Introducing multi collateral on Synthetify platform

Synthetify platform was intended to use its native token — SNY as a single collateral for minting and burning synthetic assets. Now we’ve decided to improve on our idea and introduce a multi collateral solution. Here’s a short explanation of what it is and why we think it’s a step in the right direction.

How did a single collateral with SNY work?

Synthetify platform uses its native token SNY and enables:

• Creation
• Burning
• Exchange

of synthetic assets.

SNY can be locked by a user in a smart contract in order to create synthetic USD (xUSD). This action is called Staking and it entitles users to a share of fees generated on Synthetify exchange.

Later xUSD can be exchanged on Synthetify exchange for other synthetic assets listed on platform. To unlock their SNY, Stakers need to burn synthetic assets equal to the value of their debt.

Each user needs to maintain a sufficient collateral ratio — meaning the ratio of the amount of locked tokens to the value of minted synthetic assets. If the user becomes undercollateralized their collateral will be liquidated, meaning burning their synthetic assets and transferring part of their collateral to a Liquidator for paying back the Staker’s debt.

Platform will use multiple assets such us SOL, BTC or ETH along with SNY as a collateral for xUSD creation.

What is multi collateral?

Multi collateral means using not a single but many types of assets as a collateral on the platform.

Those collateral assets will be used in the same way as SNY would, to enable creation and burning of synthetic assets and entitling users to a share of fees.

The list of assets that will be supported as collateral on Synthetify platform is still open. The most probable are SOL, ETH and BTC.

What are the potential benefits of using multi collateral?

Using multiple types of collateral has following advantages:

• allows users to generate liquidity with tokens they already hold or use on other platforms
• market cap of xUSD created on the platform is not limited by the market cap of SNY
• it increases protocol’s resilience and stability, as the whole platform is not dependent on a single asset’s price, which can be volatile
• it’s better for ensuring the safety of the platform against potential sharp drops in collateral’s price
• it reduces the risk of cascading liquidations
• it deepens the protocol liquidity.

As you can see, here at Synthetify we’re always flexible to adjust our product to provide our users with the best and smoothest experience possible.