Synthetix is a protocol for issuing and trading synthetic assets on Ethereum. Each synthetic asset (or Synth) is an ERC20 token which tracks the price of an external asset; for example each sUSD token tracks the price of the US dollar. A wide variety of Synths exists within Synthetix, including fiat currencies, cryptocurrencies, commodities, and inverse indexes. In principle the system can support any asset with a clear price, and provides on-chain exposure to an unlimited range of real-world assets.
Synthetix is otherwise composed of a smart contract infrastructure and a set of incentives which maintains Synth prices. It is underpinned by the value of the Synthetix Network Token (SNX). SNX acts as collateral; staking a proportional value of SNX is required to mint Synths. Stakers are rewarded for supporting the system with a pro-rata share of the fees generated by activity in the system. The value of SNX is thus directly connected with the usage of the network it collateralises.
This mechanism allows Synthetix to support instantaneous, near-frictionless conversion between different flavours of Synths without the liquidity and slippage issues experienced by other decentralised exchanges. The resulting network of tokens supports an extensive set of use cases including trading, loans, payments, remittance, eCommerce and many more.
A more descriptive overview of the system is available in the Synthetix Litepaper, and the explainers on SNX staking rewards, Synthetix.Exchange, and Mintr. There is also a community-run page full of helpful resources, and a snapshot of the current system status is always live at dashboard.synthetix.io.