What are Synthetic Assets?
It sounds complex...we promise it's not!
Synthetic Assets are part of a broader group of financial instruments known as 'derivatives'.
What are Derivatives?
Simply put, a derivative is an agreement between parties with the purpose of speculating on the price of an underlying asset. In the Crypto-sphere, Futures are the most common type of derivatives. Shorting that token you love to hate on Binance? You're using a derivative.
The great advantage of derivative contracts is that participants need not hold the asset upon which they are speculating! One could profit substantially from a BTC futures derivative whilst using USDT as margin!
What is FTMz?
A synthetic version of the FTM token pegged 1:1 to the FTM price, backed by a minimum of 90% collateral (and likely more at any given time) and controlled algorithmically.
What are Synthetic Tokens?
In the DeFi space the phase 'Synthetic Tokens' has come to mean tokens that are collateral-backed, where upon the value of the token changes equal to a fixed reference.
Example: If the price of FTM increases, the FTM synthetic token will too increase.
Note that this corresponding performance is not instantaneous nor is it perfect; market participants, TWAP, Collateral Ratio, and arbitrageurs all assist in maintaining the corresponding pricing.