DeFi is rapidly evolving, and decentralized application platforms in DeFi that perform functions similar to traditional financial products are becoming increasingly complete. One of which is equally attractive to investors is “Crypto Synthetic Asset”, learn about it according to the content below.

What is Crypto Synthetic Asset ?

In the traditional financial world, a Synthetic Asset is a combination of one or more derivative products such as futures, options, swaps, etc., to simulate the price of an underlying asset. such as commodities, stocks, securities, currencies…Through derivatives you can profit from price fluctuations of the above assets without you needing to own them.

Similar to crypto-finance, Synthetic Asset in DeFi has realized this process by recording data and developing on the blockchain platform. In essence, Crypto Synthetic Asset uses blockchain technology to establish that relationship in the form of a tokenized token to represent a real-world asset issued to an investor to indicate ownership. Investors can use crypto assets to gain exposure to a variety of tokenized assets without having to hold them.

Crypto synthetic asset is simply a tokenized derivative that mimics the value of another asset, allows investors to trade digital and traditional assets in the crypto ecosystem.

Advantages of Crypto Synthetic Assets

– Reliability: all transactions take place on the blockchain and everything is public and transparent because all transactions are recorded in a distributed ledger. Since there is no centralized authority, investors are given the autonomy to access, trade and transfer assets instantly and easily.

– Asset Diversification: Allows investors to tokenize and trade any real-world asset on the blockchain by attaching value to an existing asset with a derivative and then creating a token for that derivative.

– Liquidity: Before buying an asset, any investor checks the market’s liquidity. With blockchain technology, anyone in the world can join the network to use or provide liquidity.

– No barriers: Almost everyone who wants to buy synthetic assets can access it. With fewer barriers to entry in the sector, it allows investors from all walks of life to generate cash flow by owning part or all of their desired financial instruments.

Potential Crypto Synthetic Assets

The development of the synthetic assets piece in Defi is essential, given the many advantages of crypto synthetic assets over traditional markets, as well as a convenient way to approach investors.

Furthermore, as DeFi ecosystems become more competitive, many projects for the Synthetic Asset platform have emerged on various blockchain networks, promising to assist investors in maximizing their profits

Some Popular Crypto Synthetic Asset Platforms

– Synthetix (SNY)

Synthetix is a protocol for issuing and trading synthetic assets on Ethereum. These synthetic assets are collateralized by the SNX token and will be locked in a contract that allows the issuance of the synthetic asset (also known as the Synth)

Synthetix is otherwise composed of a smart contract infrastructure and a set of incentives which maintains Synth prices. It is underpinned by the value of the Synthetix Network Token (SNX). SNX acts as collateral; staking a proportional value of SNX is required to mint Synths. Stakers are rewarded for supporting the system with a pro-rata share of the fees generated by activity in the system. The value of SNX is thus directly connected with the usage of the network it collateralized.

This mechanism allows Synthetix to support instantaneous, near-frictionless conversion between different flavors of Synths without the liquidity and slippage issues experienced by other decentralized exchanges. The resulting network of tokens supports an extensive set of use cases including trading, loans, payments, remittance, eCommerce and many more

Furthermore, the Synthetix ecosystem is transitioning to a DAO-based structure, with SNX tokens serving as the backbone of the system. SNX can be staked to provide collateral supporting synthetic asset positions while in return receiving transaction fees and acting as a governance token in the DAO

– UMA

UMA is an optimistic oracle that uses economic guarantees to secure markets. UMA’s flexible oracle serves data for uses including a cross-chain bridge, insurance, custom derivatives and prediction markets among other things.

The UMA Protocol also provides various smart contract templates that are automatically secured by its optimistic oracle. Among these are contract templates and integrations for creating synthetic tokens, prediction markets, “KPI options” and structured financial products.

– DAFI Protocol

DAFI is a protocol that aims to solve hyperinflationary token models once and for all. DAFI is a unique platform for its synthetic asset creation and its ability to solve a burning issue in the cryptocurrency market. DAFI is the platform that creates Synthetic tokens (synthetic asset tokens). Instead of having to use the projects’ native tokens and then stake and liquidity providers to receive rewards, the project links to those Networks and issues Synthetics as rewards for investors.

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