Synthetic assets — where to get started?
In recent years the world of finance and assets as we know it is being turned upside down. Nowadays we have a new stream of ideas coming from crypto finance and the openness of blockchain systems. Decentralized finance platforms (DeFi) are offering more ‘traditional’ concepts like exchanges and lending but also something completely novel — synthetic assets.
So what are synthetic assets?
Synthetic assets are blockchain-based cryptocurrency derivatives — that means that they derive their value from an underlying asset or index. A synthetic asset is simply a tokenized derivative which means that the relationship between derivative and underlying asset is tokenized rather than created by using a contract. By doing so, users can get exposure to different assets within one cryptocurrency ecosystem and without the need to hold the underlying asset. Crypto synthetic assets also offer the benefits of decentralization. On synthetic assets exchanges such as Synthetify platform synthetic assets closely track the price of specific assets assigned to them e.g. xBTC will have the same price as BTC on centralized exchanges.
Decentralized platforms for synthetic assets
Synthetify is a Solana-based DeFi platform that can be used to mint (create), exchange and burn synthetic assets. The app consists of Synthetify exchange where users can exchange synthetic assets that are listed on the platform for a low and static fee of 0.3%. Exchange of two different synthetic tokens is direct, even for pairs that do not exist on centralized exchanges e.g. xFTT -> xSRM instead of FTT -> USD -> SRM which results in much lower exchange fees and slippage. The only thing it requires is the ownership of any of the synthetic assets that can be minted on the platform or acquired on centralised exchanges.
The platform also uses its native token — SNY — as a collateral, enabling users to mint and burn synthetic assets. To do that, users who own SNY token can take part in staking. Stakers lock their SNY tokens inside a smart contract and use it to create synthetic USD (xUSD) that later can be exchanged for other types of synthetic assets. The Stakers are responsible for initial creation of debt and synthetic assets. To unlock SNY tokens and reduce their debt Stakers need to burn synthetic tokens equal to the value of their debt. Collateral is dependent on the price of SNY token and debt is calculated based on their share of debt of the entire platform. In reward for creating liquidity for Traders and acting as the opposite side of trades performed on Synthetify exchange, they receive pro rata fees generated by exchange and inflation rewards.
Synthetic assets have a form of Solana SPL-Token and can be freely transferred between wallets or used in other DeFi applications. Prices of all synthetic assets are provided by decentralized oracles build on top of Solana blockchain. Only synthetic USD (xUSD) has a static predefined value that is 1 USD.
Why is it so promising?
DeFi projects like Synthetify allow users to trade synthetic assets on a decentralized platforms in a way that is fast, cheap and available to anyone 24/7. What more can one need?
To learn more about Synthetify:
Visit our website: synthetify.io
Read the platform docs: docs.synthetify.io
Keep in touch with us on Twitter: @synthetify
Telegram: t.me/synthetify
or Discord: /Synthetify
