Democratizing Investments: Discover the Top 6 Tokenized Security Platforms

Introduction

The financial landscape is evolving, with tokenized securities emerging as a significant development within the digital asset market. As this trend garners attention from all corners of the financial world, it also begins to revolutionize traditional asset handling and management. Boston Consulting Group's recent study emphasizes the potential this burgeoning sector holds, marking the beginning of a new cycle in the market.

The tokenization of traditional financial assets is gathering momentum. Financial institutions and corporate entities are increasingly choosing to issue bonds as tokenized securities on public and private blockchains. The benefits of these digital assets are manifold; they can be traded 24/7, the transaction settlement process is significantly expedited, and they have the potential to reduce costs and increase liquidity for all parties involved. As we navigate this rapidly evolving field, it becomes evident that we're standing on the threshold of a major transformation in the financial world. With that in mind, it is the perfect time to highlight some of the innovative projects that are pioneering the tokenized securities market.

In this piece, we will look at the top six projects that are pushing the boundaries in the space of tokenized securities. We will dive deep into their contributions, examining how these groundbreaking initiatives are democratizing access to investments and disrupting traditional finance paradigms. Let's embark on this enlightening journey together, as we delve into the world of tokenized securities and the projects that are leading the charge.

The Top 6 Tokenized Securities

Ondo Finance

Ondo Finance stands out as a promising security token startup. Founded in 2021 and headquartered in New York, this innovative venture is set on delivering institutional-grade financial products and services via blockchain technology. With a vision to make asset transition between stablecoins and traditional assets seamless, Ondo Finance emphasizes on offering highly liquid and low-risk products, such as short-term US Treasuries and US money market funds.

The innovative spirit of Ondo Finance shines through with the creation of a yield-generating stablecoin alternative named OMMF (Ondo Money Market Fund). This is set to function as a tokenized money market fund, paying interest to its holders. Notably, OMMF has been designed as a security, which negates the need for Ondo Finance to register the product with the Securities and Exchange Commission (SEC). This innovative approach sets the stage for a compliant on-chain financial ecosystem, fueled by real-world assets.

Helming this venture is CEO Nathan Allman and President Justin Schmidt. With their leadership, Ondo Finance has made impressive strides in securing financial backing. The company successfully raised $24 million in its Series A funding round, attracting investments from well-known entities like Pantera Capital, GoldenTree Asset Management, Steel Perlot, Tiger Global Management, and Coinbase Ventures, among others.

Despite being relatively new in the field, Ondo Finance has already made significant strides. Recently, the firm announced the introduction of a new token, OMMF, designed to give global stablecoin holders an opportunity to invest in tokenized exposure to US money market funds. Backed fully by US government money market funds, each token will be purchasable and redeemable for one dollar. Additionally, Ondo Finance has unveiled a tokenized fund that opens up access to bonds and US Treasuries for stablecoin holders, democratizing the traditional capital markets for a wider range of investors.

Although Ondo Finance hasn't yet disclosed a specific launch date for its tokenized money market fund, its progressive efforts and achievements thus far paint an exciting future for investors and the wider financial ecosystem.

Matrix Dock

MatrixDock's token , the Short-term Bill Token (STBT), is an innovative cryptocurrency product designed to offer investors exposure to U.S. Treasury securities with a maturity of six months and reverse repurchase agreements collateralized by U.S. Treasury securities.

A key innovative feature of STBT is its operation on the Ethereum blockchain under the ERC-1400 standard. This token standard allows the token to be transferred exclusively to account holders who have successfully passed a pre-approved KYC/AML white-listing mechanism. As the first product released by MatrixDock, STBT marks a significant milestone by bringing the risk-free rate of U.S. Treasury securities into the blockchain universe.

MatrixDock, a subsidiary of Matrixport, carries a strong pedigree as it was established by the co-founders of the renowned cryptocurrency exchange Bitmain. This lineage further lends credibility to the innovative work that MatrixDock is embarking on in the world of cryptocurrency and blockchain technology.

The STBT token was launched on March 9, 2023, making a notable entrance into the market as it is fully backed by U.S. Treasury Bills. This token has been designed specifically for accredited investors, providing them a unique opportunity to leverage their stablecoin holdings and access risk-free rates.

Currently, the STBT token is active on the Ethereum blockchain under the ERC-1400 standard, and is open for trading. Its introduction and subsequent performance in the market exemplify the potential of integrating traditional financial assets with blockchain technology, setting the stage for a more connected and streamlined financial ecosystem.

