STM Market Makers 01: Who is Disrupting the Tokenization Space?
Hellllo Market Makers! I figure an introduction is in order?
STM Market Makers 01: Who is Disrupting the Tokenization Space?
Hellllo Market Makers! I figure an introduction is in order?
TLDR: I’m Megan Nyvold, Head of Media at Security Token Market. This is a monthly newsletter under Jonah Schulman's What'd Drippin' brand highlighting the latest and greatest in the tokenization space. It's a bit longer and a bit more institutional.
(You can jump to The Top Security Token Projects Right Now if you're here for the news stuff).
So, what's up with me? ⤵️ ⤵️ ⤵️
I’m from Colorado where I studied business, media and engineering (I couldn't decide on just one). After graduating, working for Western Union and TikTok I moved to sunny Miami for invigorating sunshine, blockchain and tokenization.
Joining Security Token Market was a no-brainer for me both professionally and personally. As you probably know, we specialize in the tokenization of real world assets and are the leading brand in the security token industry from media to data.
TLDR: I oversee the media vertical.
Aside from being the industry leader in security token media and data, as well as being at the forefront of technological innovation, what excites me most about our business is how Security Token Market is providing market transparency on a whole new level for private assets.
The opportunity to track the trading of private equities, shares of real estate, venture fund LP shares and much more is something that can revolutionize TradFi.
Initially, the data was tracked by hand by our hardworking team, then we added a savvy tech team, BUT the technological innovations rolling out in Q4 will take this process to a whole new level. With our newly implemented complex graphQL database systems, we’ve burned our entire structure down to the ground, allowing for comprehensive coverage of the financial and blockchain data from hundreds of sources.
However, what will really be exciting about this new structure, is that for the first time correlations can be drawn between these unique asset classes, allowing investors to regress alternative asset data to find similarities and differences between the price movements of these previously unknown assets and their public market counterparts.
Visualization will be key, and our advanced analytics provide visualization that illustrates the context needed to properly juxtapose the security token market with the greater crypto, stock, and commodities markets. We currently track over 200 security tokens and tokenized stocks across eleven different live marketplaces worldwide. Our website authority continues to grow rapidly as the industry relies on the information aggregated by the API and curated by our research team, turning STM into the leading source for security token information and data.
Since joining the STM team earlyyyy on I launched Spilling the NFTea with Jessica Burns, Head of Marketing and Investor Relations at Security Token Advisors, and I host the Security Token Show weekly. I hope to primarily use my personal platform to help more women enter the world of tech.
Now to the good stuff.
Who is Disrupting the Tokenization Space?
TLDR: XY Labs, Realio, and KKR are absolutely crushing the tokenization game.
"Tokenization" has developed into a buzzword right now, and honestly, I'm here for it! By generating buzz we can begin to properly educate on the innumerable value propositions that tokenization bring to private equity!
XY Labs Inc., founded in 2012, is a leading-edge software company based in California. Their focus is building a global data network utilizing people's dataistic relationship to the physical world. They’re growing this network using a wide variety of established and emergent technologies including blockchain, IoT (Internet of Things), and mobile software products.
Alongside the industry-leading technology company tZERO, XY Labs has launched their stock on tZERO Markets — a marketplace to trade private digital securities. This will be the first opportunity for XY investors to trade their stock, and the first opportunity in over 3 years for anyone new to join XY Labs’ journey.
tZERO offers an extremely simplified shareholding experience for XY’s investors: a single service that can help users track their shareholdings, market activity, and stock value. With an easy-to-use trading interface, tZERO gives XY Labs investors the independence and security they want with their shareholdings.
XY Labs’ uses tZERO’s smart contract technology built on the Ethereum Blockchain and utilizes Vertalo’s SEC-registered transfer agent services to manage its capitalization table.
Making industry waves is the Realio Network LTD security token (RST), the first truly hybrid equity token that offers its holders both security and utility. This token provides ownership and profit share rights in Realio Technology LTD alongside staking and utility features to participate in network validation and voting on the Realio Network, which is slated to launch in the coming months.
RST (registered ticker for ATS trading still TBD) holders participate in the equity returns generated by Realio Technology LTD (a wholly-owned subsidiary of Realio Network LTD) and soon they will have exposure to revenues generated via activity in the realioVerse, Realio’s metaverse project. In June, the Realio team announced that RST will be traded on the tZERO ATS, providing RST holders with a more frictionless, regulated trading experience and the benefit of added liquidity. More information will be provided as they near their listing date on tZERO.
Realio Technology LTD is the owner and developer of the Realio Network, realioVerse, and the Realio Platform (an end-to-end, blockchain-based SaaS platform for digital asset issuance, crowdfunding, compliance management, and life-cycle management of digital securities). Realio combines non-custodial access to decentralized (p2p) marketplaces on multiple blockchains with the features of a sophisticated issuance/investment platform to merge permissionless blockchain solutions with institutional-quality investment management.
The platform satisfies the need for stringent securities compliance while facilitating uniquely democratized access to investment products customarily reserved for a select subset of institutional investors.
RST is issued by Realio Network LTD, a British Virgin Islands company, representing 100% of the outstanding shares of the company. The Realio family of affiliated companies also includes LMX Token Issuer, a Delaware limited liability company and issuer of the Liquid Mining Fund token ($LMX).
