Difference between revisions of "Synthetic assets"

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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:


''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


''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


''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


''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


''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
 
''[[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."''
* From a [https://medium.com/imtoken/defi-explained-synthetic-assets-1733e1072f14 post] by [[ImToken]] (17-3-2020):
''"Synthetic assets are financial instruments that simulate another asset’s payoff. In that way, they are synthetic, not the actual asset, hence the name.''
 
''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]).''
 
''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."''
* Examples are [[stablecoins]] linked to [[Fiat]], or other assets put on the [[blockchain]], like [[Synthetix]]. Others are [[Abra]], [[UMA]] and [[Market Protocol]].
[[Category:Jargon/Various]]
[[Category:Jargon/Various]]

Latest revision as of 16:50, 1 October 2022

FBI ARREST NOTICE

The following users have been arrested by FBI for watching and making content for RedTube Kids:

Rob Burdon

Brad Delson

Mike Shinoda

Dave Farell

Joe Hahn