Synthetix—the Ethereum-powered decentralized finance (DeFi) project has raised USD$3.8 million in new funding. According to the announcement made on Monday, October 28, 2019, Synthetix revealed that Framework Ventures has backed its operations by purchasing 5 million Synth (SNX) tokens.
Framework Ventures, which comprises a team of technologists, researchers, and investors dealing in open crypto networks, bought the said amount of SNX tokens from Synthetix’s Foundation treasury at the current price of about $0.76 per unit.
Synthetix also revealed that other investors equally purchased large amounts of SNX token but would wish to remain anonymous at this time.
SNX Tokens Will Remain in Escrow
The announcement also revealed that the SNX tokens purchased by Framework Ventures would remain in an escrow account for two years, as a long-term commitment to the project. Framework is set to stake the tokens to boost the SNX supply and to participate in Synthetix’s community governance process.
According to Michael Anderson, the co-founder of Framework Ventures, Synthetix has an infinite liquidity model that gives it a huge advantage over its competitors.
“Synthetic assets are a financial primitive that enables inclusion and innovation beyond traditional financial markets, and will likely present the next leg up in DeFi,” Anderson said.
In June 2019, a research analyst produced a report on Synthetix, which revealed that regardless of the company’s growing popularity, it lacked the necessary mechanisms used to secure the value of minted synthetic products. This situation exposed SNX tokens to significant risk.
If Synthetix is to succeed in the coming years, the integration of a liquidation process, more liquid collateral types, and some kind of monetary policy tools are a must,” the report concluded.
With its infinite liquidity, Framework Ventures has a greater advantage over its competitors.
“Protocol liquidity can be used as a barometer for success for Web 3.0 networks—and Synthetix has the superior model over other synthetic assets platforms. Superior liquidity, a broad asset mandate, and good governance will make Synthetix a success,” Anderson added.
Overall, the entire Synthetix team and community are happy to collaborate with Framework Ventures to accomplish the objective of creating a trustless platform that would people trade synthetic assets on Ethereum.
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