Due to the latest drop in market prices we have decided to do a valuation of the Synthetix project and its SNX token. The price of the SNX token dropped from a peak of $1.52 to around $0.43 (-72%). Over the last couple of months Synthetix has managed to onboard a strong and loyal community and managed to achieve a high trading volume with its early adopters.
The Synthetix dashboard (https://dashboard.synthetix.io) shows a total volume of $1.5 billion. This volume has been achieved in a timeframe beginning in December 2018 (Mainnet release) until today. This resulted in a total of $8.5 million USD in fees, which translates to an average trading fee of 0.57% and an average daily trading volume of ~$3.3 million.
When we had a detailed look into the exchange volume, we saw some pretty huge spikes instead of a steady growth.
Those spikes were responsible for the high average exchange volume of the last months (~$4 million daily), but were caused by front-running on-chain oracle price feeds (https://firstname.lastname@example.org/synthetix-the-battlefield-a15a7104587c). Since mid February 2020 this issue has been resolved, but led to a drastic decrease in the daily trading volume.
A calculation over the daily trading volume since the fix results in an average of ~$600k, which is quite good given the age of the project and the current market conditions, still not as great as in 2019.
Additionally most of the trading volume comes from a few wallets, mainly from a single one. If we also deduct this trading volume from the average, we get an average daily trading volume of ~$300k.
The amount of locked SNX steadily increases (https://defipulse.com/synthetix), even during the latest downturn, and currently sits at ~141 million SNX. The current circulating supply is at ~174 million SNX which means a staking ratio of 81%.
In 2020 the primary goal is to increase adoption and to drastically increase the exchange volume. Therefore Synthetix has announced an updated roadmap on March 10th. The following picture shows the ambitious feature list. Next to additional crypto synths, new asset classes, new order types, leveraged and derivative products will be introduced. Terrific!
As an investor in the SNX token, one can earn in two different ways:
- Trading Fees
- Staking Rewards
As described above the current daily trading volume is ~$300k. We have based our valuation on this number. For the annual growth rate we assume that Synthetix reaches 300% YOY (year-over-year).
Additionally we assume a slow decrease in the average trading fee when adoption further grows. Therefore we estimate a steady reduction to 0.3% as outlined in the litepaper.