Encrypted synthetic assets DIY era is coming, UMA brings DeFi new explosion point?

Synthetic asset A financial instrument that simulates other tools. UGA, a decentralized financial contract platform focused on cryptographic composite assets, today announced its withdrawal from the Synthetic Token Builder. Users can create their own tokens to track any price (Standard & Poor's 500 Index, Gold Price, French Dollar Price, the number of Twitter/IG fans owned by someone, the number of points you have earned…). For example, if a user creates a synthetic token of the Standard & Poor's 500 Index, it can indirectly participate in US index trading in this form, and can even do more or short. The tool is currently running on the Rinkeby test network.

1_3csL6XB7lhn0pB4ieIuypA

How to create a synthetic token?

First you need to make sure that you are using the Rinkeby test network and have the test network ETH and the test network DAI. If you haven't already, you can get some by clicking on the UMA Synthetic Token Builder .

The running process of the token building tool?

0_uW0s6AKoYn5Ry43r

A token construction tool with good mortgages

Dapp creates a token facility by launching a smart contract. After depositing the stable currency DAI into the token building tool, you can issue a synthetic token that is 100% collateralized by the DAI you deposited. Token Facility's over-collateralization (total collateral greater than or equal to the required collateral) ensures that synthetic tokens are always 100% supported. This helps to guarantee to anyone who buys synthetic tokens that the tokens in their hands are fully mortgaged (provided by you).

1_7mSZulYWCpaso_74wNMx8g

Token building tools without full mortgage

At any time, anyone can ask a smart contract to check if your token building tool is in full mortgage (ie, if the total mortgage reaches the required mortgage). In the process, the smart contract checks the latest price of the token in the Price Feed relative to the DAI and checks if the DAI you are collateralizing in the contract meets the required amount. If you are satisfied, then you are fully mortgaged. If not, the smart contract will freeze all collateral in the contract (you cannot deposit or withdraw) and evaluate the fine. Holders of synthetic tokens can convert tokens into DAI proportionally, plus a penalty portion.

What do synthetic tokens do?

Here are some ideas:

1. Create a token that tracks the CNY/DAI exchange rate and use it to support wallets that focus on the Chinese market.

2. By creating tokens that track Tesla stock prices, we can use this token to short Tesla stocks (of course, we need a competitor who is willing to do long-term Dostera stocks), which can be sold on DEX. currency.

If you want to go a step further, you can modify the parameters that represent the build tool smart contract to create other types of synthetic tokens:

1. Create a token that tracks the DPI rate on the S&P 500 Index and Compound. By changing the token's margin currency from DAI to cDAI, you can get an increase in the S&P 500 index.

2. Create a token that tracks the DAI borrowing rate on the Compound to help the borrower hedge the interest rate risk.

Obviously, while encrypting synthetic assets can guarantee decentralization, it can indeed increase more open financial application scenarios and open up the encrypted world and the traditional financial world. The outlook is good, but new things may have many unknown risks. The DeFi industry itself is still in its infancy, and we still need more experimentation, waiting for the truly mature crypto-synthesis assets.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Blockchain

The FATF's strongest regulatory new regulations have come, and the exchange's "resistance" will be held at the end of the month.

The world's mainstream cryptocurrency market – the United States, Japan, South Korea, China, how long is i...

Blockchain

Solana Ecosystem Bounces Back from FTX Collapse with a Dash of Resilience and a Pinch of Silver Lining

Solana CEO, Anatoly Yakovenko, discusses the impact of FTX's downfall on Solana's ecosystem startups and projects.

Blockchain

We sorted out 40 "running road" cryptocurrency exchanges, all of which share these common routines

Article | Interchain Pulse · Liangshan Huarong On February 23, the ZG exchange was exposed as suspected to be ru...

Blockchain

A major Brazilian bank announces closure of accounts on cryptocurrency exchanges

As a large commercial bank refuses to comply with the "Prevention of Cryptocurrency Exchange Account Closure&quo...

Policy

Sam “SBF” Bankman-Fried Faces the Fury of the Court (with a Twist of Humor)

Sam Bankman-Fried, the ex-CEO of FTX, took the stand in a New York court and testified about communication and custom...

Blockchain

Research Report | Exchange Industry 2019 Q1 Report

In the first quarter of 2019, the digital clearing exchange industry changed dramatically. After a long bear market i...