What Is the Primary Difference between a Synthetic Asset and a Tokenized Stock?
A synthetic asset is a derivative created on-chain via collateralization and a debt mechanism, tracking the price of the underlying asset without requiring the issuer to hold the physical asset. A tokenized stock is a digital representation of an actual equity share, where the issuer typically holds the physical share in custody, making it a regulated security and an IOU.
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.
Tokenized Stock
Asset ⎊ A tokenized stock represents fractional ownership in an underlying equity asset, typically a publicly traded company, but increasingly encompassing private entities or specialized investment vehicles.