Synths
Synthetic derivatives minted using rDPX collateral
rDPX tokens can be used to mint synthetic derivatives tracking prices of real world assets such as:
- Stocks
- Commodities
- ETFs
- Indices
- Cryptocurrencies
Dopex makes use of the UMA protocol to create these synthetic derivative tokens while using rDPX as collateral. These tokens differ from traditional on-chain derivatives since they are securely collateralized without an on-chain price feed.
Due to the lack of a on-chain price feed, these tokens are designed with mechanisms to incentivize token sponsors (those who create synthetic tokens) to properly collateralize their positions. These mechanisms include a liquidation and dispute process that allows token holders to be rewarded for identifying improperly collateralized token sponsor positions. The dispute process relies on an oracle, the UMA DVM, to settle disputes regarding liquidations.
Synthetic derivatives give the rDPX token real value considering that these derivatives would be tradable as proxies for these markets requiring rDPX tokens to be used to keep their minimum collateralization ratio in check. These synths could also be locked in option pools to earn passive yield from option premiums and compound on pool rewards.
Last modified 1yr ago