Synth BTC

sBTC

sBTC is a synthetic derivative of BTC collateralized with SNX token at a 3:1 ratio.

Risk Rating
Best
$64,275.00
5.65%
Summary
What we like
Offers users a permissionless, decentralized method to gain exposure to BTC. Provides access to BTC’s deep liquidity and large volume across DeFi.
What we like less
sBTC is a synthetic derivative of BTC that could lose peg in volatile market conditions as decreases in the SNX collateral value results in the position becoming undercollateralized.
What it means for you
sBTC is a solid way to gain exposure to BTC directly on Ethereum and also an easy way to put BTC to work for you in DeFi.
Information
Blockchain
  • Ethereum
Key Metrics
  • Market Cap: $16.5M
  • Fully Diluted Valluation: $16.5M
  • FDV / MC: 1
  • Ranking inside Exponential (excluding stables): #88
  • Circulating Supply: 256
  • Total Supply: 256
  • Total Supply: 256
  • Volume (24H): $25.8
  • ATH: $73,602.00 (03/14/2024)
  • ATL: $0.59 (08/13/2022)
Risk Assessment
Best
Asset Strength

sBTC is a low-cap, fully collateralized asset. This asset is exposed to the underlying risks of Synthetix, a protocol rated as Watch out.

Asset Tokenomics

sBTC has an uncapped supply but has inflation control or burn mechanisms in place. sBTC is a synthetic derivative of Bitcoin, and is overcollateralized with SNX tokens by at least a 3:1 ratio.

Asset Volatility

sBTC is highly correlated to the overall market.

Dependencies

Synthetix

Things to know about sBTC

How does sBTC work?

sBTC is a synthetic asset created on the Synthetix platform. It is minted against the value of the native SNX token which acts as the primary form of collateral backing synthetic assets available on Synthetix. All Synths are currently backed by a 400% collateralizatoin ratio, though this can change through future governance proposals. SNX stakers incur debt when they mint Synths and burn Synths to exit the system. SNX holders are incentivized to stake their SNX token to earn their proportional fees each week, as well as inflationary rewards. Stakers are unable to claim fees if the value of their collateralization ratio falls below 400%, which ensures Synths are backed by sufficient collateral to absorb large price movements.

Why trade sBTC?

Synthetic assets like sBTC provide users with exposure to BTC without holding the underlying asset. This offers a major benefit in terms of lowering friction when swapping between different assets. All Synth trades are executed against the contract, or known as peer-to-contract trading. sBTC is assigned an exchange rate through price feeds supplied by a Chainlink oracle, and can be converted using the Kwenta trading platform. This provides infinite liquidity up to the total amount of collateral in the system, zero slippage and permissionless on-chain trading.

How secure is sBTC?

sBTC does not have the same level of decentralization or security as BTC since it is dependant on Synthetix smart contracts and tokenomics. Nonetheless, sBTC can be minted permissionlessly through the platform and does not have any reliance on centralized entities like WBTC. A risk to be aware of involves the debt SNX holders issue when they stake their SNX and mint sBTC. This debt can fluctuate due to price movements within the system, which means that stakers may ultimately have to burn more sBTC than they originally minted to exit the system and unlock their staked SNX. Lastly, there are still a number of system functions that are still centralized such as the use of proxy contracts which provides greater control to the engineering team to ensure contracts can be easily upgraded.