🤝 Security Token Prime Insights: 11/25/2024

Exclusive Intelligence for Security Token Prime Members

November 25, 2024

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Summary and Key Takeaways

1. STM Unveils RWA Foundation to Build Crypto Native Community for Sector

Real World Assets are gaining steam as a sector thanks to an influx of institutional and TradFi activity. While it’s exciting to see today’s capital market technologies upgrade and evolve using tokenization, it’s an open secret that there isn’t much activity especially when it comes to crypto natives. Since the former half of this year, STM has been working to build a decentralized framework designed to engage the web3 community. 

The RWA Foundation’s mission is to bridge the crypto economy with RWAs. Instead of a traditional trade group, the RWA Foundation will set up a DAO in order to create a community-run organization designed to support the RWA industry, built by the RWA industry. Last Tuesday at Benzinga’s Future of Digital Assets, Herwig debuted the founding member partners which include Securitize, Polygon Labs, Ava Labs, Stellar Development Foundation, Neoclassic Capital, Maple, Propy, Mountain Protocol, Republic, tZERO, INX, RealT, Metawealth, IXSwap, Swarm, Chintai, Arca Labs, Brickken, Dinari, Archax, Polymesh, ProvLabs, Chronicle Labs, Particula, Credora, SWD, Blue Bay Ventures, Finaventures, among others that will soon be announced.

Stay tuned for updates at RWAF.xyz or follow @RWAFDAO on Twitter

2. Michael Saylor Becomes an RWA Jedi; Sees Future Capital Markets Tokenized

Move over Larry Fink, another popular financial figure is getting in on tokenization. With the rise of BTC comes the rise of the brand name Michael Saylor who seemingly has become as revered as Vatalik Buterin or even Satoshi Nakamoto in the crypto industry. Recently on AltCoin Daily, Michael Saylor endorsed tokenization citing examples like why we could trade Bitcoin instantaneously 24/7/365 but not an Apple share. Whether it is simple admiration for blockchain and a recognition that it is the obvious choice of technology for capital markets or if it is something deeper such as seeing the benefits of removing naked short selling when you tokenize like we saw in the past with Overstock, we’re happy to have Michael Saylor on team RWAs!

3. Mastercard MTN Blockchain Now Supported by JPM’s Kinexys

Visa and Mastercard are seriously accelerating their blockchain expansion now with the latest announcement that JPM’s newly rebranded Kinexys (formerly Onyx) will be integrated into the MTN (Multi-Token Network) blockchain from Mastercard.

By bringing together the power and connectivity of Mastercard’s MTN with Kinexys Digital Payments, we are unlocking greater speed and settlement capabilities for the entire value chain.

Raj Dhamodharan, EVP, Blockchain and Digital Assets at Mastercard

This is a great marriage between banking and payments infrastructure from the biggest leaders in their respective sectors. Traditional money transfer systems, SWIFT, and archaic internal treasury management solutions clearly have their days numbered.

4. DeFi for RWAs? BUIDL Vault on Elixir Says Yes

The biggest challenge with DeFi for tokenized assets doesn’t fall under the technology. That’s the easy part. Compliance and regulation is the real hurdle and it looks like Securitize Credit has managed to break through the barrier, legally of course. Enter Elixir, which has a synthetic US dollar denominated stablecoin called deUSD that is now being used by Securitize’s new deUSD RWA Institutional Program which will start with BlackRock’s BUIDL token. This program allows BUIDL holders (and soon other tokens) to receive an sToken while still receiving the underlying BUIDL interest. This setup is called a Vault where token holders lock their tokens in but receive a new token they can start using within other parts of DeFi. 

This is not the first RWA vault to come to market and different applications of DeFi have been applied for RWAs such as RealT’s RMM, a custom lending protocol designed for RealT’s token ecosystem to enable compliant borrowing and lending. However, this marks the first time an institutional product like BUIDL can be used, which leads the industry in size and therefore could be used to a much larger degree than similar models in the market today. Securitize is legitimizing DeFi for RWAs with initiatives like this which only helps advance the whole tokenization sector.

