What are cAssets on the Comdex Synthetics Decentralized Exchange?
For some months now, the Comdex platform has been working on its Synthetics DEX to kickstart its sole purpose of democratizing finance and revolutionizing the world of commodities. And very soon, the devnet (or Testnet) of the DEX will be launched.
To democratize commodities, Comdex allows users to tokenize their commodities or assets on-chain which converts them to synthetic assets and these synthetic assets can be used as collateral for funds that Comdex refers to as “cAssets”.
Let’s get the full details:
What are cAssets?
Synthetic assets are one of the specialties the Comdex network offers.
These cAssets — which have been converted from real-world assets or commodities — are used as collaterals for debt assets, in order to engage in Liquidity Staking pools. They are also known as CDP (collaterized debt positions).
cAssets are Collaterized Debt Positions (CDP) on the Comdex platform meaning that they are assets that have been set as collaterals to compensate debts taken by users to engage in liquidity.
Let me illustrate using an example
Mr. A wants to engage in Comdex LPs but has fewer assets than he can stake. With the DEX, Mr. A can get a loan service where he deposits his available tokens as collateral and the amount he needs is given to him as cAssets.
On cSwap — which will be a part of the Synthetics DEX — these cAssets are created (collateral exchanged for them) & stand as a debt position to the number of assets Mr. A borrowed. He can go on to engage in liquidity on the Comdex platform & earn incentives.
To keep his position & avoid withdrawal, Mr. A has to maintain a minimum collateral/debt ratio. If he fails to, his cAssets will be closed & the underlying collaterals will liquidate to pay off the outstanding debt positions, the liquidation fee, & penalty.
However, without faulting in paying his dues and maintaining the minimum debt ratio, Mr. A can build his portfolio till he is ready to close the CDP by returning the assets he borrowed as debts after his earnings as reached a point he can now engage in the LPs.
With the cAsset feature in place, Comdex through its Synthetics DEX gives many users a chance to engage in liquidity and earn great rewards with the little assets they have. That’s the goodness of Comdex.
Minting Your cAssets
There are two ways to mint your cAssets on cSwap. They are:
1. Genesis Liquidity Provision
On Comdex, whitelisted Market Maker investors are the entities in charge of establishing the initial liquidity of cAssets. To initiate a new cAsset trading contract, the Market Marker mints a specific amount of cAssets…
When the number of cAssets needed is minted, the Market Maker works towards reducing the exposure to risk to the potential downside experienced in short positions by taking futures long positions on exchanges.
As such, these minted cAssets are used by users to take on long positions on the market because they have been made to effectively make for futures long trading on Exchanges.
2. Short Selling/Minting
cAssets are minted to take in short positions on a market. To do this, a user will have to present over-collaterized assets with a USD-denominated stablecoin deposit, which will act effectively as the margin for the position.
The over-collateralization covers the margin in case of the losses that may occur during the short position. There’s still an allowance for re-collateralization of the margin balance if the position’s loss forces it to reach its liquidation limit.
Those are the ways cAssets can be minted — for long positions and short positions.
In summary, Comdex is setting up a revolution of decentralized finance commodities and real-time assets.
The Comdex Synthetics DEX will be the beginning of this revolution, therefore, I employ you to join the trend. Are you ready to engage on the Synthetics DEX Devnet?
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