Something “synthetic” is something artificial by nature, a thing that mimics the “real” version. When we add this term to already artificial tokens, it doesn’t mean that these tokens aren’t “real,” but that they follow the price of another asset. It could be from gold, a national currency, a stock, a commodity, another cryptocurrency, or whatever you want.

Still, synthetic tokens aren’t exactly on-chain representations of the referenced asset. If you own a synthetic token that’s tracking the price of gold, this doesn’t give you any ownership of gold itself. It just gives you exposure to the price of the involved asset: If gold rises in price, a synthetic instrument designed to follow it should move in the same…