Tokenized Stocks

(Ashrith) #1

@canesin @ethan recently there are talks that dx exchange is going to launch tokenized stocks . So do you have any plans to integrate this in future. Like buying the stocks behalf of the user and issuing a tokenized stock. ?

(Aman) #2

The token will in all probability be classified as security token. So i think after NEX gets approval for listing securities, this can be possible. Hopefully the team has similar plans to be executed in a better, more decentralized way. Exciting times to come :smiley:

(Nex 4 Ever) #3

Nice idea but I think when it comes to tokenize stocks many legal things are unclear in that space. I guess in the near future NEX has many other challenges to overcome and solve. Letā€™s see how DX will progress on that but have some doubts that they have done all the necessary homework first.

(Jump Around) #4

This is 100% where the crypto space is going. Think of how difficult it is for individual users to trade traditional stocks. Tokenization of equity and securities is the perfect use case

(Nex 4 Ever) #5

It is not the technology that makes it difficult. The difficulty is a result of regulation, compliance, local laws etc. The bureaucracy was not created by the tech rather by reasons mentioned above. If regulators apply the same policies to tokenized stocks same difficulty and same challenges will remain. Technology by itself cannot reform the policies but it can support the process of reformation.

(Jump Around) #6

I agree with what you are saying regarding regulations and compliance, and can also relate because I work in a regulated industry.

However, cutting edge technology tends to spur change in regulation and laws. I think companies like NEX that are willing to work with and educate regulators will be a key driver for this (becoming a regulated security, making presentations to the EU, etc).

Who knows though, sometimes a change in the laws can be in the negative direction as opposed to the positive.

(Behind You) #7

Hi Guys,

I feel like ā€œtrading stocksā€ is one of the best possible additional features, Nex should offer. Maybe you are from America and have the pleasant opportunity to use Robinhood-where trades are basically free.

However in Europe they charge you so much for a basic trade that you cant effectively DCA into anything. For Comdirect its in the first year 4ā‚¬ per trade and additional ā€œbanking/account feesā€.
In the second year its 10ā‚¬/trade. So when investing like 500ā‚¬/month in stocks (which is a lot for a student), you are already down 10ā‚¬ + 10ā‚¬ when trading back to ā‚¬. with the yearly account fee this is an redicolous amount of money just to get started. So youā€™re down 4% already on a 500ā‚¬ investment.

More realistically you have like 100-200ā‚¬/month in trading which would equal 10-20% in fees.

So Iā€™d be really happy if I could start investing into stocks easy and with reasonable fees. Robinhood already does this in America and is a 5+ Billion company. Revolut is trying this in Europe but right now they only have a banking license and a basic banking app. Due to their location in GB, they might have lots of difficulties with the upcomming Brexit as well.

(Alex Forward) #8

Tokenized equity is the futureā€¦ Especially for companies creating value from its users. (AirBnb, Uber,ā€¦)
Wouldnā€™t be surprised if the listed stock were to be in the category of companies heavely relying on its userbaseā€¦ (Facebook ā€”> no people no facebook, Tesla ā€”> drivers volunteer data for their AI driving systems,ā€¦ )
This exchange is thinking aheadā€¦ prepping for whats next.

Tokenizing users participation/incentives and SWAP for security token when regulations are clearer is another way to go imaoā€¦
Think NEX could play a role in this transition towards tokenized equity aswellā€¦
In the ICO dashboard there was room for more STO offeringsā€¦

For regulationsā€¦ It think general approval of tokenized SAFE contracts would be a great signalā€¦ Is ā€˜tokenizingā€™ Ć¼berhaupt the right wordchoise for the future ?

(EC) #9

What is doing with their version of ā€˜tokenised stocksā€™ is nothing more than a PR stunt. Quite interesting how all this information was released just days prior to their launch date to lure the suckers in.

Had a brief look at this and when you read the press release and understand how these stocks on have been tokenised, the flaws become quite clear. Iā€™m sure there are more but these are what came to mind:

  1. Counterparty risk: you are entrusting a third party to act honestly. ERC-20s are minted 1:1 for the shares held by MPC (the company responsible for all this) with no mention of any audits or safeguards to verify/ensure that this ratio is being upheld. I thought blockchains were about minimising trust.
  2. Spread - no premium is applied to these tokens to reimburse MPC for the cost of asset purchasing, custody, issuing and hedging, so one can only imagine how massive these spreads will be (they have got to make their money somehow), which makes one wonder who on earth the buyers of these tokens will be.
  3. Transferability: the most hilarious thing about this is that ERC20s canā€™t even be withdrawn off the platform which defeats the whole purpose of having a blockchain token. This does the opposite of reducing friction and increasing transparency which is a unique benefit of blockchain based assets. These ERC20s offer nothing new and might as well be CFDs which have been available on eToro or Robinhood
  4. Liquidity - other than a market maker making a killing on the spread, who else is going to be trading these other than a few naive retail traders. Order books will be very thin.
  5. Redeemable: whatā€™s the point of owning these ERC20 tokens if they cannot be redeemed? USDC or GUSD are also asset backed ERC20s (also prone to counterparty risk), but you can go right now and redeem them for the real thing after going through the necessary checks. Again, these tokens might as well be CFDs if they cannot be redeemed.
  6. Dividends: how are the company dividends of the underlying assets going to be paid out? Will MPC collect the dividends and credit holders with an equivalent amount in ETH or USD?

The truly revolutionary Security tokens will be standalone blockchain based assets, allowing for programmability, automation of dividend/interest payments, investor rights. Those are the types of tokens you should want NEX to list.

(Olu ) #10

Spot on! :+1:

(Alex Forward) #11

DX received early stage funding from NFX fundā€¦
From looking at NFX portfolio and investing philisophy you can tell it is in their best interest to be involved in the scene of tokenization as all their investments have social/network/crowd factorā€¦

It is PR for sure. (what is not? NEX has build this community without showing a productā€¦) The product itself can have flawsā€¦ What is important is that they are positioning themselves in the market of security tokensā€¦ It is their way to send a message and have the chance to get in touch with stock listed companies and other stakeholdersā€¦Getting ready for when the time is ripe for changeā€¦

I would not underestimate DX (NFX) their networking powers and ability to tokenize companiesā€¦ and taking their cuts in the processā€¦think this is a good enough money opportunity for themā€¦ It will be the business of the second exits (equity conversion --> value driven distributed equity for endusers)ā€¦
In a way its good for NEX tooā€¦ more assetsā€¦ more volume potentialā€¦

In the end DX will be a company run by the hidden agendaā€™s of VC and other fundsā€¦
Whereas NEX will be run by the community. Where the true value lays. :slight_smile: