Overview

Staking SNX tokens plays a pivotal role in supporting Synthetix's liquidity layer. This is vital for supplying liquidity to onchain derivative traders engaged in products like Synthetix Perps, spot, and options markets. Your contribution as a staker, or liquidity provider (LP), ensures the smooth functioning of these products with deep liquidity and low fees. In return for this role, trading fees collected from traders are proportionately distributed to stakers via a weekly debt reduction.

The most prominent usage of liquidity generated from staking is Synthetix Perps, which has processed over $40 billion in trading volume and rewarded stakers with over $30 million in fees in the past year alone. However, staking isn't without its risks. In scenarios of market imbalance, you, as a staker, are responsible for absorbing trader profits, acting as the liquidity buffer. While Synthetix Perps is designed to mitigate delta risk for traders, the possibility of short-term imbalances persists. We strongly suggest that you conduct thorough research before you start staking.

This guide is a simplified primer, focusing on the core aspects of SNX staking in an easy-to-read format. For a deeper dive into the nuances and more advanced topics, please look at the SNX Documentation.

Note that this guide pertains specifically to staking SNX in the V2x system.

Steps for Staking SNX

• Stake Your SNX by minting sUSD:
  • Optimism: Go to staking.synthetix.io, connect to Optimism, click “Start Staking,” and stake your preferred amount of SNX.
• Ethereum Mainnet: Visit the same link, connect to the ETH Mainnet, and follow the same steps as above.

• Understanding SNX Staking and sUSD Debt Dynamics
  • When you stake your SNX tokens, you engage in a process known as 'minting' sUSD. This action is comparable to taking out a loan against your staked SNX. The sUSD you mint represents a form of debt, which can be viewed as an advance against future trading fees you'll earn. These fees are distributed weekly, gradually reducing your sUSD debt.
  • To regain access or unlock your staked SNX, you need to 'burn' the sUSD. This act is essentially repaying your debt.
  • It's important to note that your sUSD debt is not fixed. It fluctuates in response to the overall performance of the debt pool. Users are advised to hedge their debt using dSNX and/or manual hedging.
• Claiming and Managing Rewards:
  • Trading fee distributions are automated through a weekly fee burn, directly reducing your debt. No action is required by users.
• Hedge Your Debt:
  • Use dSNX for one-click hedging, or manually via staking.synthetix.io/debt. An approximate current hedge consists of 96% sUSD and 4% ETH.
• Maintain Collateralization Ratio (C-Ratio):
  • Ensure your C-Ratio is balanced to avoid liquidation risks and maintain capital efficiency.
• Automated Minting with Gelato:
  • Automate your SNX staking & minting for capital efficiency, like auto-staking more SNX at a specific C-Ratio.
    • Ex: Auto stake additional SNX if your C-Ratio is at least 550%
• Understanding Lock Periods:
  • A 7-day lock period applies upon minting sUSD and staking SNX. You can’t transfer staked SNX or burn/reduce sUSD debt beyond the target C-Ratio during this period.
• Unstaking SNX & transferred:
  • Unlock your SNX from staking by burning all your sUSD debt. Note: SNX in escrow cannot be transferred.
• Weekly Snapshot:
  • Be staked before each Wednesday epoch to be eligible for rewards.
• Liquidation & Risks: If your C-Ratio falls below the current liquidation ratio, you will be liquidated and incur a liquidation penalty. Regularly check your C-Ratio to prevent liquidation.
  • You can raise your C-Ratio at any time by burning sUSD, or staking additional SNX, to raise your C-Ratio.

Any Questions?

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