What Is Synthetic Asset?
A token that tracks the price of another asset without requiring ownership of the underlying.
Definition
Synthetic assets are tokens built to follow the price of something else: a stock, a metal, a currency pair. Collateral and an oracle feed do the work that custody does in a tokenized product. Nobody is holding the actual share.
How it works
A protocol takes collateral, usually stablecoins, reads the target asset's price from an oracle, and issues tokens whose value moves with that price. The collateral stays locked until someone redeems.
In Continuum
Continuum issues synthetics as paired L/S tokens. Deposit stablecoins and you get both a Long and a Short token, and the two of them always sum back to what you put in. That's what keeps the system fully collateralized without an issuer promising anything.
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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