Collateral selection is the key to achieving these two objectives. Users seek exposure to volatile assets like US technology stocks. If the underlying collateral is more (or even as half as) volatile than the synthetic, the system must be vastly overcollateralized in order to avoid bankruptcy. Put simply: if a crypto-synthetics platform is collateralized by a highly volatile collateral like a floating-price crypto-asset, then the system itself is at the whim of collateral fluctuations. This can jeopardize the system’s efficacy, since users seek capital-efficient exposure to the synthetic asset itself, not the underlying collateral.