🤝 Security Token Prime Insights: 11/18/2024

Exclusive Intelligence for Security Token Prime Members

November 18, 2024

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Summary and Key Takeaways

1. Chains Subsidize Management Fees of BUIDL to Encourage Usage

BlackRock’s BUIDL product on Securitize made waves last week when Securitize announced that it has finally gone multi-chain. When it first launched back in March, BUIDL made headlines not just because BlackRock was the issuer, but because the world’s largest asset manager by AUM decided to use a public blockchain, Ethereum specifically. 

Now BUIDL is accessible onto 5 other chains, including Aptos which is the only non-EVM chain. Avalanche, Polygon, Optimism, and Arbitrum were the other supported chains. More interestingly and uniquely, it appears that certain chains decided to subsidize the 50bps fee that BUIDL charges. While using ETH, OP, and ARB chains, you’ll pay the full price. But if you’re considering building on the other chains, you’ll pay 60% less! This is a novel way to incentivize building on a specific chain is likely more cost-effective than awarding a grant directly. I think Securitize/ BUIDL just opened up a can of worms that will lead to more innovation around multi-chain fees.

2. Tether, Bitfinex, and now… Hadron - The Ultimate Trinity?

Tether is the world's largest RWA tokenation company purely by a dollar number due to the sheer size of USDT. The founder and CEO also happens to be the founder and CTO of Bitfinex, a peer-to-peer BTC exchange that is now a regulated marketplace for RWAs as well. The only thing missing? A Tether ecosystem tokenization engine that allows for RWAs to easily take advantage of Bitfinex or using USDT to go in and out. Hadron is the answer. 

Hadron isn’t limited to stocks either. It can also be used for stablecoins themselves or even loyalty points the company claims. Will the largest tokenized dollar company in the world be a force in bringing more assets on chain? We’ll be keeping a close eye on what projects leverage Hadron in the near future and how they might even utilize Tether or Bitfinex. Unsurprisingly, it’s worth noting that the Hadron platform already supports multiple chain options for issuances.

3. Plant-based Fast Food Franchise Group Now Available on INX

When it comes to novel tokenization opportunities INX really knows how to deliver. Whether its ownership in a European Football Club, tokenized stocks like Nvidia, or, now, a plant-based burger fast food chain, INX is here to serve (no pun intended!). The French-based Furahaa Group is enabling fractional ownership in the business through INX through the FURA token. Mission-driven businesses are often popular investments for retail buyers and, perhaps, even Furahaa customers may be interested in buying a piece of where they eat from. The token will be issued using the ERC-1404 standard.

4. Arca and BlockTower Sign LOI to Merge With Exception of BlockTower VC

Two juggernauts in the digital asset space are coming together to develop even better crypto investment products. Both Arca and BlockTower have notable reputations and history, with Arca being the first company to issue a retail-accessible tokenized treasury fund and BlockTower facilitating hundreds of millions in RWA tokenization through a facility on Centrifuge. BlockTower also has a well known and successful VC arm that appears to be immune from the merger. 

This comes right in time for the new cycle popping off which may suggest the timing is rushed or strategic in order to stay relevant and win over the inevitable wave of new powder that is entering the crypto market again.

5. First Bitcoin-Backed US Dollar Stablecoin Hits 9 Figures in Size

Stablecoins are the most successful use case of RWA tokenization. The value of a stable dollar-denominated asset has a nearly unlimited potential of benefits and uses in the crypto economy and the real world. However, it’s arguably also one of the reasons we saw a market collapse in the previous cycle. An algorithmic stablecoin tied to a cryptocurrency with no direct asset value called Luna seems to be coming back in the form USDa, a stablecoin by Avalaron Labs that is over collateralized 2 to 1 with BTC holdings. 

Since its reached over $100 million in size, the company has put out a statement that there is over $200 million in Bitcoin backing it. Here’s hoping we don’t see a 50%+ price drop in the market for their sake and potentially all of our sakes given what we know from history being repeated.

Notable Market Headlines

Institutional Activity

NEW STM REPORT NOW AVAILABLE

Security Token Market is proud to release October 2024’s market report, analyzing secondary market activity and benchmarking against the CoinDesk 20 Index (CD20).

