Crypto Synthetic Assets, Explained | Cointelegraph

Abra is a decentralized investment platform that allows users to use their cryptocurrency as collateral to create synthetic assets. Abra’s synthetic asset model leverages smart contracts enabled with Bitcoin (BTC) and Litecoin (LTC).

In practice, if an investor wanted to buy Google stocks worth $1,000 through Abra, the firm would peg $1,000 of the user’s BTC against the price of Google’s stock. If Google goes up or down, the equivalent amount of BTC will be added or subtracted from the user’s contract.

In the above example, the investor would essentially be taking a short position on BTC while taking a long position on Google, the hedged asset. Meanwhile, Abra would take a long position on BTC while shorting Google.

Synthetix is an Ethereum-based platform that allows investors to mint and trade synthetic cryptocurrency on its peer-to-peer platform. This enables users to gain access to synthetic products that simultaneously give them exposure to…