Synths are issued from swapping from any other asset into Synths across the pool. Instead of the paired asset being emitted, the incoming base asset is added to the pool as liquidity, liquidity units are issued to account for the new capital and assigned to the protocol, and the synth is minted. When synths are swapped back to a token, they are burnt, a pro-rata share of units are deleted, and the base asset is moved out. Even though capital is added and removed, the liquidity units that are issued and deleted account for the capital such that other passive LPs are not affected.
Since synths always have 1:1 purchasing power they do not accrue Impermanent Loss or Yield. In fact, any loss or gain is absorbed by the other passive LPs.
With Impermanent Loss Protection, other passive LPs should never be affected by this.
Since synths are 50% collateralized by the real assets and 50% collateralized by USDV, heavy adoption of synths deepens the liquidity pools and allows the system to naturally scale (or contract).