Synthetic Asset
DeFi
Token that tracks the value of another asset or index.
Synthetic assets mirror the price of another asset like a stock, commodity, or index. They are backed by collateral and maintained by on chain mechanisms that use incentives and liquidations to keep the price aligned.
Frequently asked questions
How are synths created?
Protocols lock collateral and mint tokens that track an external price via oracles and rules.What risks should I know?
Oracle failures, collateral shortfalls, and governance changes. Read docs and audits.Can I redeem a synth?
Some allow redemption for collateral at oracle price. Check the specific protocol rules.