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  "id": "synthetic-dollars",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/synthetic-dollars/",
  "collection": "stablecoins",
  "title": "Synthetic dollars: a dollar target built from positions",
  "description": "How a long asset and short derivative can offset price exposure, and why funding, custody and exchange risk remain in synthetic-dollar designs.",
  "aliases": [
    "synthetic stablecoins"
  ],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T15:09:00.630Z",
    "dataAsOf": "2026-10-02"
  },
  "authorship": {
    "publisher": "Degrees of Satoshi editorial project",
    "process": "AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied."
  },
  "quickAnswer": {
    "text": "A synthetic dollar targets dollar value through a portfolio or trading strategy rather than only a cash reserve. A common mechanism pairs an asset with a short derivative to offset price changes. The hedge can reduce directional exposure while leaving funding, execution, custody, exchange and liquidation risks.",
    "claimId": "synthetic-dollars-quick-answer",
    "sourceIds": [
      "ethena-overview",
      "ethena-funding",
      "ethena-risks"
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  },
  "keyFacts": [
    {
      "label": "Hedge",
      "value": "Opposing positions can offset directional price changes in a simplified model.",
      "sourceIds": [
        "ethena-overview"
      ],
      "id": "hedge",
      "claimId": "synthetic-dollars-fact-hedge"
    },
    {
      "label": "Funding",
      "value": "A perpetual-futures hedge can receive or pay funding.",
      "sourceIds": [
        "ethena-funding"
      ],
      "id": "funding",
      "claimId": "synthetic-dollars-fact-funding"
    },
    {
      "label": "Scope",
      "value": "A synthetic-dollar token and its savings wrapper are distinct products.",
      "sourceIds": [
        "ethena-overview"
      ],
      "id": "scope",
      "claimId": "synthetic-dollars-fact-scope"
    }
  ],
  "prerequisites": [
    "what-is-a-stablecoin",
    "stablecoin-peg-vs-market-price"
  ],
  "sections": [
    {
      "id": "offsetting-positions",
      "heading": "A simple hedge, with the assumptions visible",
      "sourceIds": [
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      ],
      "paragraphs": [
        "Suppose a portfolio holds one asset worth $100 and a short derivative covering one unit. If the asset price rises to $110, the asset gains $10 while the short loses approximately $10. If it falls to $90, the asset loses $10 while the short gains approximately $10. Ignoring costs and margin mechanics, the combined value remains near $100.",
        "The example assumes an exact hedge, matched prices and a counterparty that pays what it owes. Real positions can differ in settlement asset, margin requirements, expiry and liquidity. Dollar exposure is a property of the whole portfolio, not of the asset held on one side."
      ]
    },
    {
      "id": "funding",
      "heading": "A hedge is not a guaranteed income stream",
      "sourceIds": [
        "ethena-funding"
      ],
      "paragraphs": [
        "Perpetual contracts exchange funding payments to connect derivative prices to spot markets. Depending on the sign of the rate, a short position may receive funding or have to pay it. Holding a short therefore does not lock in a permanent positive yield.",
        "Ethena’s funding-risk documentation describes a reserve buffer and changing allocations as mitigations. Those are responses to a cost that can persist; they do not remove the underlying obligation. Historical averages should not be presented as a promised future rate."
      ]
    },
    {
      "id": "dated-example",
      "heading": "Read the actual portfolio, not only the original design",
      "sourceIds": [
        "ethena-overview",
        "ethena-risks"
      ],
      "paragraphs": [
        "Ethena’s documentation accessed on 2 October 2026 describes USDe alongside its separate sUSDe savings product and multiple backing strategies, including basis trades, lending and real-world assets. It also distinguishes open-market acquisition from direct minting and redemption for approved counterparties. This is a description of that documentation, not an independently verified portfolio valuation.",
        "A complete review must follow where positions are held, how collateral is controlled and how proceeds become available during exchange stress. Off-chain custody and derivatives can remain essential even when the token itself moves on a public blockchain. The current allocation and terms must be checked separately from this mechanism lesson."
      ]
    }
  ],
  "faq": [
    {
      "question": "Does delta-neutral mean risk-free?",
      "answer": "No. It describes offsetting sensitivity to an underlying price. It does not settle funding, custody, basis, liquidation or counterparty risk.",
      "sourceIds": [
        "ethena-funding",
        "ethena-risks"
      ]
    },
    {
      "question": "Are USDe and sUSDe interchangeable labels?",
      "answer": "No. Ethena identifies USDe as its synthetic dollar and sUSDe as a separate savings asset with its own access and reward mechanics.",
      "sourceIds": [
        "ethena-overview"
      ]
    }
  ],
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          "locator": "Synthetic dollar vs fiat and RWA backed stablecoins"
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      "scope": {
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        "dataAsOf": "2026-10-02",
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      "evidenceStatus": "documented",
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        "notes": [
          "Ethena overview confirms USDe/sUSDe separation, short hedges and current strategy categories; funding-risk page explicitly allows negative funding.",
          "Read direct mint/redeem eligibility for KYC/KYB-approved market makers. ±$10 hedge example states its exact-match and cost assumptions."
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          "Read direct mint/redeem eligibility for KYC/KYB-approved market makers. ±$10 hedge example states its exact-match and cost assumptions."
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        "notes": [
          "Ethena overview confirms USDe/sUSDe separation, short hedges and current strategy categories; funding-risk page explicitly allows negative funding.",
          "Read direct mint/redeem eligibility for KYC/KYB-approved market makers. ±$10 hedge example states its exact-match and cost assumptions."
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      "id": "ethena-funding",
      "label": "Funding Risk",
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      "note": "Positive and negative derivatives funding, reserve buffer, no guaranteed yield.",
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      "note": "Exchange, custody, funding and liquidation dependencies.",
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  "related": {
    "articles": [
      "stablecoin-yield-sources",
      "algorithmic-stablecoins",
      "stablecoin-minting-redemption-eligibility",
      "what-is-usde"
    ],
    "dossiers": [],
    "wallets": []
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  "revisionHistory": [
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      "date": "2026-10-02",
      "kind": "published",
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  "citation": "Degrees of Satoshi editorial project. “Synthetic dollars: a dollar target built from positions.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/synthetic-dollars/"
}