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Security Token Offerings from SMEs & Boutique Companies

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Security Token Offerings from SMEs & Boutique Companies

Boutique Offerings

One of the draws towards the issuance of a security token is the opportunity that the process affords SMEs. Companies that are early stage and boutique (small & on trend), and would not be able to easily raise capital otherwise, now have a means to do so, and can jumpstart the development/expansion of their products and services.

By affording SMEs this opportunity, the market is seeing interesting products and approaches on offer. Not every STO needs to be, nor intend to be, massive €250 million events.

The following are a few upcoming STOs made available through various issuance platforms. Each of these opportunities stray from commonly seen tokens, such as those backed by real estate and debt instruments, and in place, present unique ideas.

Contenders

GREYP Bikes

This Croatian company specializes in tech solutions built to advance the smart mobility sector. The flagship product of GREYP is their E-Bike, which has caught the attention and investments of companies such as Porsche, T-Mobile, and more.

With capital raised through an STO, GREYP Bikes hopes to continue development on, both the physical product, and an IoT enabled platform, to facilitate ride sharing with E-Bikes.

The team behind GREYP Bikes is 64 strong. CEO, Mate Rimac, resides at the helm of this forward thinking company.

Issuance Platform – Neufund

Ash Elements

While many nations are making a concerted effort to pivot from traditional energy creation methods to green energy, the fact remains that much of the world still utilizes coal. Found within coal are ‘rare earth elements’ (REEs) – a grouping a valuable substances used in electronics and manufacturing. As coal is burned and used up, what remains are huge quantities of rare-earth-element rich ash.

Ash Elements hopes to create tokens backed by the value within this ash due to the REEs. The company hopes to raise capital, through an STO, to fund the continued development of innovative extraction techniques for REE, and establishing the industry. The benefit of this shows, not only in a financial sense, but environmentally as well, as a previously unused and harmful substance is essentially being recycled.

Ash Elements notes that the world leader in these processes is China, with much of the world completely dependent on the nation for their REE needs. By establishing such an outfit, the U.S. would become independent from China, and remove potential leverage in on-going trade talks.

The team at Ash Elements is spearheaded by a trio of Managing Partners – Tom Friend, Chuck Whitlock, and Kevin Paley.

Issuance Platform – SWARM

Cryotech Nordic

In recent years, high profile athletes have driven the growth of cryotech. Cryotech chambers offer increased recovery and healing times for training and injuries sustained by athletes. This is done through exposing the individual to super-cooled gases in a contained chamber. This technology has unfortunately remained out of the hands of the general public, to date, due to attached costs – until now.

Cryotech Nordic indicates that they have developed next-gen chambers that require an electric solution, rather than cost prohibitive gasses traditionally used, such as liquid nitrogen. In doing so, they are looking to bring their solution to the masses. In an effort to achieve this, they are hosting an STO to raise capital for the continued development of their product, and efforts to continue through their roadmap.

Issuance Platform – TokenMarket

Something for Everyone

Through the use of issuance platforms and bridging services, SMEs are now able to take advantage of a democratized sector, as companies of all sizes have the means to raise necessary capital. The three aforementioned companies represent only a few of the boutique options coming to investors in the coming months.

Will these types of offerings prove to be successful? Or will STOs become relegated to only large scale offerings surrounding real estate?

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Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Security Tokens

Security Token Group Study Reveals Investors Hedging US Markets with Security Tokens

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Security Token Group - US Equities

This month, a research team from the Security Token Group delved into how security token holders faired against US equity investors. Interestingly, the report revealed a decoupling of the STO market from the US equities markets. As such, researchers demonstrated how investors can use security tokens to hedge against US equity markets during the Coronavirus pandemic.

Uncorrelated Assets – Security Token Group

The report begins with a eureka statement from researchers. Nicely, the Security Token Group takes a moment to let you know there’s some light at the end of the Covid-19 tunnel. Here, they explain the fruits of their research. Also, the main researcher, Jonah Schulman shares a heartfelt message when he states “have faith and remain positive during these hard times.”

Security Token Group Info Graphics

Security Token Market InfoGraphics

The study includes a comparison of two hypothetical investors from the start of 2020. Importantly, the first investor has $1 million in US equities in their portfolio. The second investor holds only $750,000 in US equities and the remaining $250,000 is held in a diversified security token. The Security Token Group chose to distribute the funds evenly over the top 14 security tokens in the market.

