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What are THORChain Synthetics?
THORChain synthetics are synthetic twins of the Layer 1 cryptocurrencies. They are derivatives that keep the same price and value as the underlying asset.
The price of the underlying asset is based on the ratios of THORChain's liquidity pools. The pools are also a requirement to mint a synthetic asset. The structure for THORChain synthetics is integrated directly into the blockchain making them native assets, which will enable THORfi applications.
Trading with synthetic assets is consistently cheap and fast compared to trading with layer 1 tokens. They can also be locked into vaults to earn interest which is auto-compounded.
(Table comparing Synths vs. L1 assets in terms of speed and costs)
No impermanent loss Synthetics are exposed to only one asset, but the impermanent loss happens only when exposed to two assets in the same pool.
When holding THORChain synthetics users can't get liquidated. Minting synthetic asset is like swapping rather than borrowing, that means there is no risk of having position liquidated.
You can recognize them by having a prefix of the native chain/ BTC/BTC - Synthetic asset of Bitcoin ETH/UNI - Synthetic asset of Uniswap
Last modified 3mo ago
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