Synthetix (SNX) unveils debt pool merger for enhanced staking capabilities

Synthetix (SNX/USD), a decentralized finance (DeFi) protocol, has announced the launch of the Debt Pool Synthesis feature. The feature will boost the staking process and enhance liquidity on the protocol.

Synthetix debt pool merger 

The staking investors that will be impacted by the launch of this feature are those in SNX inflationary staking rewards and debt hedging. Debt hedging is a derivative trading strategy that lowers asset exposure.

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The presented data shows that if the two pools are merged, it will bring the total value to sETH: 31% Short, sBTC: 25% Long, sUSD: 27% Long, sEUR: 75% Long and other assets: 11% Long.

The team noted that the debt amount of the issued synths will be calculated off-chain and then brought on-chain through Chainlink oracles. The data will then be accessed on both L1 and L2.

Spokespersons from the protocol said,

Merging the debt pools provides maximum liquidity across the protocol and [the ability to] transfer synths between multiple chains efficiently via cross-chain messaging, rather than relying on automated market makers… debt pool synthesis allows the protocol to have fungibility on both L1 and L2.

The Synthetix protocol offers synths for a wide range of assets. These assets range from DeFi, crypto, forex and commodities. Synths are used by the protocol to boost user experience by making it easy for people to interact with the protocol.

Synths are “based on the price action of equities, measure of volatility, interest rates, or other novel mechanisms like our own debt pool,” the spokesperson said.

Developments on Synthetix

The Synthetix network currently runs debt pools across different blockchains, including the Ethereum mainnet and Optimism, an Ethereum layer 2 scaling solution. Pools on Ethereum mainnet and Optimism have a total value locked of $930 million and $157 million, respectively.

One of the developments expected on Synthetix is the transition of the protocol into an Optimism-native protocol. The protocol is also implementing the SIP 80 (Synthetix Improvement Proposal). The functionality will create synthetic futures contracts pooled together. In these pools, SNX, the native asset of the protocol, will be used as the financial instrument.