Crypto Education: Synthetic Assets Explained | Animation | Cryptomatics

Hello and welcome to a new Cryptomatics episode! Today, I will explain what synthetic assets are,   how they are used in crypto, 
and why they are important. What Are Synthetic Assets? Synthetic assets are a blend of assets 
with the same value as another asset. In a traditional sense, they 
mix some derivative products,   like call options, and futures, that replicate 
an underlying asset, such as stocks, or bonds. For instance, instead of buying   a stock, a company may buy a call option 
and sell a put option on the same stock.

This gives the company the chance 
of using several financial vehicles   at the same time, instead of 
a single investment asset. How Are Synthetic Assets Used in Crypto? The goal of crypto-based synthetic assets 
is to offer you exposure to various assets   without having to actually hold the underlying 
ones, be it gold, index funds, or the euro. When using a unique synthetic asset, 
an investor is able to continue to hold   tokens that track the value of other assets 
without having to abandon the crypto sphere. Crypto synthetic assets come with all 
of the benefits of decentralization   since they are available to all users 
thanks to secured smart contracts. Why Are Crypto Synthetic Assets Important? Basically, thanks to this, crypto 
holders are able to trade traditional   assets or derivatives without having 
to leave the digital ecosystem.

In the past, only a small number of 
institutional investors were able   to gain access to the global 
derivatives market, but now,   anyone who owns a smartphone and understands 
the basics of synthetic assets can use them. What Types of Synthetic Assets Are There? You can use several platforms for 
this, such as Abra, Synthetix, or UMA. For example, Abra represents a decentralized 
investment platform that lets people use   crypto they own as collateral 
for creating synthetic assets. This means that if someone plans to 
acquire Apple stocks worth $2,000   via Abra, the company would peg $2,000 of the 
user’s Bitcoin against the price of the stock. If the price of the Apple stock increases,   the equivalent sum of Bitcoin will be 
added or removed from the contract. Basically, it would result in a short position 
on Bitcoin but with a long one on Apple,   which represents the hedged asset. At the same time, Abra would have a long 
position on Bitcoin and a short one on Apple. Conclusions Traditional derivatives may have 
been the bee’s knees in the past,   thanks to the fact that it allowed the unlocking 
of additional value from assets such as equities.

Nowadays, though, things have changed, 
and crypto synthetic assets are pushing   liquidity access to a status that wouldn’t 
have been thought possible in the past. Synthetic assets will offer you instant and 
unlimited access to any asset in the world,   thus completely changing the game for the future. I hope you enjoyed today’s video, and if you 
have other questions about synthetic assets,   don't hesitate to tell us in the comment section. So much for today, don't forget to 
subscribe to the Cryptomatics channel,   if you want to stay up to date with the 
latest concepts in the crypto sector.

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