What Is a 'Synthetic Asset' in DeFi? ⎊ Path

What Is a ‘Synthetic Asset’ in DeFi?

A synthetic asset is a tokenized derivative that mimics the value and returns of another asset, such as a stock, commodity, or traditional derivative, without requiring the user to actually hold the underlying asset. They are created by collateralizing crypto assets in a smart contract.

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Glossar

Synthetic Asset

Derivation ⎊ Synthetic assets, within cryptocurrency markets, represent tokenized representations of other assets ⎊ equities, commodities, or even other cryptocurrencies ⎊ created through the use of smart contracts and collateralization mechanisms.