Top Security Tokens

 

  • Protos
  • Mt Pelerin
  • Lottery
  • Lesure St, Detroit, MI
  • Audubon Rd, Detroit, MI
  • Fullerton Ave, Detroit, MI
  • Marlowe St, Detroit, MI
  • Appoline St, Detroit, MI
  • Patton St, Detroit, MI
  • tZERO
  • Startupbootcamp
  • SPiCE VC
  • Blockchain Capital

 

The results from the report were an eye-opener. Researchers showed that the second investor outperformed the first by over 3%. Specifically, both investors took losses, but investor 2 was able to weather the storm better. The data showed investor one lost -9.50%, while investor 2 showed a return of -6.54%. In total, investor 2 held on to an additional $31,625 thanks to their security token investments.

Notably, Protos showed the most gains over 2020. The token is up 27% to date. Reversely, the worst performer in the portfolio was Blockchain Capital. This token showed a -10.03% loss over 2020. The report then breaks down the aggregate return for the total portfolio since the start of the year.

The data showed a +2.35 return. Importantly, researchers pointed out that an investor that followed this strategy would be up 12% versus investors that only held equities. Crucially, the data signals that if you were invested in the Dow Jones, S&P 500, and the NASDAQ exclusively for 2020, you may want to expand your horizons.

Security Token Group – Delving Deep

As part of this strategy, the group decided to calculate the correlation coefficient for all of the security tokens in the study. When you calculate a correlation number you examine varying factors and market movements to notice patterns. The higher the score, the more correlation you have between two financial instruments.

Security Token Group Coefficient

Security Token Group Coefficient

Amazingly, the security tokens correlation coefficient score was only -.19. To put this score in perspective, the report lists Apple stock as .88. Interestingly, researchers then show the data for each token independently. This data helps to indicate what security tokens unhinged from the US markets during the epidemic specifically.

The next step was to examine each tokens correlation to each of the major US markets independently. Interestingly, the largest security token in terms of market capital, tZERO showed the highest correlation among the tokens. SPecifically, tZERO ranked .74. The other tokens in the study scored much lower. For example, all of RealT’s tokenized properties scored just .21.

An Escape Pod

The Security Token Group’s research proves what blockchain-based financial instruments continue to make headway in the market. Notably, STG researchers plan to conduct further studies in the coming weeks to better understand the effect of these tokens in the sector. For now, savvy investors continue on their hunt for uncorrelated assets during the quarantine.

 

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DTCC Unveils Two Security Token Research Platforms

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DTCC Unveils Two Security Token Research Platforms

This week, the security token sector got a jolt of energy after the Depository Trust & Clearing Corporation (DTCC) unveiled two new blockchain programs. The programs are meant to study distributed ledger technology (DLT) and how it can improve the current settlement processes. The news marks a turning point in blockchain integration as the DTCC processes quadrillions worth of securities transactions yearly.

DTCC Projects Underway

According to reports, DTCC has two DLT initiatives already in the works. The two projects, Ion and Whitney, leverage blockchain technology to improve upon the current business models. For example,  Ion is a proof-of-concept alternative settlement service. The platform will work as a stress test indicator to verify the scalability of blockchain settlement systems under heavy traffic. The protocol is the result of years of research. In 2018, the public got a glimpse into the project as DTCC announced the results of a benchmark study. The report demonstrated for the first time that DLT is capable of supporting average daily trading volumes in the US equity market.

Ion

Ion is the DTCC’s new blockchain settlement protocol. Impressively, the platform is said to be able to handle quadrillions of transactions. Interestingly, Ion developers ran this concept for 12 weeks with mixed reviews. For example, in their report developers acknowledged scaling issues that emerge during development. Despite some bugs, the proof-of-concept served its purpose as a benchmark tester for DLT tech. Importantly, the platform utilized the Ethereum network. This decision makes sense as Ethereum is known for its developer-friendly ecosystem.

Jennifer Peve - Managing Director of Business Innovation at DTCC

Jennifer Peve – Managing Director of Business Innovation at DTCC

Ion is now moving on to the next stage in its development. DTCC executives are now on the lookout for a “technical stack” to bring the platform to life. Additionally, the DTCC already offered to start testing APIs of other firms within the ecosystem. This decision is sure to help bolster the security token sector as more developers make the leap into distributed applications (Dapps).

