Synthetix Network to Deprecate Leveraged Tokens on Optimism

Synthetix has officially disabled minting of leveraged tokens on the Optimism network. Token holders can redeem their balances over the next week. After the redemption window, any remaining assets will be distributed. The deprecation marks a shift away from this product line as Synthetix focuses on other offerings. Full details are available in their official blog post.

Refer to the official tweet by SNX:

SNX Info

Synthetix is a protocol on Ethereum that allows for the creation of synthetic assets, or “Synths”, which are essentially tokens representing the value of real-world assets. These can range from cryptocurrencies to commodities and fiat currencies, offering traders exposure to these assets without the necessity of owning them directly.

Synths leverage decentralized price oracles to accurately track the prices of their underlying assets. Unlike stablecoins, Synths are not backed by a direct reserve of the asset they represent, but by on-chain mechanisms and smart contracts. Owning a Synth doesn’t mean owning the underlying asset; instead, it offers exposure to the asset’s price fluctuations. This functionality, coupled with the interoperability of Synths as ERC-20 tokens, allows them to be integrated into other DeFi protocols for liquidity provision and trading.

The Synthetix Network Token (SNX) is a key component of the protocol, acting as the primary form of collateral used to mint Synths. Synthetix also supports Ethereum ETHUSD as collateral. The system operates on an overcollateralization principle, ensuring each Synth represents less value than the collateral backing it. To maintain a certain collateralization ratio determined by governance, stakers mint or burn Synths or add more collateral, which is essential for them to continue earning staking rewards.