Synthetic Assets vs Wrapped Tokens: What's the Difference?
Understanding two approaches to bringing assets on-chain
A comparison of synthetic assets like Continuum and wrapped tokens like wBTC, explaining the key differences and trade-offs.
Synthetic Assets (Continuum)
SolanaPrice-tracking tokens
Pros
- No custody of underlying asset
- Any asset with price feed can be synthesized
- No geographic restrictions
- Instant minting and redemption
Cons
- Doesn't convey asset ownership
- No dividends or staking rewards
- Dependent on oracle accuracy
Wrapped Tokens (e.g., wBTC)
Various1:1 backed tokens
Pros
- Backed by real underlying asset
- Redeemable for the actual asset
- More established legal framework
- Perfect price tracking
Cons
- Custodian/bridge risk
- Limited to assets that can be wrapped
- Often requires KYC for large redemptions
Our Verdict
Synthetic assets excel for trading exposure without custody complexity, especially for traditional assets. Wrapped tokens are better when you need actual asset ownership or plan to unwrap.
Which Should You Use?
Trading TradFi assets on-chain
Synthetic AssetsStocks and commodities can't be wrapped, only synthesized
BTC on other chains
Wrapped TokenswBTC/tBTC provide actual Bitcoin backing
DeFi collateral
Both workDepends on protocol acceptance and your risk preference
Long-term investment
Wrapped TokensActual asset backing for true ownership
Short-term trading
Synthetic AssetsFaster minting/redemption, no custody delays
More Comparisons
Continuum vs Synthetix: Solana vs Ethereum Synthetics
Comparing the leading synthetic asset protocols across chains
Continuum vs Jupiter Perps: Synthetics vs Perpetuals
Understanding the difference between synthetic tokens and perpetual futures
Continuum vs GMX: Cross-Chain Synthetic Comparison
Comparing Solana and Arbitrum approaches to synthetic trading
Try Continuum Today
See why traders are choosing Continuum for synthetic asset trading on Solana.
Get Early Access