Synthetic assets, often referred to as synthetic tokens or derivatives, represent an innovative financial product in the world of decentralized finance (DeFi). They derive their value from underlying assets such as cryptocurrencies, equities, commodities, and fiat currencies while being created through smart contracts on blockchain networks. Users can create, trade, or invest in synthetic assets without needing to hold the actual underlying asset, which can facilitate easier access and a more diverse investment strategy for users. They can be utilized in various trading strategies such as hedging against volatility, speculation, and leveraging positions. Examples of synthetic assets include Synthetix, which allows users to create and trade synthetic versions of various cryptocurrencies and commodities.