Synthetix is a powerful protocol that enables users to gain synthetic exposure to a wide range of assets. Beyond trading and investing, it offers numerous opportunities to earn passive income through staking, liquidity provision, and lending. This guide explains how you can participate in these yield-generating activities.
What Is Synthetix?
Synthetix is a decentralized finance (DeFi) protocol built on Ethereum that allows users to mint and trade synthetic assets, known as "synths." These synths track the value of real-world assets like cryptocurrencies, commodities, and equities without requiring you to hold the underlying asset.
The native token of the network is SNX, which plays a key role in securing the system and incentivizing participation. By staking SNX, you can help generate liquidity and earn rewards.
Earning Through SNX Staking
The most straightforward way to earn with Synthetix is by staking SNX. When you stake your SNX tokens, you can mint sUSD, the protocol’s native stablecoin. In return, you receive a share of the fees generated from synth trades on the network, plus additional SNX incentives.
The current approximate annual percentage yield (APY) for staking is around 24%, though this can fluctuate based on network activity.
Staking not only helps you earn but also supports the overall liquidity and stability of the Synthetix ecosystem.
💡 You can monitor your rewards and track network stats directly through the official Synthetix dashboard.
Using Yearn Finance for Automated Staking
If you prefer a more hands-off approach, you can use Yearn Finance. By depositing your SNX into Yearn’s vault, the platform automatically manages the staking process, including debt management and reward claiming.
Yearn charges a 2% management fee and takes 20% of the generated profits. The net APY after fees is currently around 4.77%.
Shorting Synths for Additional Rewards
Synthetix offers incentives for users who short synthetic assets like sBTC and sETH. Shorting helps balance the system when there’s too much long-side pressure.
By shorting these assets, you can claim SNX rewards. Current APYs are approximately:
- Shorting sBTC: ~72% APY
- Shorting sETH: ~84% APY
Many users hedge their short positions by going long on the same assets on centralized exchanges, allowing them to earn risk-free yields from the SNX incentives.
You can initiate and manage short positions through Kwenta, Synthetix’s native trading platform.
Providing Liquidity for Synthetic Assets
Another popular way to earn is by providing liquidity for synth trading pairs on various decentralized exchanges (DEXs). Synthetix has partnerships with several leading DeFi platforms to offer these opportunities.
Balancer Pools for Stock Synths
Synthetix offers synthetic versions of popular stocks like Tesla (sTSLA), Google (sGOOG), Apple (sAAPL), and other tech giants. You can provide liquidity for sUSD-backed pools on Balancer.
For example, by adding liquidity to the sGOOG/sUSD pool (in a 1:4 value ratio), you can earn SNX rewards with APYs ranging from 60% to 100%.
After supplying liquidity, you receive Balancer Pool Tokens (BPT), which you can stake to claim your rewards.
Earning on Curve Finance
You can also provide liquidity for the sUSD pool on Curve, which includes DAI, USDC, USDT, and sUSD. This is a low-impermanent-loss way to earn yields in stablecoins.
Additionally, supplying sBTC, sETH, or sLINK to relevant Curve pools can earn you CRV rewards on top of trading fees.
👉 Explore real-time yield opportunities on Curve
dHedge Liquidity Mining
dHedge is a Synthetix-based asset management protocol. By providing liquidity for the DHT/sUSD pair on Uniswap V2, you can earn both DHT and SNX tokens.
After receiving your LP tokens, you can stake them on the dHedge platform to claim dual rewards.
Lending SNX and sUSD
Synthetix has also integrated with lending protocols like Aave and Celsius. By depositing SNX or sUSD into these platforms, you can earn interest.
- On Aave, the current deposit APY for SNX is ~2.61%, and for sUSD it is ~2.04%.
- Celsius offers even higher returns—close to 30% APY for SNX staking. Nearly $222 million worth of SNX is currently staked there.
These platforms allow you to earn yield while still maintaining the flexibility to borrow against your deposits.
Frequently Asked Questions
What is sUSD?
sUSD is a synthetic USD stablecoin minted on the Synthetix network. It is backed by SNX collateral and is used for trading synthetic assets and providing liquidity.
Is Synthetix staking safe?
While all DeFi activities carry some risk, Synthetix is one of the most established protocols in the space. Its code has been extensively audited, and the system is secured by substantial SNX collateral.
Can I lose money by shorting synths?
Shorting involves risk, especially if the asset’s price rises significantly. However, many users hedge their short positions to minimize potential losses while capturing SNX incentives.
How often are staking rewards distributed?
Rewards for staking SNX are claimable weekly. Other incentives, like those from liquidity mining, may have different distribution schedules.
Do I need to manually claim my rewards?
In most cases, yes. You need to manually claim rewards through the Synthetix dashboard or the respective platform (e.g., Kwenta, Curve, Balancer). Some services like Yearn automate this process.
What’s the best way to start?
Beginners should start with simple SNX staking or stablecoin liquidity provision to minimize risk. As you become more familiar with the ecosystem, you can explore more advanced strategies like shorting or leveraged yield farming.
Conclusion
Synthetix offers a wide range of opportunities for DeFi users to earn yield—from straightforward staking to advanced shorting and liquidity provision strategies. By participating in these activities, you not only earn passive income but also contribute to the growth and stability of the ecosystem.
Always remember to do your own research, understand the risks involved, and consider starting with smaller amounts until you’re comfortable with the mechanics. Happy farming!