In this month’s market report, we have meticulously tracked 680 security tokens spanning across 35 marketplaces and 10 blockchains.

Sections include:

  • Key Takeaways

  • CoinDesk 20 Index Benchmark

  • Quantitative Highlights

  • Asset Class Breakdown

  • On-Chain Liquidity Products

  • Platform Spotlight: Hashnote

  • New Tokens and Announcements

STM Data

This week the STM Data team would like to shine some light on equities’ performance in October and what we might expect in November. 

Equities held their value in October 2024, only growing 0.07% as an asset class. This asset class is the one closest to public markets given it represents pre-IPO companies and even tokenized shares of public ones. The equally-weighted basket of tokenized equities outperformed the S&P 500 (-0.99%) and the Dow (-1.34%) for October 2024. 

Looking at market cap growth, tokenized stocks were a large onboard in late September as more were listed on INX from Backed Finance in addition to the already onboarded Orderbook tokenized stocks. An interesting thing to look at with tokenized stocks is how they trade compared to their traditional counterparts. 

Here’s a table of some examples at the end of October 2024, which multiple show tokenized closing prices at discount to traditional.

Security Token Prime is Made Possible Thanks to Our Enterprise Partners

Events

Recent Recordings

  • (NEW) AI In Digital Assets Marketing and PR with Rob Gonda (Recording Link)

  • Navigating PR Between TradFi and Web3 Media with Amsterdam Group (Recording Link)

  • Beyond the Hype: Cracking the Code of Successful Asset Tokenization with BlockInvest and Polygon (Recording Link)

  • Risk Management in Tokenized Assets with Moody's and Particula (Recording Link)

  • Blockchain Meets Construction with Inveniam & LV8R Labs (Recording Link)

  • Non-Performing Loans with BlockInvest and Davis & Morgan (Recording Link)

  • Issuer Spotlight: Tuscany National Token (Recording Link)

  • Platform Spotlight: Block Time Financial (Recording Link)

  • The TradFi/DeFi Hybrid with Maple, Centrifuge and Swarm (Recording Link)

  • Platform Spotlight: REtokens' New Platform with Tyler Vinson and David Kirschbaum (Recording Link)

  • Powers Hour: New SEC “Dealer” Rule Expansion and DeFi Impacts (Recording Link)

TokenizeThis Workshop Tour Around the US

Get your tickets today for a full day masterclass around tokenization from A to Z. There continues to be a massive education gap in the industry and off the success of the original workshop in Miami last May, we’ve decided to go nationwide. We’ll be visiting NYC, Houston, Boston, LA, SF, Atlanta, and Chicago, check out workshop.stm.co for more information. Use code PRIME for 15% off.

Hello readers,

Tomorrow I will be announcing a major new initiative by STM at Benzinga’s Future of Digital Assets (message me for a discount code) right after Grant Cardone and Natalia from Propy share the stage. We have been working in stealth on a number of different initiatives you’ll be exposed to over the next 90 days. New product updates, new products themselves, and, starting tomorrow, a whole new organization.

Beyond improving STM itself to continue to foster market activity for tokenized assets through our platform, there is something missing in the industry today. It’s long been incorrectly assumed that by tokenizing an asset you are suddenly making demand for it by crypto natives. Few companies have successfully won over crypto natives in my opinion - Ondo, RealT, Mantra and a few others are the exception.

What if the leading RWA technologies teamed up in order to create a crypto native organization designed to bridge RWAs? That’s exactly what we are doing with the RWA Foundation tomorrow. Imagine a DAO dedicated to RWA perks, airdrops for RWA governance tokens, and voting rights to steer the DAO as a community itself. 

If we want to bring crypto natives into RWA markets, we need to start speaking their language.

Happy tokenizing,
Herwig “Happy” Konings
CEO, Security Token Group 
Follow me on X / LinkedIn

Herwig’s Pick: BUIDL

Find out why and more every Friday live at 2pm EST on LinkedIn or X/ Twitter. Past episodes available on Youtube or your favorite podcast platform! 

Helpful Resources

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