Whitney

The second platform the DTCC plans to examine is Whitney. This private securities market’s design is a combination of features from the private and public securities markets. Developers hope to bring more traditional investment firms to the STO sector with this maneuver.

Importantly, Whitney is a full security token ecosystem. The platform supports the issuance, distribution, and exchange of securities on the blockchain. Consequently, smart contracts integrated with compliance mechanisms are built throughout the protocol. Notably, the DTCC stated it will also keep records of every transaction stored off the blockchain as a security measure. While this decision seems redundant, it does reveal the level of caution the firm plans to exercise.

DTCC Backup

In a public interview, the managing director of business Innovation at DTCC, Jennifer Peve discussed the main goals of the projects. She started with an explanation of how the private securities markets lack transparency. Importantly, Reg D securities have far fewer regulations than publicly traded securities. She explained the DTCC plans to use the data gained from the platforms to build a next-generation securities clearing system.

The Time is Now

Peve, like many in the market, believes the time is ideal to leverage emerging technologies. Its true, blockchain provides intuitive minds a gateway to develop completely new solutions to many of the inefficiencies plaguing the market. For now, it’s exciting to hear a securities powerhouse such as the Depository Trust & Clearing Corporation (DTCC) already has plans to upgrade their systems in the near future.

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Polymath Speaks on Polymesh on Aldebaran Blockchain Release

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Polymesh on Aldebaran

This week, the hugely popular tokenization platform, Polymath unveiled some details about the Polymesh on Aldebaran security token blockchain project. Interest in the new blockchain continues to rise ever since its first mention by co-founder Trevor Koverko at CoinDesk’s Consensus in 2019. Now, Polymath is ready to show the world what its developers see as the future of the STO market.

Security Token Exclusive – Polymesh on Aldebaran

Polymath’s decision to launch a blockchain exclusively for security tokens makes sense. The firm is seen by many as the top tokenization platform in the market. To date, the firm tokenized over $2.2 billion in high-end real estate. As such, the launch of the Polymesh on Aldebaran test net marks an important milestone for the entire STO industry.

According to reports, the official launch date is June 23, 2020. Developers hope to have the blockchain fully functional and open to the public by Q1, 2021.  For now, the company seeks testers to help drive the beta testing process forward. Once complete, Polymesh on Aldebaran will provide an important link between traditional investment firms and the blockchain sector.

Compliance

Polymesh on Aldebaran includes numerous institutional features designed to appease regulators and large investment firms alike. Specifically, the blockchain tackles the issues of absolute transaction finality through the use of a nominated proof-of-stake (NPoS) consensus mechanism.  The protocol functions as an additional security layer allowing specific actions to be performed by identifiable participants on the network.

Polymesh on Aldebaran via Twitter

Polymesh on Aldebaran via Twitter

In company documents, developers explained some of the other helpful upgrades Polymesh on Aldebaran brings to the market. For one, the blockchain removes the legal complexities surrounding blockchain forks. Additionally, the blockchain includes automated regulatory compliance mechanisms directly embedded in its core coding.

In this way, Polymesh on Aldebaran ensures all parties meet the stringent securities legislation currently in place. For example, regulatory compliance coding ensures all traders completed due-diligence checks. Additionally, the compliance mechanisms can deny traders access based on their location, identity, or other preset parameters.

Permissioned Blockchain – Aldebaran

Importantly, Polymesh on Aldebaran‘s design allows sensitive data to remain private. Developers explained that the new system will keep all trading and user-specific data more secure than other alternatives on the market. Discussing the developments, Thomas Borrel, chief product officer at Polymath called the project a “major milestone.” He also spoke on some of the capabilities the platform introduces to the market. Lastly, he touched on Polymath’s overall intention to satisfy regulators and institutions.

Polymath

Polymath entered the market in 2017 with the goal to simplify the creation, issuance, and management of digital securities on the blockchain. Since its inception, Polymath has been an innovative force in the tokenization sector. The platform currently offers a wide variety of blockchain-based products. These products include white label solutions. Famously, Polymath tokenized $2.2 billion in real estate in February of this year. Now, the firm has its eyes set on the STO sector.

A Bull in the Glass House

The Polymesh on Aldebaran blockchain project will drive security token adoption to new heights if succesful. Polymath has the market experience and network to develop something integral within the sector. For now, the cryptocommunity awaits the final launch of this innovative blockchain.

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