What Is Synthetic Asset?
A token that tracks the price of another asset without requiring ownership of the underlying.
Definition
Synthetic assets are blockchain tokens designed to mirror the price movements of real-world assets like stocks, commodities, or currencies. They are created using collateral and oracle price feeds rather than holding the actual underlying asset.
How It Works
A protocol accepts collateral (like stablecoins), uses price oracles to track the target asset, and mints tokens that represent exposure to that price. When the underlying price moves, the synthetic token value moves proportionally.
In Continuum
Continuum creates synthetic assets using paired L/S tokens. When you deposit stablecoins, you receive both Long and Short tokens that together track the underlying asset price. This paired approach ensures full collateralization.
Related Terms
A token that gains value when the underlying asset price increases.
A token that gains value when the underlying asset price decreases.
A service that brings off-chain data (like prices) onto the blockchain.
Assets deposited to back or secure a financial position.
More Basics Terms
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