We invite you to read our summary of the most important things discussed during the Indonesia Blockchain Week 2020, dealing with the issue of obtaining passive income through cryptocurrency staking. In addition, there was talk about DeFi, and how this sector of the cryptocurrency industry is advancing.
Obtaining passive income through cryptocurrency staking
Staking It is the process of actively participating in the validation of transactions on a proof of stake (PoS) Blockchain, or to provide liquidity to a protocol. On these Blockchains, anyone with a crypto asset can validate transactions and earn staking rewards.
From the customer’s point of view, staking is similar to an interest-bearing savings account at a traditional bank. Aside from cryptocurrency loans, staking is currently the most popular method of earning passive income with crypto assets.
In this opportunity we will talk about some comments from Jordan Momtazi, COO of Synthetix. However, in subsequent publications we will be talking about more experts present at the event who dealt with this topic.
Momtazi is known for supporting a variety of businesses, including PayPal, where he helped business merchants use digital payments to connect with the consumer. However, this time the role of Synthetix in the evolution of the use of staking to obtain passive income.
What is Synthetix?
In the words of Momtazi, Synthetix “essentially it is a protocol that supports synthetic or derivative assets. We support a number of different types of assets and different categories. But ultimately, Synthetix’s kind of goal is to provide liquidity to the market.”.
Obviously, there are a variety of different locations for these assets, as they are traded in different ways. However, there are also different ways in which the end user or third parties can use these assets.
According to this expert, the entire protocol is based on incentives, just like much of DeFi. He then gave a brief explanation of how these incentives work and why they are really important.
“I guess one of the benefits or one of the highlights of decentralized finance is actually the ‘trustless’ nature of these platforms. Synthetix is similar in that regard”He commented.
Instead of having custodians of these assets, in this type of protocol no one controls the underlying assets themselves. Therefore, the protocol is permissionless and completely open source. The way it is done is similar to the Bitcoin model or the Ethereum model.
Momtazi went on to clarify that they have a distributed group of guarantee providers, who are basically contributors and really support the system. “From these guarantees, synthetic or derivative assets are issued and this is how the system can be decentralized ideologically and mechanically”, He explained.
What types of assets are handled in this protocol?
The expert assured that they have synthetics of euros and obviously also of US dollars. In fact, he commented that they have expanded the list of currencies that they support, based on their use. He also said that they have also moved towards cryptocurrencies.
Why use Synthetix? What benefits does this protocol provide?
Faced with this question, Momtazi briefly stated that it is “you can expose yourself to assets such as Cardano, Litecoin or Bitcoin within the Ethereum ecosystem, and obviously also to Fiat currencies”.
Other advantages that he mentioned is that they have tools that track the price of gold, the price of silver, and also manage indices. Among them, the DeFi index stood out, which “it is an aggregate of 10 different DeFi projects, with different weights; in a basket where a user can be exposed to all these projects ”. All this within a single tokenhe commented.
Hence, Synthetix certainly offers a wide range of assets. “As long as there is a price, or a reference that we can point to and say ‘this asset has this price at this time’, we can include it in Synthetix”, He explained.
Most people are familiar with how exchanges work. That’s why they handle spot pricing options, which essentially gives people exposure to the price an asset has at the time of trading.
He also explained that they have long-term token options, reverse tokens, which are essentially short-term. In fact, they also have a binary market option.
Another news that he revealed is that they are launching options for future contracts, known as Synthetix Futures. All of this he summarized with the following phrase: “It is essentially a decentralized version of BitMEX”.
Why did you decide to enter the future markets?
Derivatives futures markets are actually larger than spot markets, both in traditional markets and within the cryptocurrency industry. Therefore, Momtazi stated that “Creating a decentralized version of BitMEX is quite a powerful market to enter”.
In this system, whatever the quoted price is, that’s what you get. There is no slip (slippage) on the Synthetix platform. So if you run a ten dollar trade, in synthetic US dollars and want to move to synthetics from Tesla or Apple in the future, you can.
So if you take a ten dollar trade, you get exactly the spot price. This is very powerful and very unique, according to Momtazi. This would work as a kind of undifferentiated collateral, with which users can negotiate and perform different activities.
With Synthetix you can basically create a derivative of any real world asset, or any cryptocurrency. Finally, he commented that they have an exchange called Synthetix Exchange, but that there will be a new name for this platform very soon due to changes that will be made in the brand.
Something that is obviously a big part of today’s topic is staking. Momtazi spoke of Synthetix because it is a fully Stakers-enabled system.
Likewise, Momtazi stressed that “These are users who come and select SNX as collaterals. They are issuing synthetic dollars based on that guarantee. By using an SNX as collateral, you are obviously securing our native stablecoin”.
Why would stakers do this? The answer is simple. Stakers are rewarded not just with trading fees, but with access to passive income on just about any asset they like. All this makes more people interested in this protocol to obtain passive income through staking.