Before trading any crypto assets it is important to understand the risks. This overview summarizes certain risks associated with SNX.
No securities regulatory authority has expressed an opinion about SNX, including an opinion that SNX itself is not a security and/or derivative.
Token Description & Project Background
Synthetix is an Ethereum-based protocol that facilitates the creation of synthetic assets. These synthetic assets, similar to derivatives in traditional finance, are represented by ERC-20 smart contracts called “Synths”. They enable users to track and gain exposure to the performance of various assets without needing to actually hold those specific assets.
The native token of the Synthetix protocol in SNX, serves a dual purpose. Firstly, it acts as collateral against the Synths created within the system. Secondly, SNX functions as the governance token, giving holders the ability to participate in decision-making processes. The creation of Synths is achieved by staking SNX tokens, ensuring a collateralization ratio of 600%, which can be determined or adjusted through protocol governance. The SNX holders collectively form a Decentralized Autonomous Organization (DAO), governing protocol upgrades, Synthetix smart contracts, and the allocation of protocol grants.
Synthetix was founded by Kain Warwick and was initially known as Havven, Havven raised approximately US$30 million during the initial token sale. Over time, the governance structure transitioned from a non-profit foundation to a DAO, which took effect in 2020.
Risks of SNX
Like an investment in other crypto assets, there are some general risks to investing in SNX. These include: (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to thestatement.
In addition to these general risks, an investment in SNX is subject to the following specific risks:
- SNX operates using smart contracts, which have an association with vulnerabilities and security breaches. Despite undergoing successful audits by well-regarded third-party entities, it is essential to acknowledge the existence of inherent risks. Furthermore, the project’s future trajectory hinges on the decisions made by a global community of SNX token holders.
We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with SNX. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.
The SNX community and aforementioned founders are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of SNX have no recourse to SNX DAO, founder, or Uphold if SNX declines in value for any reason.
Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.
Uphold’s Evaluation Process
Prior to listing SNX on the Uphold Platform, Uphold performed due diligence on SNX and determined that SNX is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following:
- The creation, governance, usage, and design of SNX, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community.
- The supply, demand, maturity, utility, and liquidity of SNX.
- Any marketing materials put forward by the SNX social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
- Material technical risks associated with SNX, including any code defects, security breaches and other threats concerning SNX and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
- Legal and regulatory risks associated with SNX, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of SNX.
Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
Uphold users should read thestatement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.
Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following. Please also review the for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and statement.
Last updated on June 21, 2023.
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