For investors, blockchain technology has opened up an entire world of new asset classes. At the same time, this opening up has happened globally – a stark contrast to traditional stock markets that restrict users based on where they live.
One of the biggest shortcomings with investing using blockchain tech is that investments have previously been relegated to digital currencies and tokens only.
Synthetix is changing that. By using a complex system of synthetic derivatives, Synthetix will eventually allow any blockchain investor to get exposure to almost any asset type imaginable – gold, crude oil, soybeans, fiat currencies and more.
A Simplified Introduction To Synthetix
When it comes to the latest wave of DeFi platforms and assets, Synthetix is easily one of the most complex, abstract and difficult to understand for beginners. It’s especially difficult to those new to derivatives and synthetic assets.
Because of this we’re going to be taking a very high level approach to explaining Synthetix. When you’re ready to dig into all the technical details, we recommend you read through the official white paper (PDF).
Synthetix is an Ethereum-based DeFi platform that will allow investors to get price exposure to any type of asset that has price tracking. For example, in the future you could invest in Starbucks stock, SBUX, by purchasing a synthetic SBUX stock token – sSBUX, which can be bought, sold and minted through the Synthetix platform.
The price of the token will track the price of the real SBUX stock. But owning synthetic SBUX as a token doesn’t mean you actually own a share of the stock. As such, you won’t be able to earn dividends if a stock offers them normally.
According to Synthetix, this idea can extend beyond stocks to commodities futures like corn or steel, other cryptocurrencies, fiat currencies (not just stable coins based on them), precious metals and more.
Currently, only fiat currencies, certain cryptocurrencies, and gold and silver are…