U.S. investment firm KKR has put a portion of its private equity fund on the Avalanche Blockchain via Securitize. This Health Care Strategic Growth Fund provides exposure and invests in innovative health care companies in North America and Europe with proven products and services that are seeking a partner to commercialize and scale.
KKR is one of the biggest investment management firms in the U.S., with $491 billion in assets under management as of June 30.
This fund, tokenized via Securitize, is being offered under SEC Reg D 506(c). Tokenization allows for retail investors to have access to KKR's fund, something that was previous inaccessible. Enabled by blockchain, this tokenized feeder fund on Avalanche (AVAX) is a huge step forward for democratizing private equity.
Investors will setup an account via Securitize to go through KYC and AML accreditation to invest in the fund.
Disclosure: Securitize Markets is the registered broker dealer of the Security Token Market Crowd Fund and no fees were exchanged between these parties for this feature.
For the next section, I want to highlight impactful aspects of the tokenization industry with a general overview of emerging concepts. For this first edition I've chosen to analyze how crypto assets are democratizing the trade finance market, specifically how one company is pioneering this movement.
How Crypto Assets are Democratizing the Trade Finance Market
Trade finance has long been the domain of global banks and larger institutional investors but greater democratization of the market through digital assets is opening it up to new participants.
Trade finance regularly pays above the risk commensurate yield level and has all the components investors look for – but high barriers to entry has restricted access to a small pool of investors.
Trade finance assets, which are based on the flow of tangible goods around the world, traditionally carry little risk and yet promise investors a steady stream of stable rewards. Despite its attractiveness as an asset class, however, trade finance is at present scarcely even investible due to the high barriers of entry, including poor visibility for beneficiaries, insufficient levels of collateral and complex regulatory and supply chain procedures.
The emergence of “tokenized” trade finance assets is breaking down those barriers, as many other tokenized asset classes, such as real estate, have also done. Retail investors can diversify their portfolios by investing in trade assets that are not otherwise available to them through traditional capital markets.
Trust and promised-based crypto schemes have proven ill-equipped to withstand liquidity shocks as they are not asset backed. As a result, there is tremendous value in bringing real assets to the blockchain in a regulated, transparent, and stable fashion.
Nils Behling, CFO at Tradeteq states, “Trade finance is a multi-trillion-dollar asset class that has many of the features that private debt investors may look for. These typically short-term, revolving, and self-liquidating assets potentially offer better spreads and shorter duration than comparable fixed income products. Short duration means that, unlike corporate bonds, trade finance assets generally do not lose value because of rising interest rates."
How Tradeteq is Democratizing Access to Trade Finance Receivables With The TRADA Token Launch
Tradeteq, a World Economic Forum member, has selected the XDC Network to launch TRADA Tokens, the first ever fully regulated, trade finance-backed fungible security tokens. This move is expected to deliver significant liquidity to the trade finance sector by securitizing a traditionally illiquid asset class on the XDC Network – a public, decentralized blockchain.
“This launch is an important move in the democratization of trade finance through XDC’s enterprise-grade blockchain technology. By investing in trade finance, which historically has been restricted to banks and larger institutional investors, private investors can now invest in the real economy. The XDC Network is our chosen blockchain to develop this system and XDC is the only crypto asset that can be used to purchase TRADA,” said Nils Behling, CFO and co-founder at Tradeteq.
The collaboration represents the next evolution in the Tradeteq and XinFin partnership, which first introduced trade finance-based non-fungible tokens (NFTs) for institutional investors in September 2021. Like the TRADA launch, the NFT offering used XinFin’s XDC Network to transform trade finance assets into a non-fungible token, which Tradeteq re-packaged and distributed to investors.
By using fungible security tokens with concrete collateral (TRADA), Tradeteq begins the process of ramping up on-chain transaction volume of regulated, real-world assets and extends access to the trade finance market to both retail and institutional investors.
XDCTEQ, a new entity established to issue the TRADA tokens, is set to overcome these barriers by fractionalizing and tokenizing pools of repackaged, securitized trade finance assets on the XDC Network. At the same time, the offering will give SMEs the world over unprecedented access to the financing on which they depend.
"XDC Network is completely decentralized and has been optimized for enterprise applications over a period of years. As the preferred network for its token issuance, Tradeteq offers further validation of the XDC Network’s real world utility," said Atul Khekade, co-founder of the XDC Network.
The TRADA launch signals blockchain’s adoption in a regulated arena. It positions the XDC Network as a way to connect real-world finance origination with DeFi markets, confirming a number of reports by Deloitte, JPMorgan and CoinDesk that foresee a wave of tokenized assets on the blockchain in the years to come.
More information is available here, or at the socials linked below.
Traditional finance companies are still entering the blockchain and crypto industry this year despite what is clearly identified as a market downturn. Many people believe that the best building happens during bear markets, pushing companies to truly identify their value add and position in this emerging industry. The companies stated in this edition are just a few of many industry leaders trailblazing the way for the next bull run! (Not financial advice, lol.)
I hope you all enjoyed. I'll see you again October 12th for another edition of STM Market Makers! In the meantime, join me on Twitter (@MeganNyvold) and let me know which table you're sitting at! ⤵️⤵️⤵️⤵️
Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.