It takes a lot of time for the direction of regulation to be decided
If we wait, the meaning of arriving first disappears
Let’s break through in the new direction of development! Project Direction
It is foolish to wait for Big Money! A few years ago some VC had our lina at a low price. Other smart big money can’t buy lina at a higher price than them. What will bring the brothers together and how will our bank of lina be exposed?
Is it a partnership with JP Morgan? Is it a partnership with Morgan Stanley?
and Granting of synthetic assets and defi the United States first or China first
Whoever it is, it’s good for lina
Synthetix and Mirror Protocol are the most representative synthetic asset protocols today.
Synthetix is an Ethereum-based synthetic asset protocol for integrating assets, including real currency, raw materials, stocks, and indices, on-chain. In order to guarantee the value of synthetic assets, it secured the stability of the protocol by setting a high collateral ratio of more than 400%, and it gained great popularity by supporting more than 50 synthetic assets, including foreign exchange, stocks and raw materials.
However, due to the deepening regulatory risks, only 14 types of synthetic assets are currently supported, and the entry barriers due to high collateral ratios and the high gas cost of Ethereum Mainnet are moving away from the glory of its heyday. The project is trying to attract users by expanding support for Optimism, a layer 2 rollup, and planning to airdrop tokens from the brother project Alin Protocol to SNX Staking participants.
Mirror is a Terra-based synthetic asset protocol launched in December 2020 by Terra Form Labs, the developer of Terra Blockchain, to increase the use of UST. In Mirror, mAsset, which means mirrored Asset, is issued as a synthetic asset. Mirror has the following distinctions from Synthetix:
- Unlike Synthetix, where only SNX can be deposited, collateral assets are diversified (MIR, ANC, LUNA, UST, etc.)
- A structure that allows users to determine the ratio of collateral assets (150–400%) by maintaining a high ratio of Synthetix above the minimum collateral ratio for collateral assets
- It is designed in a structure where mAsset and UST pair are deposited through AMM DEX Terrace Swap, and non-permanent losses caused by pairing with UST are compensated through APY
As such, Mirror has attracted attention as a protocol that compensates for Synthetix’s shortcomings and increases the use of UST. Mirror has grown to $1.6B in TVL in less than a year since its launch, ranking second among all synthetic asset protocols.
Naturally, synthetic asset protocols have both advantages and disadvantages.
-
First of all, a synthetic asset is not an actual asset, so you can’t exercise the right to an underlying asset. For example, a combined equity asset cannot exercise dividend rights or voting rights, and the holder of sBTC cannot exchange it for an actual BTC.
-
Because synthetic assets are not real assets, there are risks to value collateral. In the case of Synth composite assets that are guaranteed value with SNX tokens, if the SNX token crashes, the value of the underlying asset may not be sufficiently guaranteed despite the high collateral ratio.
-
Finally, synthetic assets do not fully follow the price changes of underlying assets. Because synthetic assets are a kind of derivative, a separate market is formed, and prices are fluctuated by the demand/supply of these market participants.
regulatory risk
The SEC has been expressing its intention to regulate securities tokens for a long time. Shortly after Binance’s announcement of its suspension of offering token-type stock services in July 2021, SEC Chairman Gary Gensler said any form of token would be subject to the Securities Act if it had the nature of securities. In response, the decentralized exchange Uniswap also announced the delisting of more than 100 synthetic asset tokens, raising market anxiety about synthetic asset tokens. After Uniswap’s massive delisting, Synthetix no longer supports stocks and raw material synthetic assets due to lack of trading volume. Meanwhile, Mirror Protocol has continued to support synthetic assets without any separate measures, but the future is uncertain as it was revealed that Kwon Do-hyung, CEO of SEC and Terra, entered a legal battle in October 2021.
Given the SEC’s strong willingness to regulate securities-type tokens, it is expected that it will be difficult to maintain stock synthetic assets. In particular, unlike Synthetix, which has already stopped supporting all stock synthetic assets, Mirror Protocol is concerned about a major blow if regulations are enforced because most of the currently supported synthetic assets are stock synthetic assets. Even if the service is provided only to non-U.S. nationality holders to avoid SEC regulations, it is a disadvantage that it is hard to ignore in the U.S., which has grown into the largest market with cryptocurrency transactions banned in China.
I’m not good at expression
Please understand my lack of knowledge Thank you!