What is Backed vs Synthetic Tokenized Assets?
Glossary · Equities
A backed (asset-referenced) tokenized asset is collateralized 1:1 by the real asset held in custody — one token, one share or unit. A synthetic tokenized asset instead tracks the price using collateral and derivatives, with no underlying asset held per token. The two carry different rights and risks.
How to tell them apart
Backed products — Backed's xStocks, Ondo Global Markets, and most tokenized treasuries — publish custody arrangements and often a proof-of-reserve feed, because a real asset sits behind each token. Synthetic products disclose a collateral-and-derivatives mechanism and do not hold the named asset 1:1; the token is engineered exposure rather than a claim on a custodied share.
Why the distinction matters
Redemption rights, what you can ultimately claim, and the risk profile all differ. A backed token is a claim on a custodied asset, so its main risks are custody, issuer, and redemption. A synthetic token's value depends on its collateral and counterparties holding up. Neither is inherently better — they are different structures, and this is information rather than advice.
Frequently asked questions
Are tokenized stocks real or synthetic?
Both models exist. Leading products such as xStocks and Ondo Global Markets are backed 1:1 by shares held in custody, while some other products are synthetic exposure. Check the issuer to know which you are holding.
Related terms
- Tokenized Equity — A tokenized equity is a blockchain token that represents ownership of, or economic exposure to, a real company share.
- Proof of Reserve — Proof of reserve (PoR) is an independent, on-chain attestation that a tokenized asset is fully backed by the assets it claims to hold.
- Real-World Asset (RWA) — A real-world asset (RWA) in crypto is an off-chain asset — a Treasury bill, equity, fund, bond, commodity, or property — represented as a blockchain token.
Informational only · not financial advice. See the live data on the newsroom. · ← All glossary terms