Synthetix, a decentralized finance (DeFi) project built on the Ethereum blockchain, has raised around $3.8 million in new funding.
Announcing the news on Monday, Synthetix said Framework Ventures has purchased 5 million Synth (SNX) tokens from the Synthetix Foundation’s treasury, toward the funding. One SNX token is currently priced at around $0.76.
Synthetix, which provides access to synthetic forms of fiat currencies, cryptocurrencies and commodities, further said that several other groups have also purchased “large quantities” of SNX token, but wish to remain undisclosed at this time.
Framework Ventures will keep its SNX tokens in an escrow account for up to 24 months as a long-term commitment to the project, per the announcement. Framework will stake these tokens to add to the SNX supply, and also participate in Synthetix’s community governance process.
Michael Anderson, co-founder of Framework Ventures, said that Synthetix’s “infinite liquidity” model is a major advantage over its competitors, adding: "Synthetic assets are a financial primitive that enables inclusion and innovation beyond traditional financial markets, and will likely represent the next leg up in DeFi.”
In June, The Block research analyst Matteo Leibowitz, published a detailed report on Synthetix, saying that despite the project’s increasing popularity, the mechanisms used to guarantee the value of minted synthetic products are largely deficient, exposing SNX token holders 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,” Leibowitz wrote at the time.