🤝 Security Token Prime Insights: 8/19/2024

Exclusive Intelligence for Security Token Prime Members

August 19, 2024

Summary and Key Takeaways

1. RETokens Claims Industry First by Tokenizing $2.5M Chapel

After 7 years of tokenization activity, there still is room for new use cases. A church group in Colorado has enlisted RETokens (which uses Polymesh) to create this novel real estate offering. The Colorado House of Prayer aims to use the funds to buy the building holding their chapel outright (providing a $300K profit on the original purchase price in 2022 - the owner’s identity is unclear). CoinTelegraph reports that already more than half has been subscribed. Will more churches follow suit?

2. Superstate Taps Chainlink for NAV Reporting and Proof of Reserves for USTB in Model Example for the Industry

Transparency is a key element that is difficult to quantify the value of but a massive benefit from using blockchain technology. When comparing similar investment products, investors take transparency into account - not just for due diligence. Reporting frequency, criteria, and standards are extremely important to certain investors and, therefore, transparency can be a competitive advantage. 

In a sea of liquidity product options, one way to stand out is transparency. Superstate is now leveraging Chainlink to do exactly that. NAV reporting is sometimes not relevant when the underlying portfolio doesn’t change in value often, but it can be useful for products that want to publish daily updates. Furthermore, that underlying data can be used beyond humans by applications that use the information to underwrite a potential financial service for the token like borrowing from a lending protocol or selling to an automated market maker pool. Finally, proof-of-reserves is the holy grail as it provides the utmost confidence to investors to trust and see the underlying portfolio, which many providers don’t do and rely on their reputations instead. 

3. Hamilton Lane Doubles Down on Securitize with New Product Offering

Hamilton Lane made waves when it tokenized its Equity Opportunities Fund V  (Flagship Direct Equity Fund) on Securitize back in January 2023 and 4 months later a feeder fund into their Senior Credit Opportunities Fund (SCOPE). We’ve also seen them on ADDX and Sygnum Bank, however they’re now back with Securitize, tokenizing another feeder fund.

This gives exposure to their $5.6B Secondary Fund VI which, like another tokenized Hamilton Lane fund, features a $20K minimum investment rather than the usual $5M. This enables granularity in portfolio management and broadens the investor base for access to mature private equity investments (secondaries). It’s clear Securitize is a leader in terms of institutional issuers with customers like Hamilton Lane, Investcorp, and BlackRock.

4. Backed To Access Latin America Through eNor Securities

Backed has been known for their tokenized stocks, bonds, and ETFs. We covered them recently for tokenizing NVIDIA stock and listing that token ($bNVDA) on INX. The Swiss-based company is expanding to even more markets now through their partnership with eNor Securities out of El Salvador. This duo will work to offer tokenized RWAs in LATAM for retail investors.

We had the pleasure of having both David Henderson from Backed and Bruno Winik from eNor on The Security Token Show on Friday, where David from Backed shared an exclusive and Bruno shared why countries in Latin America will be interested in tokenized RWAs, with inflation in mind.

5. Particula Releases Comparison Report: BUIDL | OUSG | USDM

Treasuries, liquidity funds, stablecoins, payment tokens, etc. - names that many people use interchangeably yet have defining differences. Particula released their “Same Asset, Different Tokens” report, breaking down 3 big names in this space which are BlackRock’s BUIDL, Ondo’s OUSG, and Mountain Protocol’s USDM. One can start to understand how they relate yet differ from each other and how BUIDL is integrated. 

A couple takeaways include separating the 2 funds from a rebasing stablecoin (USDM) backed by low-risk assets. Additionally, OUSG is essentially a feeder into BUIDL considering 99.8% of its distribution is into BlackRock’s fund while USDM allocates a portion into BUIDL yet diversifies into holding its own treasury bills and stablecoins.

Did You Catch STM’s Latest Report?

Look out for STM’s latest report: State of the Tokenization Industry 2024 - The Year of the RWA which features over 350 service providers and tokenization issuers and their updates for the year to date across 18 categories from blockchains to issuances to DeFi and all the updates from tokenization platforms and marketplaces. Dive into the report, made possible thanks to SteelWave Digital! 

Notable Market Headlines

Institutional Activity

STM Data

This week the Security Token Market Data Team would like to dive into market performance. The non-US market cap held steady despite less than half the volume from the previous week. Meanwhile the US markets saw 5% growth in market cap from a significant 550+% spike in volume. This can mostly be attributed to a token we haven’t seen on our radar in some time until now: Curzio Research’s $CURZ token, which trades on tZERO.

The preferred equity token didn’t see much trading activity throughout the year, experiencing 100s to low 1000s in volume on any given day. That changed last week as we saw the following three days with record breaking volumes:

  • 8/14: $9,958.00

  • 8/15: $104,756.25

  • 8/16: $46,966.00

This ultimately raised the token price from $1.55 to $6.00 at today’s open (8/19). Keep an eye on Curzio’s token here!

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Upcoming Events

  • Weekly Industry Updates Breakdown - Tuesday August 20th at 3:30pm EST

  • Risk Management in Tokenized Assets with Moody's and Particula - Thursday August 22nd at 12pm EST

Recent Recordings

  • 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 Launches September

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,

If it isn’t clear already, the industry is now in full swing. There used to be a time when naysayers questioned the technology or the capacity for a market to form for security tokens. Those times are behind us as now every week brings us new token offerings, new application launches, regulatory updates around the world, service provider announcements, and market activity to discuss. The tokenization industry is now a full time job to stay on top of, which is why we’re here to try to make it as easy as possible for you. 

You’ve got dozens of chains now dedicated to RWAs working to support new products and ecosystems. Institutions around the world now have digital asset units working on creating the next digital financial operating system. Lesser known geographies are opening up investments and commercial interest to create digital financial hubs. DeFi and crypto communities are minting new billion dollar cryptocurrencies related to RWAs while (slowly) onboarding them. Now is the best time to think about how you will take advantage of the knowledge you have about an industry that knowingly will take over all things finance. It’s all but guaranteed.  

If you are considering launching a business in tokenization, evaluating an asset tokenization project, or even trying to understand the market better as an investor, please reach out to me! I’m here to help you dive in. 

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

Herwig’s Pick: Hamilton Lane

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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