Glossary · Stablecoins
Synthetic dollar
Also: synthetic stablecoin, delta-neutral stablecoin
A synthetic dollar is a stablecoin backed by a hedged trading position rather than by cash reserves, typically pairing spot holdings with an equal short in perpetual futures so the combined value stays near a dollar.
Related terms
- Delta neutral
- A delta neutral position is one constructed so that its net sensitivity to the underlying asset's price is approximately zero, leaving its return to come from funding, fees or basis rather than from price direction.
- Funding rate
- The funding rate is the periodic payment exchanged between holders of long and short perpetual futures positions, paid by longs to shorts when the perpetual trades above spot and in the opposite direction when it trades below.
- Stablecoin
- A stablecoin is a token designed to hold a constant value against a reference asset, almost always the US dollar, using reserves, overcollateralization or a hedged trading position to defend the peg.
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