> For the complete documentation index, see [llms.txt](https://docs.butane.dev/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.butane.dev/readme.md).

# What is Butane?

Synthetic assets on Cardano, backed by native token collateral.

<figure><img src="https://2611713366-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FsKoaKdI1o97UnvYVMfiL%2Fuploads%2FzQ6q5OxduI9RqL5HAWKO%2Fdocs-header-small.png?alt=media&amp;token=9a5dfc28-90f8-4766-8ebf-facf310d1331" alt="Butane documentation header"><figcaption></figcaption></figure>

Butane is a synthetic assets protocol on Cardano. You lock Cardano native tokens as collateral and mint synthetics against them, or stake synthetics to earn their market's savings rate.

<a href="/get-started.md" class="button primary" data-icon="rocket">Get started</a> <a href="https://butane.dev/app" class="button secondary">Open the app</a>

<table data-view="cards"><thead><tr><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th><th data-hidden data-card-cover data-type="files"></th></tr></thead><tbody><tr><td><strong>Borrow</strong></td><td>Lock native token collateral and mint synthetics against it.</td><td><a href="/use-butane/borrow.md">Borrow</a></td><td><a href="https://2611713366-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FsKoaKdI1o97UnvYVMfiL%2Fuploads%2Fgit-blob-c47dbc34305c9b7908c9e58c02dabe6977505af5%2Fcard-borrow.jpg?alt=media">card-borrow.jpg</a></td></tr><tr><td><strong>Earn</strong></td><td>Stake synthetics and collect each market's savings rate.</td><td><a href="/use-butane/earn.md">Earn</a></td><td><a href="https://2611713366-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FsKoaKdI1o97UnvYVMfiL%2Fuploads%2Fgit-blob-cfcef904d734b6309b844a38982f94cdebeaf083%2Fcard-earn.jpg?alt=media">card-earn.jpg</a></td></tr><tr><td><strong>Swap</strong></td><td>Trade synthetics against the treasury reserves that back them.</td><td><a href="/use-butane/swap.md">Swap</a></td><td><a href="https://2611713366-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FsKoaKdI1o97UnvYVMfiL%2Fuploads%2Fgit-blob-c5e7d816fe986521082a7cd5603fc4480210d8eb%2Fcard-swap.jpg?alt=media">card-swap.jpg</a></td></tr></tbody></table>

## New in V2

* **Rate caps.** When you borrow, you choose the highest borrow rate you are willing to pay. See [Rate cap](/use-butane/borrow.md#rate-cap).
* **Redemptions.** If the market rate rises above a CDP's cap, any user can redeem against it: they repay part of its debt and take collateral worth the repayment, adjusted by the market's redemption share. You can redeem from **Positions**, or through **Swap**. See [Redeem](/use-butane/liquidate-and-redeem.md#redeem).
* **Treasury swaps.** Buy a synthetic with the reserve assets that back it, or sell it back, at a fixed rate. See [Swap](/use-butane/swap.md).

Multi-asset collateral, staking for the savings rate and [action composability](/get-started.md#action-composability-engine) work as they did in V1.

## Synthetic assets

Synthetics are tokenized derivatives. Each one tracks the price of an underlying asset through on-chain price feeds, which gives you exposure to the asset without holding it.

A synthetic can follow a single asset, a basket of assets, or the inverse of another asset's price. Synthetics can be staked to earn their market's savings rate, and some markets also support fixed-rate swaps against assets held in the protocol treasury.

## Collateralized debt positions

You borrow synthetics through collateralized debt positions (CDPs). You open a CDP by locking native tokens and minting the synthetic as debt. Each market sets which tokens it accepts as collateral and how much each one can borrow.

Debt accrues interest at the market's borrow rate, limited by a rate cap you choose. A CDP without enough collateral can be liquidated, and one whose rate cap the market rate has passed can be redeemed against. [Borrow](/use-butane/borrow.md) explains both.

{% hint style="info" %}
When you lock ADA as collateral, you keep its staking rights and continue to earn Cardano staking rewards. To delegate your ADA, see Lace's guide to [staking with Lace](https://www.lace.io/blog/staking-with-lace-is-easy).
{% endhint %}