A tokenized asset that is created and funded/ collateralized by a financial instrument such as a derivative or debt). The holder is required to repay the asset (token) to reclaim the underlying collateral. The token can also have a utility mechanism as underlying. It is essentially a blockchain-powered representation of derivatives, where a transaction is immutably registered on a public ledger. The digitized derivatives are cataloged online and investors receive tokens that certify their holdings and ownership. In other words, ownership rights are undisputed since the token are recorded on the blockchain securely and permanently. The blockchain storage enables the issuance of fractional synthetic coin to investors.
Synthetic tokens can also be issued on the basis of fractional ownership of real/ physical assets such as real estate, gold, and other precious metals.
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