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Comment by latchkey | Hacker News Reader

Mirror protocol. https://mirror.finance/

It wasn't buying an equity, it was buying a token that was the same price as the equity. Buying the token had no effect on the upward price of the equity. I can see why the SEC is protective of that, for sure.

The bigger issue is that Mirror was hacked and nobody knew about it, for seven months. https://rekt.news/mirror-rekt/

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> It wasn't buying an equity, it was buying a token that was the same price as the equity. Buying the token had no effect on the upward price of the equity

Sounds like a derivative to me. That is also a type of security.

The mirror documentation [1] calls it a 'synthetic asset'. This mechanism is also how they also offered BTC and ETH on their network (as mBTC and mETH).

To be clear, I wasn't trying to debate the nature of if it is a security or not.

[1] https://docs.mirror.finance/

"synthetic asset" and "derivative" sound like Venn-diagram that's just a circle.

Reminds me of the scene in The Big Short where Baum learns about synthetic CDOs.

https://www.youtube.com/watch?v=A25EUhZGBws&t=111s

Synthetic in finance just means a combination of two or more products/calls etc.

So if you make a financial product that encompasses two different derivatives it would be a synthetic derivative.

It’s mostly a meaningless term as far as regulation goes.

FWIW when I was doing some banking courses, as I was working in DeFi and wanted to know more about CeFi, they have synthetic assets too. Which are derivatives. In fact in the Big Short movie I'm 100% they call derivates synthetics!

These are a bit different. Derivatives is a complex product based on more fundamental products. Synthetic product is what it sounds like, stocks are a great example. You can create a synthetic stock with the same price as the real one and let people trade it.

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