Tokenized Stocks and Different Projects
With StockSwap we are taking a new approach to this growing market of tokenized stock solutions. This is a brief breakdown of the differences between the dominant solutions currently on the market.
Centralized, asset-backed and Locked (Bittrex, FTX, Binance):
- asset backed.
- underlying asset is held by custodian. Possibility for dividends and voting rights exists.
- these platforms don’t allow for transfers or usually any interaction beyond simple buying and selling.
- limited jurisdictions, US is usually restricted.
- requires KYC.
- trading hour limits.
Decentralized, algorithmically backed and Open (Synthetix, Mirror, Deus):
- collateral backed (750%, 150%)
- there is no connection to the underlying asset. Buying a synthetic stock does not support the company. This also means little to no ability for dividends or voting rights being supported.
- free transfer, potential to stake and other interactions.
- unlimited jurisdictions.
- no hour limits.
- usually doesn’t have KYC.
- probably not compliant.
Most tokenized stock solutions fall into these two categories. With StockSwap, we are trying a different kind of solution. Our process is most similar to Wrapped Bitcoin (wBTC) in that we create ERC tokens that are backed 1:1 by that stock. These tokens are available in your wallet and have the potential for staking, voting, receiving dividends and more: all enabled through the use of smart contracts. You must still go through KYC in order to purchase Wrapped Stocks (any project which does not have KYC is not compliant with regulations and is constantly under existential threat of being shut down). With this hybrid solution, we can try and offer the best of both worlds: Upgraded stocks that are way more usable and built on the newest technology and are more censorship resistant and resilient than the current stock market, designed for the future financial system.
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