Brent Crude Futures (Brent) has been added to the list of tradable assets on the Synthetix trading platform and now anyone will be able to have exposure to the world oil markets in their decentralized finance (DeFi) portfolio.
One of the first real world assets to enter DeFi trading
Using data established by the Intercontinental Exchange (ICE), the Synthetic Oil (sOIL) token is now available on the Synthetix trading platform, as it was already on Bitcoin system. Brent is one of the two major futures contracts for global oil markets, the other being West Texas Intermediate (WTI).
The contract tracks the future price of oil extracted in the North Sea and generally helps to fix the spot price of European oil. Outside of fiat-backed stablecoins, the product is one of the first real world assets to enter DeFi trading.
The addition of more real-world resources "is something that is up to the community to request," said Synthetix founder Kain Warwick, adding that there is "a lot of interest in adding more raw materials."
The pricing data for sOIL is provided by the data provider Chainlink, which in turn was acquired by ICE for an undisclosed sum. Framework Labs, a subsidiary of venture capital firm Framework Ventures, helped establish the data.
“Connecting key financial infrastructure to next-generation smart contracts is a critical step in the continuing evolution of the DeFi ecosystem. We look forward to helping Synthetix expand the number of resources it supports and to partner with Framework Labs to integrate more traditional participants into DeFi, ”Chainlink co-founder Sergey Nazarov said in a statement.
Synthetix and petroleum
Synthetix, which conducted an initial coin offering (ICO) in 2018 for its ERC-20 Synth (SNX) token, enables the creation of synthetic financial contracts using its native token. The platform currently offers 24 trading pairs ranging from cryptocurrencies to crypto indices to foreign currencies (FX) such as the euro.
Each negotiable contract is backed by a 750% guarantee from SNX and mimics the price movements of the chosen asset through an oracle. SNX is currently trading for $ 4,12, according to Messari.
The real world assets in DeFi have not left their mark to date due to the technical and philosophical constraints behind blockchain-based financial alternatives. For example, MarkerDAO, the first DeFi project to be created, has been considering adding music royalties as collateral for its stablecoin dai (DAI) while lending platform Aave has more recently started working towards mortgage tokenization with RealT .
Creating a negotiable synthetic DeFi contract for oil also proved difficult, Warwick said, particularly in light of Brent's physically deliverable nature. “The XBTO team helped build a formula that takes all current futures contracts and turns them into a proxy for a spot price,” Warwick said.
