Editing Synthetix (section)

= The stable coin =

Throughout the Synthetix ‘Litepaper’ many references are made to a currency called ‘SNX’ [litepaper]. SNX is the main ERC-20 token used in Sythetix Exchange to pay for synthetic assets. Makes sense so far? Well things only go downhill from here.

Though SNX is mentioned 63 times in the white paper - it is not actually the main currency. Instead, that role is filled by another currency called ‘sUSD’ that is built using SNX. The sUSD currency turns out to be a stable coin, and it’s never formally introduced in the ‘litepaper.’

What’s confusing about is sUSD (short for synthetic USD) is how one might believe the currency to be in the same category as other synthetic assets within the system. In fact, it’s not at all. The currency is its own unique token, completely seperate to ‘synthetic’ assets within the system. So here’s an overview of how it really works.

# Each sUSD is supposed to represent $1 - this is a fixed exchange rate.
# Thus: if you want to buy $250 worth of Bitcoin you need 250 sUSD. The corresponding amount of synthetic (fake) Bitcoin you receive is based on the price of real Bitcoins at the time of the purchase.
# The value of sUSD is backed by a certain amount of SNX. It’s SNX that trades publicly on an exchange – not sUSD. Thus, all synthetic assets are backed by a certain amount in SNX.

Below I describe in more depth how this all works.

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