Collateral Ratio (CR)

At the core of Solidus Synth lies a dynamic collateralization model designed to ensure the stability, efficiency, and scalability of our synthetic assets.

Initial 95% Collateralization

• Optimized Capital Efficiency from Day One: Unlike fully backed synthetic assets, Synth launches with a 95% collateralization ratio to provide greater capital efficiency while maintaining security.

Collateral Composition

Each synthetic asset is backed by:

✔️ The backing asset of the synthetic (e.g., stablecoins or native assets depending on the chain). ✔️ The utility token of the respective Synth ecosystem (sSynth, aSynth, or hSynth).

💡 Example:

• xsUSD (omnichain) is backed by a basket of stables hand picked on each chain for optimal safety in backing and yield potential.

• xsS (Sonic Chain) is backed by S + sSynth.

• xsAvax (Avalanche) is backed by AVAX + aSynth.

• xsHype (Hyper Liquid EVM) is backed by its native asset + hSynth.

Transition to more Capital Efficient Collateralization

• Smart Liquidity Optimization: As the platform matures and establishes strong revenue streams and deep liquidity, the collateral ratio will gradually decrease based on risk parameters, allowing for capital-efficient growth.

• Governance & Market-Driven Adjustments: The Synth DAO will govern future collateral ratio changes, ensuring that modifications are community-driven and data-backed.

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The CR is used by the minting and redeeming function and it is displayed as a percentage. This ratio expresses what percentage of utility token (e.g. sSynth) is required to mint or redeem an S token.

CR will be adjusted every hour at the step of 0.25% (up or down)

For example: ▶️ 60min-TWAP over 1.005 S-> CR down ▶️ 60min-TWAP under 0.995 S-> CR up At the beginning, the minimum CR is set at 95%