🤝 Security Token Prime Insights: 9/23/2024

Exclusive Intelligence for Security Token Prime Members

September 23, 2024

Summary and Key Takeaways

1. Securitize Selects Interoperability Partner Wormhole With Much Hullabaloo Specifically From Chainlink Community

If you’ve followed the Security Token Show since 2019, you’ll remember our episode on multi-chain assets and how they are inevitably the future. Nothing requires assets to be ledgered exclusively on one chain and by being portable you can tap into any chain’s community, ecosystem, and technology. Therefore, the future is naturally multi-chain as we’ve seen with Franklin Templeton’s BENJI, Ondo’s USDY, and most stablecoins which are all on at least 4, 5, 6+ chains. So naturally, picking interoperability providers will be an important note for consideration for evaluating technology providers. 

Last week Securitize announced its tapping Wormhole for interoperability capabilities, which supports over 30 different chains. Crypto Twitter/X went into commotion largely due to the size of Chainlink community with both Zach Rynes/ @Chainlink God, Chainlink Community Liaison tweeting (200K+ impressions) and others crying foul about this partnership due to one of the largest hacks in crypto being on Wormhole for $325 Million in 2022. Jump Crypto, the firm behind Wormhole, did recover the funds and both Wormhole and Securitize share ParaFi as an investor. Yes, that’s the same ParaFi that just announced a tokenization on Securitize with their latest fund. Speculation points to this being the reason for not choosing the ever-popular Chainlink or other players like LayerZero and Axelar which both participated in Project Guardian proving their RWA capabilities. 

Security is naturally a big component of interoperability and crypto in general. Was this business-as-usual where Wormhole won a competitive bidding process or special favors where a provider that isn’t seen as an RWA interoperability industry leader was chosen by the biggest tokenization platform in the world? Meanwhile, Re launched a reinsurance product last week on Securitize too. 

2. INX To Launch Its First Tokenized ETF (S&P 500) With Backed On Polygon

INX and Backed are bringing the best of both worlds onto the Polygon blockchain with their latest initiative from their partnership that they announced earlier this year. Backed has been tokenizing popular public stocks already with its $bNVDA product for Nvidia stock, which was even rated by Particula. Now, they’re tokenizing the S&P 500 with bCSPX alongside launching Microsoft and Tesla products too. 

During the FTX era, we saw some tokenized public stocks trade in the millions on a daily basis. There has been a proven demand for this category in the past, likely due to the arbitrage opportunities between 24/7 onchain markets versus 9:30 to 4 public markets. Another factor could be the demand for international investors participating easily into the most purchased stocks of all time in America. Let’s not forget DeFi will eventually learn to integrate these products too.

3. MANTRA Announces Mainnet Launch In October

MANTRA made waves launching a Layer 1 for RWAs with its own $OM utility token reaching over $1 Billion in market capitalization in the past. Though it’s trading just below that at the time of writing this, it’s quite the feat since it started the year at around $40 Million. Big announcements like their $500M real estate tokenization with MAG Group might be helping push this excitement which is quite something since the actual blockchain hasn’t even gone live yet. Now they’ll be walking the walk in October they say, which likely means an offering (or two?) or some partnership announcements will likely go live with it.

4. Revolut and BitGo Announce Separate Stablecoin Projects

Stablecoins continue to prove RWAs out as a valid use case of blockchain technology with growing acceptance in the crypto community that RWAs are poised to be so big it will transform DeFi and the crypto landscape. With the launch of PayPal’s stablecoin last year, this marked the sign that crypto-native startups were no longer the only ones to tackle this technology. Now, the European neobank giant Revolut is also getting in the game proving that other fintechs and large corporates will too. 

The same goes for large native crypto firms who are increasingly looking to dominate the ecosystem with new products and business models in an effort to grow revenue tirelessly and offer an end-to-end service in one place. BitGo is doing this as they move beyond custody into other things like they did with tokenization in acquiring Brassica. Now they are also launching a stablecoin with the intention of having institutions reaping the rewards of the float for providing liquidity to their newly minted USDS.

5. A Trial Of 100,000 Koreans Using CBDC At Grocery Stores Is Happening

Central Bank Digital Currencies (CBDCs) are a polarizing topic in the US but in Asia not so much. China has already gone full blown nationwide with their own CBDC even with ATMs offering conversion between digital and physical. Now South Korea aims to be a leader in adopting this technology by performing a large-scale trial that originally wasn’t suspected of being retail focused according to Ledger Insights. Well, they say the trial will now be focused around 100,000 people testing out a voucher style system at grocery stores that’s powered by CBDC. The Fed is also experimenting and exploring the technology here in the US, so this topic may become more prevalent in 2025 and 2026 as we reach the point where the technology can actually be introduced into the economy.

Notable Market Headlines

Institutional Activity

NEW STM REPORT AVAILABLE - Updated tZERO Interview!

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 and now with a special interview with tZERO! Check out the updates. 

STM Data

This week the Security Token Market Data Team would like to cover the biggest movements in the security token space. Although we’ve come a long way, tokenized assets aren’t as liquid as we’d like them to be which can result in high price volatility. Find below this past week’s most volatile assets.

Asset

Ticker

Price Change %

Hashrate Asset Group

HAG

130%

EnergyFunders Yield Fund I, LLC

ENFD

66.67%

Realio Security

RST

53.42%

Curzio Research

CURZ

42.57%

INX Limited

INX

18.18%

At the top of the list we have Hashrate Asset Group with a 130% price increase last week starting at $30/ token and closing Sunday at $69/ token. This resulted in a market cap catapult from $1.3M to $3M.

Will this continue throughout this week? What happened to the other tokens? Keep up with security token data on STM.Co!

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Events

Recent Recordings

  • (NEW) 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 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,

Everyone I talk to feels the same way about interoperability, it’s a net positive for RWAs for obvious reasons. Even the different blockchains are open and encouraging collaboration recognizing the “rising tide lifts all ships” narrative behind it. That’s why multi-chain support will become an increasingly important and covered subject when it comes to tokenization platforms and products. Speculative investors might even weigh in the premium value of adding in new ecosystem support for different blockchains they weren’t exposed to before. Whatever you think about the decision from Securitize to use Wormhole, I can tell you this topic is going to get more and more attention around it. 

This means more partnership announcements, a bigger spotlight on the different interoperability providers and their differentiators and chain support, and (in the future) gushes of new capital from DeFi tools being unlocked when cross-chain support exists and we have healthy DeFi ecosystems on different chains that all have robust RWA integrations. For now, we really don’t have that last part, so the value of interoperability is currently a lot like the promise of liquidity, it’s just not there yet. Unless an investor only cares about keeping tokens on one type of wallet (which some might), I think that investors in RWAs tend to care less about multi-chain RWAs today. 

The last week of September before Q4 sets in October historically proves to be the loudest and most active month before the holidays swell things down. I’m excited to see what’s coming and to announce some big updates ourselves - feel free to reach out to me if you want to learn more.

Happy tokenizing,
Herwig “Happy” Konings
CEO, Security Token Group 
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