Synthetix Explained: how a Synth gets transferred
Edit (November 11, 2019): this blog post is no longer up to date (as Synths no longer require a transfer fee).
Whenever a Synth (e.g. sUSD) gets transferred, a complex system of transactions are initiated. Synth transfers require a higher gas limit than some other ERC20 tokens (we recommend 300k). We decided to unpack exactly what happens when Synths gets transferred, just so our community can understand what their gas is doing.
For this example, let’s assume that you’re transferring 100 sUSD.
- The transaction fee (currently 15 basis points, or 0.15%) gets burned. In this example, the transaction fee is 0.15 sUSD, so that gets burned. A token is burned by being transferred to the wallet address 0x0000000000000000000000000000000000000000.
- The equivalent amount of what was burned now gets minted as as the Synth XDR token (more details on XDR at the end of this article). This freshly minted XDR gets transferred to the fee pool, which is the wallet address 0xfeefeefeefeefeefeefeefeefeefeefeefeefeef. All fees are stored as XDR.
- Finally, the remaining (99.85) sUSD gets transferred to the nominated receiving wallet address.
In this transaction we can see the Gas Limit was set to about 350K and gas used was 230K. Most transactions will only use about 230K.
We recommend always using a gas limit of at least 300K
This user set their Gas Price to 1.6 Gwei, costing them $0.05c.
If your transaction is not urgent and you can wait for it always set a very low Gwei 1–3. If you need a bit faster go with 4–9 and right now would be anywhere from 10-100 depending on Ethereum congestion.
Please check https://ethgasstation.info/ for the current gas conditions on the ethereum network.
This process is the same regardless of which Synth you’re sending. If you’re sending 100 sXAU (the equivalent value of 100 ounces of gold), then 0.15 sXAU gets burned and the same amount is minted in XDR and sent to the fee pool.
All Synths in the fee pool are stored as XDR to allow SNX holders to be able to withdraw their earned fees in their currency of choice, be it sGBP, sEUR, or any of the available flavours. XDR stands for Synthetix Drawing Rights, based on the IMF’s Special Drawing Rights (SDR), which is a supplementary reserve asset consisting of a basket of several currencies to maintain stability. The currencies in the XDR basket include including USD, EUR, GBP, CHF & AUD.
If you have any more questions around the Synth transfer process, please come and ask us in Discord!