

They plan to build three platforms with the Synthetix protocol. Those platforms include Kwenta. They claim Kwenta could provide 10 times the asset price leverage for trading and simulated liquidity prices for best price fills.

The Lyra platform will provide the first completely decentralized options protocol. The Thales platform will offer a binary options protocol for trading on prices, sports, and other events. I think Thales could be a gambling platform.

Platforms leverage Synthetix’s deep liquidity pool include 1INCh, Curve, DHEDGE, Paraswap, Yearn, and Aelin.

Meet the Synths, the new Derivative Tokens

The other Synth derivatives include sEUR, which tracks the price of Euros through price feeds an oracle provides.

Similarly, the sJPY tracks the price of the Japanese Yen through oracle price feeds. Meanwhile, the sAUD tracks the price of the Australian dollar; the sSGP tracks the price of the Pound Sterling with an oracle; the sKRW tracks the price of the South Korean Won through oracle price feeds, and the sCHF tracks the price of the Swiss Franc through an oracle.

Interestingly, there are also Synth derivative tokens that track the price of cryptocurrencies. For example, the sBTC tracks the price of Bitcoin (BTC) with an Oracle’s help. Similarly, the sETH tracks Ethereum’s (ETH) price; the sLINK tracks Chainlink’s (LINK) price, the sADA tracks Cardano’s (ADA) price; the sAAVE tracks Aave’s (AAVE) price, and the sDOT tracks Polkadot’s (DOT) price.

Finally, the sDEFI tracks the price of the DeFi Index through price feeds an oracle supplies. Therefore, Synthetix is building a trading platform that can build derivatives based on almost any asset.

What Value Does sUSD have?

Mr. Market gives sUSD some value. For example, Coinbase gave sUSD a $117.2 million Market Capitalization, a $36.9 million 24-Hour Market Volume, and a Circulating Supply of 117 million SUSD on 7 February 2022.

So yes, sUSD (SUSD) is a genuine stablecoin with actual value. In addition, I think Synthetix is a protocol that could generate enormous value. For example, giant investment banks such as Goldman Sachs (NYSE: GS) could buy Synthetix to get its derivative making capabilities.

I think investment bankers will be interested in Synthetix because derivatives are an enormous business. For example, the Bank of International Settlements (BIS) estimates the derivative market’s value was $12.6 trillion in June 2021.

Hence, Synthetix is a protocol built to cash in on a $12.6 trillion market. Moreover, Synthetix claims to have enormous value. For example, they claimed Synthetix had $621.980 million in total locked value on 7 February 2022.