5. Sky’s USDS Stablecoin Launches on Solana

Though PayPal’s PYUSD is a popular stablecoin on Solana already, Sky (formerly Maker) deciding to put their USDS stablecoin (formerly known as DAI) on Solana is another big deal. Let’s also recognize that Solana has recently surged into the 3rd largest blockchain token in the world by market cap when you don’t count Tether’s USDT. Despite the early success of Solana in the last cycle, few dared fathom that Solana would be a quarter the size of Ethereum just ~3 years later. This is likely the logic behind choosing Solana as it has exclusively been on Ethereum in the past. Reduced gas fees, improved user experience, and a fast-growing community to tap all sound a bit like a product upgrade just in time for the big new rebrand. Where Maker was an Ethereum company, it looks like Sky might be turning into a Solana company. 

6. RWA Inc. Governance Token Launches Today

Governance tokens for RWA infrastructure will be the leading trend in 2025 and a massive boon for the whole market. The RWA Foundation believes that this concept is critical for adoption from web3 natives and the success of numerous others in the market already suggest that it can be beneficial for other RWA infrastructure to consider. It’s the expectation that other large firms will follow in this path, with RWA Inc. launching on BASE today. 

The project launched around ~.05 cents putting it around a ~$50 million fully diluted market capitalization with 1 Billion total $RWA tokens. The company had been publicly building since March of this year and has listed on KuCoin, MEXC, and Gate. With over $2 Million raised, the company aims to do a BBB model (buy back and burn) from revenues in order to create token price growth. There is, obviously, no sharing of the revenue itself with the token holders.

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 is switching it up! Passing it to our Data Operations Lead, Caleigh Crossman, you can listen to her analysis on CoinDesk’s Markets Daily Crypto Roundup on your favorite streaming platform. 

Caleigh looks at, among other things, the CoinDesk 20 Index and CoinDesk DeFi Index, their constituents’ performance, and how RWA activity could be impacting them.

Take a listen!

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,

I’m excited to be channeling my crypto roots again. For those that don’t know, before getting into blockchain I founded a RegTech company offering compliance software for online investments. Aside from buying (and not holding… oof!) some Bitcoin back in 2012, I didn’t really get into the space until late 2015 with my first purchase of Sia coin. It was at this time that I was also the managing director of the Miami Venture Capital Association - a group of local real estate types, PE managers, and angels looking to break into venture. In 2016 I had formed a blockchain chapter within MVCA where we met monthly to discuss the market. Now fully active in ICOs by that time, I was already exploring the concept of compliantly pooling funds via an SPV for an ICO... a concept not too far off from tokenizing the SPV itself. 

Then in September of 2017 I was approached by a CEO of a facial recognition startup raising a Series B here in Miami. They were mystified by this new, non-dulutive ICO but fortunately I convinced the management team to avoid the compliance risks and, instead, pioneer one of the first ever tokenizations of private company stock in the US and, quite possibly, the world. I didn’t look back from there, going all in on security tokens which is what they were called back then. 

Now the worlds of crypto and Real World Assets are merging, or worse, leaving crypto behind altogether as the likes of the biggest banks and asset managers look to hold their positioning in financial markets and now leap headfirst into this technology. Meanwhile, crypto natives have found something shinier and sexier that isn’t controlled by those same incumbents. If we want to make sure that crypto natives embrace RWAs, we need to flip the narrative and that’s what the RWA Foundation is all about. By championing community and focusing around RWA governance tokens, crypto natives can still expose themselves to the RWA narrative and asset class without compromising on what they are used to, which is unorthodox price gains and composability within DeFi. 

If the RWA Foundation can foster adoption by crypto natives through perks, airdrops, and helping bridge tokenized assets to DeFi, then it is a successful and worthy initiative that for me personally, is something I am very passionate and excited about.

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

Herwig’s Pick: Sky

Kyle’s Pick: Oxbridge Re

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! 

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