Synthetic tokens are digital assets that represent a derivative of another asset, allowing users to gain exposure without owning the underlying asset directly. They are created through smart contracts and can mimic the value of commodities, currencies, or indices.These tokens are often created on decentralized platforms, enabling users to trade synthetic assets without the need for traditional exchanges. By using collateral, users can mint synthetic tokens that reflect the price movements of the underlying asset. For example, a synthetic token that tracks the price of gold allows investors to speculate on gold’s price changes without purchasing physical gold itself. This offers flexibility and access to a wider range of assets.Synthetic tokens can also provide opportunities for hedging and leveraging trades, making them appealing to traders looking to enhance their investment strategies. However, they come with risks, including smart contract vulnerabilities and market volatility, which users should consider carefully.