IX Swap - The Evolution of the Security Token Industry
Background
In the ever-developing world of capital markets, capital fundraising has evolved significantly. The security token is the next evolution in capital markets, and after many years of painstaking infrastructure development, the industry is finally catching up to its associated sister, cryptocurrency. The utility of a coin was essential, given that most crypto exchanges did not have security broker/dealer or exchange licenses to trade tokens that were classified as securities. As the number of failed ICOs continued to rise, regulatory scrutiny also began to pick up. Security token offerings (STO) became the natural evolution of the ICOs.
The security token offerings made more sense legally, but due to the lack of infrastructure and trading capabilities, this created less of a buzz for the retail crowd. Given the lack of trading venues, individuals were neither able to realize profits immediately. Due to these factors, the growth of the STO industry had been stifled and took a backseat over the last few years while its sister asset, cryptocurrency, continues to soar to new heights.
The security token (STO) or tokenized stock (TSO) industry suffers from a major liquidity problem. The total security token market is currently valued at approximately $7.5 trillion. However, the tradable volume for the industry has been highly limited. IX SWAP is the liquidity solution for the secondary trading of security tokens.
What is IX Swap?
It is the first platform to provide liquidity pools and automated market maker (AMM) functions for the security tokens industry. Users will have access to trading, liquidity mining, Staking, borrowing and lending, and more. This DeFi solution will bring a new wave of liquidity to STO trading, solving the industry's key problems.
Featured of IX Swap
- Automated Market Makers AMM - An AMM is a type of decentralized exchange(DEX) that relies on a mathematical formula to price assets using blockchain and smart contracts. Instead of using an order book like a traditional exchange, assets are priced according to a pricing algorithm, and any investor can participate in the defi liquidity pool and earn fees as a benefit. Since the introduction of automated market makers, the total monthly DEX volume increased from $39.5m to $43.5b in a year growing by 110,100%. We expect IX Swap to deliver similar or even better results for the STO industry.
- Liquidity pools - IX Swap will be creating the first liquidity pool by allowing STO token holders to stake their tokens to become a liquidity provider, receiving a share of the fees in return. There are two types of pools offered by IX Swap, liquidity pools for custodial assets and liquidity pools for custodial assets.
- IL -Insurance - Imperemenent loss occurs when the price of the deposited asset changes compared to when it was deposited. The bigger the price change larger the exposure to IL. IX Swap has been structured to include an IL insurance mechanism to reduce the effect of IL on liquidity providers. 8% of the funds allocated for the Ecosystem will be placed in the IL -insurance Vault. 5% of all trading fees are contributed towards the IL Insurance fund. 50% of all penalties from early termination of liquidity provision contract is contributed to IL Insurance Fund.
- Borrowing & Lending - Crypto-financing allows crypto investors to borrow loans in cash or cryptos by offering cryptocurrencies owned by them as collateral. Crypto lending enables the lender to remain the owner of the crypto asset. However, the crypto offered as collateral cannot be used for trading or transacting during lending tenure.
- The liquidity pools for security tokens work similarly to other AMM models.
- IX Swap allows security token holders to become liquidity providers by depositing their security tokens into liquidity pools and receiving a share of the fees in return.
- On IX Swap when security token holders request to provide liquidity, the security tokens interact with IX Swap smart contracts and are held with a third-party custodian.
- A Wrapper token of the same security token is simultaneously minted and this Wrapper gets added into the liquidity pools.
- Similarly, IX Swap is also connected to third-party licensed broker-dealers to facilitate trading in the liquidity pools.
Utility of IXS tokens
- Token holders will be able to stake their IXS token for a fixed income % on the IXS platform
- Token holders will also be able to stake IXS in IXS pools to receive a portion of the pool profits
- Staking IXS on the platform will also provide voting and governance functionalities for the IXS platform
- IXS will also be the native payment token on IX Swap’s first broker/dealer partner platform, InvestaX
- IXS token holders will also gain priority access to NEW primary STO listings
- IXS will be distributed as incentive rewards to ecosystem contributors. IXS paired pools will have boosted returns over non-IXS paired pools.
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