Synthetix Network (SNX) Staking Overview
Synthetix Network Token (SNX) is the native token of the Synthetix network, a decentralized synthetic asset issuance protocol built on Ethereum and Optimism. By staking SNX as collateral, users can earn rewards and contribute to the creation of synthetic assets, which track the price of real-world assets on the blockchain. Staking SNX is an important component of the Synthetix ecosystem, as it helps to secure the network through proof-of-stake consensus and enables the creation and trading of unique derivatives and exposure to real-world assets on the blockchain.
If you are keen on learning how to stake Synthetix Network (SNX) to generate passive income, this tutorial will provide you with step-by-step instructions on how to stake your SNX and start earning rewards.
How to Stake Synthetix Network (SNX)
To stake SNX, users need to follow the given steps:
Step 1 – Visit Synthetix
Step 2 – Connect the wallet
Step 3 – Connect the wallet
Step 4 – Stake SNX and mint sUSD
Step 5 – Claim rewards
Step 1 - Visit Synthetix
To begin staking SNX, visit the official website of Synthetix staking, which offers a range of features for interacting with the protocol, including minting, burning, claiming, and trading Synths. Click on the “Connect Wallet” button in the top right corner of the website to link your wallet to the platform and proceed with staking.
Step 2 - Connect the wallet
To interact with the Synthetix protocol, you will need to connect a Web 3.0 digital wallet that supports Ethereum and Optimism. Examples of Web 3.0 wallets include Metamask, Ledger, Coinbase Wallet, Rainbow Wallet, and other Wallet Connect supported wallets. Click the “Connect Wallet” button on the Synthetix staking website, choose your preferred wallet, follow the instructions to connect it to the platform, and enter your password, PIN, or passphrase to grant permission to access your account.
Step 3 - Connect the wallet
To transfer your SNX from Layer 1 (Ethereum) to Layer 2 (Optimistic Ethereum), you need to use the bridge at the official website of Synthetix staking. The bridge is a smart contract that allows you to move your assets between layers securely and efficiently. To use the bridge, click “Bridge Now,” enter the amount of SNX you want to bridge, and click “Approve.” Then, click “Bridge” to initiate the transfer to Layer 2.
Step 4 - Stake SNX and mint sUSD
To stake SNX and mint Synths, use the Mintr dApp after bridging your SNX and ETH to Layer 2. Click on “Staking” in the left tab, followed by “Mint & Burn” to access your SNX balance, C-Ratio, debt balance, staking rewards, and mintable sUSD. Use the “Mint Max” tool to calculate the maximum amount of sUSD you can mint based on your SNX balance and C-Ratio, and then click “Mint” to confirm the transaction on your wallet. Your sUSD balance on Layer 2 will be updated, and you can check it on dApp.
Step 5 - Claim rewards
Staking SNX allows you to earn rewards in two ways: sUSD fees generated from traders and SNX inflationary rewards. To claim rewards, ensure that your C-Ratio is at or below the target C-Ratio. Click on “Claim Now” and see your claimable rewards in sUSD and SNX. Then click “Claim” and confirm the transaction in your wallet. The escrowed SNX can be staked for further rewards, but they cannot be transferred or sold until they are vested.
Also read: How to Buy Synthetix Network (SNX)
Popular Video Guides on Staking Synthetix Network (SNX)
Already Holding Synthetix Network (SNX)?
There are multiple options for staking SNX, and each has its own advantages and disadvantages. Here are a few platforms where you can stake SNX:
Option 1 - Synthetix Staking Website
Synthetix Staking Website is the official platform for staking Synthetix Network (SNX), the native token of the Synthetix protocol. By staking SNX on Synthetix Staking Website, users can mint Synths and earn rewards in sUSD and SNX for supporting the protocol. This allows users to participate in the Synthetix protocol and benefit from synthetic assets and derivatives on the blockchain.
Pros
- Earn rewards in sUSD and SNX for supporting the Synthetix protocol and its features, such as synthetic assets and derivatives on the blockchain.
- Enjoy the benefits of synthetic assets and derivatives, such as deep liquidity, low slippage, and highly competitive trading fees.
- Access various protocols that rely on Synthetix liquidity, such as Kwenta, Lyra, Curve, dHEDGE, etc.
- Benefit from the scalability and compatibility of Optimistic Ethereum, a Layer 2 solution that runs on top of Ethereum.
Cons
- Staking requires monitoring your C-Ratio and debt balance regularly and burning sUSD to reduce debt and claim rewards, which can be time-consuming and require active management.
- Staking SNX as collateral means locking up your SNX for a period of time, exposing you to the volatility of SNX price and potentially limiting your ability to sell or trade it during that period.
- Bridging your SNX and ETH from Layer 1 to Layer 2 can be a slow and expensive process, requiring gas fees and confirmation times on both layers.
- Claiming rewards requires manual action once per week, and rewards are escrowed for one year, limiting your ability to use or sell them until they are vested.
Option 2 - YouHodler
YouHodler is a crypto lending platform that offers a range of services, including borrowing and lending of fiat or crypto assets using SNX as collateral. By staking SNX on YouHodler, you can earn interest on your tokens and enjoy the flexibility of withdrawing your SNX at any time. Additionally, YouHodler offers other services like multi-HODL and turbocharge. Staking SNX on YouHodler allows you to earn passive income on your SNX without sacrificing control or ownership of your tokens.
Pros
- Earn rewards in sUSD and SNX for supporting the Synthetix protocol and its features, such as synthetic assets and derivatives on the blockchain.
- Enjoy the benefits of synthetic assets and derivatives, such as deep liquidity, low slippage, and highly competitive trading fees.
- Access various protocols that rely on Synthetix liquidity, such as Kwenta, Lyra, Curve, dHEDGE, etc.
- Benefit from the scalability and compatibility of Optimistic Ethereum, a Layer 2 solution that runs on top of Ethereum.
Cons
- You have to trust a third-party platform with your SNX and accept the risk of potential hacks or losses.
- You have to pay fees and interest for using the platform’s services.
- You have to comply with the platform’s terms and conditions and follow its rules and regulations.
- You have to monitor your loan-to-value (LTV) ratio and margin call level to avoid liquidation.
Option 3 - Ledger
Ledger is a hardware wallet that provides a secure way to store your cryptocurrencies offline. By storing your SNX on Ledger, you can keep it safe from potential hacks, thefts, and online attacks. You can also earn passive income on your SNX by staking it on Ledger and delegating it to a validator node using Ledger Live. Staking SNX on Ledger allows you to participate in the governance of the Synthetix protocol and make decisions that affect the future of the network.
Pros
- Ledger provides a secure way to store your SNX offline and protect it from potential hacks or online attacks.
- You can connect your Ledger device to various software wallets and platforms that support SNX, giving you more flexibility and accessibility to your assets.
- Staking SNX on Ledger allows you to earn passive income while maintaining full control and ownership of your private keys.
- You can delegate your SNX to a validator node using Ledger Live and participate in the governance of the Synthetix protocol by voting on proposals and making decisions that affect the future of the network.
- You can bridge your SNX from Ethereum Mainnet to Optimistic Ethereum, a layer 2 scaling solution that reduces gas fees and transaction times, to improve your staking experience.
Cons
- You have to maintain a collateralization ratio (C-Ratio) of at least 500%, which means you have to stake 5 SNX for every 1 sUSD you mint.
- You have to manage your debt exposure, which can fluctuate with the exchange rates of the synths and the total debt pool.
- You have to pay gas fees when you stake, unstake, mint, burn, or claim rewards on Optimistic Ethereum. Although these fees are lower than on Ethereum Mainnet, they can still add up over time.
Benefits of staking Synthetix Network (SNX)
- Generate sUSD fees from traders on Synthetix-based platforms, including Kwenta, Lyra, Curve, dHEDGE, and more.
- Receive SNX inflationary rewards on a weekly basis by maintaining a target collateralization ratio as a staker.
- Support the liquidity and stability of the Synthetix ecosystem, which provides low slippage, competitive trading fees, and a wide range of synthetic assets.
- Participate in the governance of the Synthetix protocol by voting on improvement proposals and changes.
- Benefit from the potential long-term appreciation of the SNX token value due to its utility and demand within the Synthetix ecosystem.
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Frequently Asked Questions
What is staking Synthetix Network (SNX)?
Staking Synthetix Network (SNX) involves locking up SNX tokens as collateral to mint synthetic assets (Synths) that track real-world asset prices. By staking SNX, users can earn rewards in two ways: through sUSD fees generated by traders using Synthetix-based platforms and through SNX inflationary rewards. The latter are new SNX tokens that are minted and distributed to stakers based on their share of the total staked SNX. The inflation rate decreases over time until it reaches 2.5% per year.
How much can I earn by staking Synthetix Network (SNX)?
The amount you can earn by staking Synthetix Network (SNX) depends on several factors. including the amount of SNX you stake, your target collateralization ratio (C-Ratio), the trading fees generated on Synthetix-based platforms, and the SNX inflationary rewards. To estimate your potential earnings, you can use a calculator tool like Staking Rewards. As of now, staking $1000 worth of SNX for one year may yield an estimated annual return of 7.48%, or $74.84.
What are the risks of staking Synthetix Network (SNX)?
Some of the risks of staking Synthetix Network (SNX) include debt, price, liquidity, and smart contract risks. Debt risk is associated with the fluctuation in the value of Synths, which can affect your debt value and collateralization ratio (C-Ratio). Price risk is related to the volatility of SNX and Synths, which can impact your staked value and C-Ratio. Liquidity risk arises due to the lockup period of staked tokens, which can reduce your flexibility and accessibility to funds. Finally, smart contract risk is related to the possibility of vulnerabilities or bugs in the smart contract used for staking. While Synthetix has undergone audits, there is no guarantee that all issues have been resolved.
How can I unstake or withdraw my Synthetix Network (SNX)?
To withdraw your Synthetix Network (SNX) tokens, you first need to burn all of your Synths to wipe out your debt completely and release your staked SNX. After this is done, you can submit the amount of SNX to withdraw and then submit the transaction. If you staked your SNX on Optimistic Ethereum (a layer-2 scaling solution), you will need to bridge your SNX back to the Ethereum Mainnet using the Optimism Bridge. Withdrawals to L1 from L2 take at least 7 days to complete.
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