🗣️ Definition
Synthetic assets are financial instruments that mimic the value of traditional asset but do not have a direct physical representation of him. They are synthetic, not real assets, that's where the name comes from.
🔗 The difference between synthetic assets and regular ones
Synthetic assets are needed when there is no desire or opportunity to hold currency in its traditional form.
For example, we have $mTSLA, a synthetic asset that tracks the price of Tesla shares. It allows users to trade Tesla shares as tokens on the blockchain by the actual price of Tesla itself.
Synthetic assets also allow owning native tokens of another blockchain (for example, $BTC coins on the TON blockchain). If all thing done correctly, the $BTC rate will be exactly the same as that presented on all other exchanges.
💵 cUSD — Cephei's stablecoin
Our coin is a synthetic US dollar asset (1 cUSD = 1 USD) that supply users with credit funds in exchange for their collateral.
Peg Decision: Arbitrage
There is one important thing with synthetic assets - they can lose their price behavior that simulates to the traditional version, this situation is called "Depeg".
Our protocol solves this problem in the most rational way - by making the peg profitable for arbitragers:
When the price of cUSD > $1, it is profitable to open a new loan and sell cUSD for another stablecoin, and this selling process will push the price of cUSD to $1.
If the price of cUSD < 1$, then it is profitable to buy cUSD from the market to close the loan, this action will push the price of cUSD to 1$.
Cephei also has a Hard Peg mechanic, which you can read more about in our documentation
Cephei plans to have many different synthetics and so we will be releasing a new synthetic asset soon!
🪐 Our resources:
Cephei-App | Landing | CIS Channel | Eng Community | X | NFT