# Level 2 – Onchain Liquidity / Debt Pool  / Synfy Token

In Level 2 liquidity is provided by a collateralized debt pool and all synthetic assets are backed by Synfy tokens.

Synthetic assets are minted to buyers, when stakers provide their capital to the debt pool. Stakers incur debt when synthetics are minted. In return, stakers are provided Synfy tokens to represent their share of the debt pool. These Synfy tokens give the right to receive a portion of the trading fees and rewards.

**Benefits of staking collateral**

Stakers are incentivized to stake their capital because they

a)       receive a portion of the trading fees. When a buyer makes a trade, a fee is incurred, this fee is delivered to a fee pool. Each week, stakers can claim their proportion of that fee pool. Stakers therefore can become market makers.

b)      receive a portion of any liquidated stakers who have incurred penalties from not maintaining their collateral ratio.

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