Synthetics is an Ethereum-based synthetic asset platform for minting and trading synthetic currencies. It functions as a peer-to-peer setup. On June 24, it lost track of more than 37 million units of the synthetic Ether digital currency. It stopped trading on the platform at that time. Users lost access for about 24 hours. The event caused trades with 1,000x profits and more than $1 billion in value in less than one hour. The synthetic digital currencies are the Australian company's access to valuing other digital currencies, including Bitcoin and Ether. The company says that its platform makes it possible to hold digital currency without a cryptographic wallet.
The asset tokens are priced against actual currencies such as the Euro, yen, won and gold. Synthetix was launched in the summertime of 2018. It also has a stable coin that follows the value of the US dollar. Because the assets traded are representations of actual assets, it is possible to make quick profits off of trades. Those profits can be in synthetic versions of actual currencies.
Synthetix is not the only synthetic digital currency on the market. Abra has one that allows a trader to get exposure to any fiat or crypto currency. It supports different networks, including Bitcoin and Litecoin. Users can quickly exchange coin formats.
An oracle is the reason why the trading platform went down. This is a process that allows a blockchain to verify word information and report it. It triggers the smart contract to be implemented. A Synthetix oracle transmitted false data around June 25. A bot took advantage of it. The company stated that no funds were lost. One person noted that their balance appeared to be inflated at the time. All of the sETH were recovered from the problem.
According to the company's leaders, there was not enough collateral to cover the profits. They paid out a bounty for the discovery of the bug, but not the expected profit of what the false trades would have yielded. The bots using oracles have ramped up in recent months, and more security and monitoring will be implemented.