However, unlike cryptocurrency, STOs are a whole different ball game. To deal with securities, you need licenses and proper infrastructures to accommodate the trading and custody of these regulated assets.
When trading security tokens, you are trading a right of ownership or claim to an asset in the real world. Without the proper infrastructure and licenses, security token investors take the risk that the legal ownership of these assets is not transferred when traded.
Similarly, given that security tokens are regulated assets, improper handling of these assets without required licensing may cause detriment to the business, disrupting business activity.
Similar to the Uniswap model, a liquidity provider stakes liquidity by depositing two sides of a trade. In the example below, the liquidity provider inputs 50% of Token A and 50% of IXS tokens and receives LP tokens in return.
Subsequently, through programming of the smart contract, Token A will be sent to the third-party custodian for safekeeping whilst a wrapper token, let’s call it wToken A, is minted by the platform.
This newly minted wToken A is placed in a liquidity pool for trading. These wrapped tokens are then traded within the pool. The same process is reversed upon withdrawal of these STO assets.
Through licensed custodians and licensed broker-dealers, IX Swap creates an ecosystem that ensures a safe and proper trading environment allowing security token investors to participate in this shared ecosystem.
About IX Swap
IX Swap is a next-generation platform that leverages DeFi services backed by CeFi regulatory compliance to facilitate safe and convenient issuance, listing, and trading of security tokens and fractionalized NFTs.
By bridging the gap between traditional finance and innovative blockchain-based solutions, IX Swap is paving the way in democratizing access to traditional financial markets that have never been done before.