An asset or class of assets that is created by a community by means of voting as a validation point. These assets are maintained on a blockchain, as tokens, and replicate other certain types of assets or valuables, giving the asset holder the benefit of, and exposure to, the asset without holding it. Synthetic assets may take the form of currencies, cryptocurrencies, stocks, commodities and virtually anything that has a price.
Those are assets are economically like derivatives, where investors can gain exposure to any kind of asset like gold, bitcoin and fiat money (a currency), or even specific economic variables (such as interest rates, inflation rate, credit risk, etc.) without having to own it. However, synthetic assets are blockchain-based cryptocurrency derivatives that act and behave similarly like traditional derivatives, but in a different way and mechanism. In short, a synthetic asset is simply a tokenized derivative that mimics the the behavior (and value proposition) of another asset.
Synthetic assets are known for short as synths.
