A portion of CNBC’s prime time is dedicated to cryptocurrency discussion. Bakkt has launched regulated Bitcoin futures, and Ethereum futures are on the horizon. Bitcoin ETFs have been launched across various exchanges in Europe. The past two years have been prosperous for the recognition of cryptocurrencies as genuine financial instruments.
The next frontier is to connect cryptocurrencies with other fundamental securities like stocks, commodities, and bonds. Bitcoin’s existence as a great store of value is proven not just by its recognition by the financial sector, but also by the people engulfed by the world’s most hyperinflationary currencies. Purchases of Bitcoin skyrocketed in Turkey and Venezuela right when the local currencies underwent severe devaluation. It’s now imperative to extend the utility from store of value to transact, and the most significant form of transactions happen among the trade of various assets across the worlds’ debt and equity exchanges.
One form of usage where cryptocurrencies have shown prominent proliferation is trade.
Cryptocurrency exchanges are the few highly successful businesses in the digital asset sector and that is due to the billions of dollars of cryptocurrency trades that take place on any given day. This is a testament to the demand for putting cryptocurrencies to use among the exchange of assets, but this demand has yet to be satiated by cryptocurrency trading pairs against regulated commodities, equities, or bonds.
Paving a New Path
CoinField, a crypto to fiat t global exchange, recently announced the launch of an affiliated project named the Sologenic Ecosystem.
The Sologenic Ecosystem is a novel concept within the digital asset space since it is targeted at tokenizing traditional securities like stocks and ETFs on-demand.. A few attempts have been made to execute such a vision, but these have been limited to gold or other precious metals.
This time, the aim is to onboard equities, debt, and commodities on-chain, making Crypto pairs against such pairs a reality.
The Dawn of Security Tokens
Security tokens have been a mainstay in the 2019 press, but the year’s coming to a close yet no major STO or security token has surfaced. The reasoning for this is the lack of desirable security tokens, namely those with proven intrinsic value—the entire purpose of security tokens is to offer tokenized investment options that are not as volatile as utility tokens or payment coins.
Now, with Sologenic’s aim of bringing traditional assets on-chain, security tokens are about to have a genuine value-add within the digital asset sector. There is an incredible number of benefits that tokenizing equity and bonds can bring to the masses.
Lower Fees: Most investors with small portfolios do not have access to Robinhood. Thus, most people to rely on expensive per-trade fees and commissions, which takes a significant toll on anyone who aims to invest with less than $5,000, which happens to be the vast portion of the world.
Security tokens can nullify this issue as transactions can take place on a percentage-fee, as is the case with utility tokens. Thus, instead of a $1,000-trader paying $10 to enter and exit a trade in fixed fees, which is 1% of capital, he or she could pay only 0.075%, a standard benchmark in the sector, which is less than a tenth of the present fee standard cast through fixed fees.
Easier Dividend Distribution: Dividends are delivered through bank transfers at an average expense of approximately $1.8. As Sologenic operates on XRP Ledger, the fee would be minute. Once scaled across millions of shareholders, the cost-savings are extensive.
Easier Shareholder Voting: While every shareholder gets a vote, traditional vote assimilation methods used for shareholder decisions squeeze out the individualized smallholders . With on-chain smart contract solutions, it becomes incredibly easy for small shareholders to inexpensively cast a vote, thereby empowering the voices of the masses.
Accessibility for All: Presently, access to quality shares and bonds is difficult for those most in need of wealth creation opportunities. On-chain assets have already proven to be accessible by virtually anyone, and bringing quality assets on-chain can deliver proper wealth creation opportunities to all.
Self-Custody via DEX
The assumption to date is that security tokens would take away the key benefits of blockchain technology, primarily self-custody of one’s wealth. However, given the recent success of Binance DEX, and the ongoing pursuit of other competitors to launch their DEX, it’s clear that the market is willing to pivot to decentralized exchanges if they offer sufficient scalability.
Sologenic will be available through the DEX based on the XRP ledger. The security tokens issued via Sologenic would be tradeable on this DEX, allowing investors or traders of tokenized equities, bonds, or commodities to claim self-custody of their wealth held in tokenized assets.
DEXes ensure self-Custody, enabling users to control their wealth while executing trades.
The Sologenic Ecosystem will comprise of more than just the tokenized assets and DEX. It also includes a Crypto payment card and Liquidity Pool Reward Program.
Whenever prices of tokenized assets on the DEX deviates from their fiat market value, liquidity providers are able to fill supply or demand as needed and subsequently be rewarded for 50% of the fees generated by the DEX. Additionally, the crypto cardholders are able to reap several benefits if they are holding SOLO tokens.
SOLO Burn Commitment
The SOLO tokens operate as the ecosystem loyalty program, essentially offering benefits to community members. Benefits include exclusive perks on the card, 50% trading fee discounts, and indirect access to DEX success as half the fees are used to burn circulating SOLO. Additionally, holders have the right to vote on which projects shall receive aid from SOLO Community Fund, a VC-like operation that supports blockchain projects.
The launch of a tokenization protocol of physical assets is well within the roadmap of the wider blockchain sphere. Given that traditional financial institutions are now entering the space, 2020 is the prime time for the launch of equity-, debt-, and commodity-backed security tokens.
SOLO tokens will be available within two rounds. The first round is only available to top 25,000 VIP users of CoinField during December 9-16, 2019. In addition, 25,000 invites will be sent to users who submit their email address and complete the KYC on CoinField. The second round will be launched as an IEO on one of the major global exchanges.
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