Synthetix, a leading protocol in the decentralized derivatives space, demonstrated notable activity and strategic shifts throughout the fourth quarter of 2024. This analysis covers governance updates, product developments, trading metrics, and financial performance—providing a clear view of its current market position.
Key Insights
- Synthetix implemented governance reforms, shifting to a single Spartan Council model to streamline operations.
- The protocol expanded its derivatives offerings through acquisitions of Kwenta and TLX at $13.2 million and $4 million, respectively.
- Open Interest (OI) peaked at $671 million on November 21, with a quarterly average of $195.4 million—a 45% increase from Q3.
- 68 new perpetual contract markets were launched, including 24 first-of-their-kind assets.
- Daily average perpetual trading volume reached $71.7 million, up 29% quarter-over-quarter.
Performance Overview
Governance and Strategic Expansion
Synthetix transitioned to a unified Spartan Council structure aimed at improving decision-making and operational cohesion. This move facilitated two major acquisitions: Kwenta, a trading interface, and TLX, a decentralized exchange. These acquisitions are designed to enhance Synthetix's product ecosystem and consolidate its market presence.
Perpetual Contracts Performance
Daily average trading volume for perpetual contracts reached $71.7 million in Q4, a 29% increase from the previous quarter. However, this reflects a 50% decline compared to the same period in 2023.
Trading on V3 perpetual contracts slowed, with volume dropping 38% from Q3. Total quarterly trading volume was $6.6 billion, accounting for 0.9% of the total on-chain perpetual market.
SOL emerged as the most-traded perpetual market, surpassing BTC, with a 53% increase in volume. BTC retained the second position, while ETH's share continued to decline. Other markets saw a collective volume increase of 74%.
A total of 68 new perpetual markets were introduced, with 24 featuring assets new to the platform—enabled through the implementation of SIP-387.
User Activity Trends
After a year of declining engagement, Q4 saw a rebound in user activity. The average number of daily perpetual trades increased by 25%, from 1,400 in Q3 to 1,700 in Q4. This growth was largely driven by Synthetix V2, where trades grew by 59%.
Daily Active Users (DAUs) increased by 14%, from 207 in Q3 to 236 in Q4. Still, this represents a 47% drop from Q4 2023. Both V2 and V3 platforms saw growth in DAUs, suggesting heightened activity among core users.
It's important to note that Synthetix V3 is not yet deployed on OP Mainnet and is currently operational on Base and Arbitrum.
Total Value Locked (TVL)
TVL, a measure of on-chain liquidity available in the protocol, remained largely stable with just a 1% increase in Q4. It peaked above $600 million during the quarter before closing at $378.9 million.
While TVL is a useful indicator of protocol size, it is not the sole metric for evaluating the success of a perpetual DEX.
Open Interest (OI)
Open Interest indicates the total value of unsettled derivative contracts at a given time. Synthetix ended the quarter with an OI of $67.5 million, down 60% from Q3. However, November 21 saw a record OI of $376.1 million due to heightened market volatility.
The quarterly average OI was $195.4 million—a 45% increase from the previous quarter. OI trends were influenced by the U.S. presidential election, with rising risk appetite and leveraged trading activity following the outcome.
SOL recorded the highest average OI at $84.9 million, a 115% increase from Q3. BTC followed with $77.6 million. Together, SOL and BTC comprised 83% of the total average OI. ETH’s OI fell by 27%, reflecting its relatively weaker price performance.
Fee Generation
Trading fees are incurred when orders reduce or increase market skew. Synthetix also collects liquidation fees when positions are undercollateralized.
The majority of fee revenue was generated on OP Mainnet. A updated fee distribution mechanism (SCCP-373) now allocates:
- 20% to V2 debt burn
- 20% to integrators like Cyberdex
- 60% to V3 liquidity providers
Total fees from perpetual trading and liquidations on OP Mainnet reached $2.8 million in Q4, a 64% increase. Base network fees fell 47% to $26,810, while Arbitrum, operational since August, accumulated $69,100 in fees.
Across all deployments, the average daily fee was $34,400—a 42% increase from Q3 but a 67% decrease year-over-year.
SOL perpetual markets generated the highest exchange fees at $988,900, a 52% increase. BTC followed with $748,900, while ETH fees declined by 31%.
Financial Health
SNX’s market capitalization rose by 26% to $649.8 million in Q4. The token price increased from $1.58 to $1.91, absorbing a 4% increase in token supply issued to fund strategic acquisitions.
Additional Developments
- Mobile trading support was introduced in December, integrating fiat on-ramps and gas-free transactions.
- Synthetix Exchange received a significant upgrade to its interface and fee structure.
- One-click gas-free trading was implemented.
- V3 perpetuals began supporting multiple collateral types.
- SNX was added to the Coinbase 50 Index.
- A new unified website launched, serving as an aggregated portal for all Synthetix products.
Quarterly Summary
Q4 2024 was a period of structural refinement and strategic growth for Synthetix. Governance improvements and acquisitions positioned the protocol for expanded market reach and product integration.
Despite mixed volume and user metrics, new market launches and increased open interest reflect continued innovation and adaptability in the competitive DeFi landscape.
Frequently Asked Questions
What is Synthetix?
Synthetix is a decentralized derivatives liquidity protocol that enables users to trade synthetic assets, including cryptocurrencies, commodities, and indices, without direct asset ownership.
How does Synthetix generate revenue?
The protocol earns fees from perpetual contract trades and liquidations. Fees are distributed among debt burning, integrators, and liquidity providers based on predefined governance rules.
What was Synthetix’s biggest achievement in Q4 2024?
The protocol successfully acquired Kwenta and TLX, expanded its perpetual markets, and achieved record open interest amid volatile market conditions.
Is Synthetix only available on Ethereum?
No, Synthetix is deployed on multiple networks, including OP Mainnet, Base, and Arbitrum, though feature availability may vary across chains.
What are perpetual contracts on Synthetix?
Perpetual contracts are derivative instruments without an expiry date, allowing traders to hold leveraged positions long-term. They are a central product in Synthetix’s offerings.
How can I start trading on Synthetix?
You can begin by connecting a compatible wallet to one of Synthetix’s front-end interfaces, depositing collateral, and exploring available markets. 👉 Explore trading strategies and get started