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Synthetix, a decentralized finance (DeFi) protocol, has made a major move in the crypto space with a notable acquisition. Synthetix acquired TLX, the leverage token platform, through a token-for-token transaction.
Synthetix announced that the acquisition gained approval on SIP-412 and TIP-14. This acquisition comes shortly after a similar procurement of Kwenta.
Leveraged Tokens and Their Role in DeFi
Synthetix clarified these moves are steps in the protocol’s strategy of evolving as a principal product issuer after designing a decentralized liquidity layer.
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For clarification, leveraged tokens refer to the tokenized form of a levered strategy that multiplies the results of the price movement of an underlying asset like Ethereum or Bitcoin.
Leveraged tokens allow users to access leverage without trading on a perpetual futures platform. It also eliminates the need to manage margin requirements. Additionally, traders can easily mint their leveraged token, transfer it, and redeem it at their convenience.
According to the paraent platform, TLX’s acquisition is the maiden end-customer, revenue-generating product developed on Synthetix. The protocol owns it and will be responsible for its operation.
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Synthetix to Unveil Incentive Program in 2025
Users should anticipate the “juicy leveraged token incentive” program in 2025. As per its update, this will happen as soon as a thorough audit of TLX products has been conducted. Synthetix says it plans to improve parameters and redeploy all smart contracts.
Once done, it will relaunch TLX products on the same Base network. TLX, which is also the native token, will be incinerated and changed to Synthetix’s token to complete the acquisition and switch.
To guarantee a quicker route to launching, Synthetix says it will utilize TLX’s existing codebase as a basis for its designs. That is, it will be used to design the DeFi protocol’s leveraged tokens in a bid to hit the market faster.
Synthetix’s Growing Impact on DeFi
Kain Warwick founded Synthetix in 2017. The platform allows users to trade synthetic assets, such as stocks, currencies, and commodities, on the Ethereum blockchain amid scaling potentials. According to data from DefiLlama, the protocol holds a total value locked (TVL) of $242 million.
This represents significant growth and confidence on the part of investors in the future of Synthetix.
