# Synthetic asset

Source URL: https://support.dxp.blockstream.com/education/glossary/synthetic-asset
Updated: 2026-05-26T17:14:45.000Z
Letter: S

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Sometimes referred to as simply _synths,_ synthetic assets are collateral-backed assets whose value fluctuates depending on a reference price. They can be defined as anything an oracle can attest to, from [digital securities](https://support.dxp-staging.blockstream.com/education/glossary/digital-securities) or a share of Apple stock to entire index funds like the S&P 500.

On [Liquid](https://support.dxp-staging.blockstream.com/education/glossary/liquid-network), synths work by having the user (borrower) lock collateral into a smart contract to borrow the synthetic asset, which acts as a digital bearer asset that can then be self-custodied and traded confidentially between peers.  
  
Learn more about synths by reading the _Synthetic Asset Smart Contract for the Liquid Network_ [whitepaper](https://vulpem.com/synthetic-asset-smart-contract.pdf).

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## Related Terms in This Letter
- [Schnorr signatures](https://support.dxp.blockstream.com/education/glossary/schnorr-signatures)
- [Shamir's Secret Sharing](https://support.dxp.blockstream.com/education/glossary/shamir-secret-sharing)
- [Satoshis (sats)](https://support.dxp.blockstream.com/education/glossary/sats)
- [Synthetic asset](https://support.dxp.blockstream.com/education/glossary/synthetic-asset) (current)
- [STARKs](https://support.dxp.blockstream.com/education/glossary/starks)
- [SNARKs](https://support.dxp.blockstream.com/education/glossary/snarks)
- [SHA-256](https://support.dxp.blockstream.com/education/glossary/sha-256)
- [Sound Money](https://support.dxp.blockstream.com/education/glossary/sound-money)