Backed Assets

Backed Assets is driving a financial revolution with its innovative tokenized structured products. These products track the value of popular publicly traded securities like Tesla or Apple and are embodied in what's known as Backed tokens (or bTokens). Issued as ERC-20 tokens on the Ethereum blockchain, each Backed token represents the ownership of a structured product, compliant with the Swiss DLT act.

Each Backed token mirrors the value of a corresponding publicly traded security, thereby enabling fractional trading and providing redeemability for the underlying asset's cash value. Importantly, these tokens are freely transferable and each one is fully backed 1:1 by the underlying asset. This asset is securely held by a licensed custodian on behalf of Backed Assets. However, it should be clarified that holding a Backed token does not bestow ownership or any attached rights, such as dividends or voting rights, over the underlying asset.

Backed Assets was brought to life in early 2021 by founders Adam Levi, Roberto Klein, and Yehonathan Goldman, a team of seasoned crypto-enthusiasts. Operating under the name Backed Finance AG, and with its headquarters in Zug, Switzerland, Backed Assets maintains a fully remote team, drawing on diverse backgrounds in finance and technology. Reflecting its commitment to diversity and inclusion, Backed Assets takes pride in being an equal opportunity employer.

Since its inception, Backed Assets has seen considerable traction. In its seed funding round in May 2021, it swiftly secured support from well-established entities like Gnosis, Semantic Ventures, and Stratos Technologies. Furthermore, Backed tokens have made a significant impression on the market, given that they're ERC-20 tokens on the Ethereum blockchain tracking the value of real-world assets such as stocks or ETFs.

Today, Backed Assets operates under the Swiss DLT Act's stringent guidelines. It issues and redeems tokens via its API or GUI, priced at net asset value (NAV) plus a fee. Retail clients, once they have passed KYC checks, can directly redeem their Backed tokens with Backed Assets at NAV plus fee, subject to minimum transaction values.As Backed Assets continues to evolve, its innovative approach to tokenized financial products could significantly shape the broader financial landscape. The company's dedication to delivering robust, compliant solutions makes it an exciting player to watch in the world of finance.

OpenEden

OpenEden's TBILL Vault is a transformative approach to investment in U.S. Treasury Bills. As a pioneering smart-contract vault, it offers a unique opportunity to gain exposure to the U.S. risk-free rate directly on-chain. Investors can deposit USDC, a widely-used stablecoin, into the TBILL Vault and mint TBILL tokens in return. These tokens are in full compliance with the EIP-20 standard, acting as virtual representations of stablecoin balances supplied to the TBILL Vault.

A standout feature of the TBILL token is its 100% backing by short-term U.S. Treasury Bills. These assets are securely held within a bankruptcy-remote Special Purpose Vehicle (SPV) structure. This means that TBILL token holders can confidently claim legal rights to the redemption value of all the assets held within the Vault, including Treasury Bills, USDC, and fiat USD. The entitlement is proportional to the amount of TBILL tokens held by the investor relative to the total outstanding supply of TBILL tokens.

Issued by Hill Lights International (HLI), a professional fund regulated under the British Virgin Island Securities and Investment Business Act 2010, the TBILL token is freely transferable between different blockchain wallets and fully compliant with the ERC-20 standard. The innovative technology and regulation surrounding OpenEden's TBILL Vault sets a new standard in decentralized finance by offering investors direct access to U.S. Treasury Bills 24/7.

Furthermore, OpenEden's TBILL Vault represents the first smart contract vault managed by a regulated entity to provide this level of accessibility. This groundbreaking initiative provides a low-risk investment option for decentralized finance (DeFi) investors. It has the potential to fundamentally change traditional financial operations, significantly broadening financial inclusion for those previously marginalized by conventional investment channels.

Adding another layer of transparency and security, OpenEden TBILL Vault has integrated with Chainlink's Proof-of-Reserves. This ensures real-time transparency into the underlying assets of TBILL tokens, providing further assurance for investors. Launched in April 2023, OpenEden's TBILL Vault continues to innovate and redefine the intersection between traditional finance and blockchain technology.

Franklin Templeton

Franklin Templeton, a globally recognized investment firm, has successfully launched a groundbreaking initiative: the Franklin OnChain U.S. Government Money Fund, a tokenized mutual fund. Making significant strides, this fund has already amassed over $270 million in assets under management. As the first U.S.-registered fund to leverage a public blockchain, Stellar, to record transactions and shareholdings, Franklin Templeton is at the forefront of integrating blockchain technology in traditional financial structures.

