Synthetix Perps Engine

Synthetix Leveraged Tokens are backed by perpetual futures on Synthetix.

Synthetix creates leveraged tokens by consolidating them based on asset, direction, and leverage (e.g., 10x long ETH) and backing them with a corresponding single perpetual futures contract using the Synthetix Perps engine. This position is continuously adjusted to account for price movements that trigger a rebalancing event or user interaction such as minting and redeeming leveraged tokens.

Fig. 1. Relationship between leveraged tokens and perpetual futures.

Integrating the Synthetix Perps engine allows Synthetix Leverage users to gain synthetic exposure to the underlying asset, i.e. without holding the actual asset. A user's margin is denominated in sUSD and the counterparty to all leveraged tokens minted on Synthetix Leverage is the SNX debt pool.

The Synthetix Perps engine also enables Leverage to utilize Pyth price feeds to ensure users' trades are executed based on precise and timely data. This secure design reinforces the platform's reliability for mission-critical operations for leveraged trading.

For more information regarding the Synthetix protocol's Perps engine, please check: https://docs.synthetix.io/exchange/perps-basics/perps-on-synthetix-exchange