What are Synthetic Assets?
Synthetic assets (synths) are tokenized derivatives that mirror the price of other assets—stocks, commodities, forex, or indices—without holding the actual asset. They use oracles and collateral to maintain price tracking.
How Synths Work
- Users deposit collateral (often stablecoins or native tokens)
- Mint synthetic tokens tracking target asset prices
- Oracles provide real-time price feeds
- Collateral ratio maintained through liquidations
Popular Synthetic Protocols
- Synthetix (sUSD, sBTC, synthetic stocks)
- Mirror Protocol (mAssets)
- UMA (synthetic tokens)
Risks
Oracle manipulation, collateral volatility, and regulatory uncertainty.