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| * [https://cointelegraph.com/explained/crypto-synthetic-assets-explained From] [[Cointelegraph]] (18-3-2020):
| | == FBI ARREST NOTICE == |
| ''"The term “synthetic asset” refers to a mix of assets that have the same value as another asset. Traditionally, synthetics combine various derivative products — options, futures or swaps — that simulate an underlying asset — stocks, bonds, commodities, indexes, currencies or interest rates.''
| | The following users have been arrested by FBI for watching and making content for RedTube Kids: |
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| ''For example, rather than purchasing a stock, an investment firm may purchase a call option and sell a put option on the same stock. The use of synthetic assets here allows the firm to make use of multiple financial vehicles rather than a single investment asset.''
| | Rob Burdon |
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| ''The high-end estimate for the value of all derivative contracts is upwards of $1.2 quadrillion — a number exponentially bigger than global real estate ($217 trillion), the global debt ($215 trillion), global stock markets ($73 trillion) and the world’s supply of gold ($7.7 trillion).''
| | Brad Delson |
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| ''On one hand, [[derivatives]] can be used to help take price risk out of a variety of assets like commodities to debt. On the other hand, derivatives can promote and exacerbate market inefficiencies, encouraging a zero-sum game among traders rather than creating true market value. The use of derivative products allows investors to earn returns without a physical settlement, arbitrage trade, transfer risk and hedge against price fluctuations.''
| | Mike Shinoda |
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| ''In practice, if an investor wanted to buy [[Google]] stocks worth $1,000 through [[Abra]], the firm would peg $1,000 of the user’s [[BTC]] against the price of Google’s stock. If Google goes up or down, the equivalent amount of BTC will be added or subtracted from the user’s [[Smart contract|contract]].''
| | Dave Farell |
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| ''In the above example, the investor would essentially be taking a short position on BTC while taking a long position on Google, the hedged asset. Meanwhile, Abra would take a long position on BTC while shorting Google.''
| | Joe Hahn |
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| ''[[Decentralization]] grants open-access to a global community of investors. Before products such as Abra, Synthetix and UMA became available, only a select few institutional investors could access the global derivatives market. Now, anyone with a smartphone and an intermediate understanding of the synthetic asset underworkings can access these powerful investment vehicles."''
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| * From a [https://medium.com/imtoken/defi-explained-synthetic-assets-1733e1072f14 post] by [[ImToken]] (17-3-2020):
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| ''"Synthetic assets are financial instruments that simulate another asset’s payoff. In that way, they are synthetic, not the actual asset, hence the name.''
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| ''Any difference between synthetics and derivatives? Those names are often seen in the same context (e.g. Investopedia’s examples for [https://www.investopedia.com/terms/s/synthetic.asp synthetics] and [https://www.investopedia.com/ask/answers/12/derivative.asp derivatives]).''
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| ''In our case, we are simply using derivatives as instruments that simulate other assets’ payoff and synthetics as derivatives that use a mix of assets/derivatives."''
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| * Examples are [[stablecoins]] linked to [[Fiat]], or other assets put on the [[blockchain]], like [[Synthetix]]. Others are [[Abra]], [[UMA]] and [[Market Protocol]].
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| [[Category:Jargon/Various]] | | [[Category:Jargon/Various]] |