The fund's innovative design is embodied in the BENJI tokens, EIP-20 compliant tokens that represent stablecoin balances supplied to the fund. Through these tokens, investors can gain exposure to the fund directly in their digital wallets using the Benji Investments app. This fusion of traditional investment methods with blockchain technology reimagines the way investment transactions are processed, resulting in increased security and faster execution.

Recently, the fund has expanded its blockchain support to include Ethereum via the layer 2 solution, Polygon. This ensures broader compatibility within the digital ecosystem, further enhancing the fund's versatility. As a result of these pioneering steps, Franklin Templeton continues to uncover the immense potential of blockchain technology in reshaping the investment industry by providing superior transparency and reducing operational costs.

At the helm of this ambitious project is Roger Bayston, Head of Digital Assets at Franklin Templeton. His leadership is instrumental in guiding the company's venture into this cutting-edge territory. The OnChain U.S. Government Money Fund has also gained robust backing, with Stellar reportedly investing $20 million in the fund.

Currently, the Franklin OnChain U.S. Government Money Fund is readily accessible to users via the Benji Investments app, and its popularity is clear with the impressive $270 million in assets under management. The recent expansion to the Polygon blockchain signals a continued commitment to integration and compatibility within the wider digital ecosystem. With these developments, Franklin Templeton proves that tokenized assets are not just a theoretical concept, but a practical, transformative force in the investment industry.

Swarm

Swarm is a blockchain platform that brings unique tokenization and trading solutions to the world of traditional finance. Swarm has experienced strong demand for their tokenized real-world assets, and the recent 6% growth follows a strong launch. Swarm has launched tradable stocks and bonds on-chain that are available on the Polygon blockchain for both retail and institutional investors with no minimum investment. The tokenized securities are public investment offerings and bring Apple and Tesla stocks as well as iShares US Treasury bond 0-1 year and others.

Swarm operates as a hybrid platform, seamlessly integrating the liquidity and value depth of traditional financial markets with the advantages of blockchain technology. This open platform allows permissionless tokenization and no-cost fundraising, thus empowering users with the ability to easily create and manage digital assets. Moreover, the platform has recently expanded its securities offering, even conducting a community vote for holders of its native payment token, SMT, to decide on the next securities to be listed.

Furthermore, Swarm has ensured regulatory compliance by operating trading activities under the purview of Germany's Federal Financial Supervisory Authority, BaFin. This ensures a layer of security and trust for users of the platform.
Leading the helm of this innovative platform is Timo Lehes, a Co-Founder of Swarm. His belief in the potential of bringing real-world assets on-chain resonates with the growing consensus that this could be blockchain's "killer app."

Keeping up with its mission to innovate, Swarm announced on April 25, 2023, that it will list the first security token in the carbon offset market, backed by REDD+ credits, on its platform. This move signifies Swarm's commitment to integrating the world of finance, blockchain technology, and sustainability. The educational implications of Swarm's model serve to enhance our understanding of the possibilities within blockchain and the future of finance.

Final Thoughts

The blending of traditional finance with blockchain technology is a revolutionary step, offering previously unseen benefits such as 24/7 trading, expedited transactions, reduced costs, and increased liquidity. A common thread among these innovative projects is the focus on democratizing finance and increasing accessibility to investments.

Companies like Ondo Finance, MatrixDock, Backed Assets, OpenEden, Franklin Templeton, and Swarm are using blockchain technology to open up financial markets to a wider array of investors. By tokenizing traditional assets such as bonds, mutual funds, or even publicly traded securities like Apple or Tesla stocks, they are enabling fractional ownership and breaking down traditional barriers to entry.

These initiatives are not only changing the way financial transactions are conducted but are also bringing an unprecedented level of transparency and security to the process. The use of blockchain technology ensures that all transactions are recorded in a secure, immutable ledger, which brings more trust to the system. Furthermore, many of these projects operate under stringent regulatory guidelines, further ensuring their credibility and safety for investors. It is also noteworthy that these projects are using blockchain standards like ERC-1400 and ERC-20 to ensure regulatory compliance and facilitate seamless transactions. They are harnessing the power of both public and private blockchains, reflecting the versatility of this technology.

Looking forward, we can anticipate a continued surge in the tokenization of traditional securities. As more investors become familiar with blockchain technology and understand its benefits, the demand for these tokenized securities is likely to grow. Furthermore, the potential for blockchain technology to reduce costs and increase efficiency in the financial industry is substantial.