The blockchain-based derivatives protocol Synthetix saw its SNX tokens jump in price Tuesday after another project, Lyra, announced a rewards program tied to the protocol’s sUSD stablecoins.
In order to mint new sUSD coins, traders need to first get the SNX tokens and then lock them into the Synthetix platform via a process known as staking.
Lyra, a decentralized options-trading platform launched in late August, says it wants to increase the supply of sUSD on Optimistic Ethereum – a so-called “layer 2” network that’s used to speed up and reduce the cost of transactions on the Ethereum blockchain. Lyra wrote Monday in a blog post that it relies on Synthetix’s sUSD tokens “as both a source of liquidity and a means of exchange.”
Under Lyra’s new “trial liquidity mining program,” some 750,000 LYRA tokens will be made available to liquidity providers. The LYRA tokens haven’t been released for trading in cryptocurrency markets, so the value of the rewards isn’t yet clear in dollar terms.
“The rewards earned during this program will be distributed when the LYRA token is officially launched,” according to the Sept. 13 blog post. “More information about the LYRA token will be released in the coming weeks.”
Synthetix is protocol that allows users to mint digital replicas of cryptocurrencies like bitcoin as well as real-world assets like the U.S. dollar and oil. These “synthetic” tokens can then be used in decentralized finance, or DeFi, where traders can trade, lend or deposit tokens using automated, blockchain-based protocols.
As of press time, the SNX price was up 10% over the past 24 hours to $13.34, for a market capitalization of $1.5 billion.
The episode illustrates an increasingly common theme in cryptocurrency markets: digital assets jumping in price due to demand from DeFi traders who need them to cash in on token giveaways. Many cryptocurrency projects offer these reward programs to market themselves and incentivize new users.
According to Denis Vinokourov, head of research at Synergia Capital, the Lyra project’s rewards program is heavily dependent on people getting SNX so that they can stake it, get the sUSD and start the process of trying to qualify for the Lyra rewards program.
“This specifically targets SNX stakers, and therefore is contributing to its rise,” said Vinokourov.
Lucas Outumuro, head of research at IntoTheBlock, said that “this has been something discussed and anticipated in the Synthetix community.”
He noted that the number of addresses holding the SNX token has climbed to an all-time high, closing in on 100,000: “This shows a growing community of participants for the Synthetix ecosystem,” Outumuro said.