- Currently, tokenized stocks can be traded on a singular entity like an exchange or private blockchain network.
- DAAG’s tokenized stocks will be moved from a private blockchain to Solana’s which will be more efficient and cost effective, the company said.
Swiss-based Digital Assets AG (DAAG), a firm focused on tokenized financial instruments, announced that it is bringing tokenized stocks, including Facebook, Google, PayPal and Tesla, to the Solana network and will launch the first free-floating security tokens through the network on the FTX exchange.
The company previously used a private blockchain but now its products will be available on FTX exchange in addition to Binance and Bittrex. It has over 60 tokenized stocks issued and around $100 million worth of underlying collateral, said DAAG’s Corporate Development Lead Brandon Williams.
Popular stocks that will be immediately available for trading include Facebook, Google, Netflix, Nvidia, PayPal, Square and Tesla.
Tokenized stocks are transferable tokens that represent the value of the respective underlying, like an Apple share, and tokens function similarly to a stablecoin, Williams said.
DAAG’s tokenized stocks will be moved from a private blockchain to Solana’s which will be more efficient and cost effective, the company said. Solana provides lower transaction fees, high-speed transactions and can enable up to 50,000 transactions per second, while Ethereum is a well-known blockchain for DeFi applications, the average cost for a single transaction on its platform is about $6, Williams said.
The free-floating tokenized stocks on Solana will allow centralized and decentralized exchanges on the blockchain to be able to add tokenized stock trading to their platforms. So, DAAG’s new decentralized token will be able to be self-custodied, which means customers on FTX can withdraw or deposit their stock tokens to their own digital wallet and trade it 24/7, Williams said.
“Security tokens and tokenized stock trading provides the same experience as any other electronic trading mechanism,” Williams said.
DAAG combines liquidity and capital from traditional finance with the crypto industry to make everything related to capital markets more efficient, transparent and reliable, Williams said.
“There is no reason the settlement of a stock trade should take two days or a company going public should have to spend tens of millions of dollars to get listed on a national exchange. With the ability to use traditional finance products in the DeFi space we enable the crypto industry to develop new products to really use the full potential of the crypto and DeFi industry,” he said.
One caveat, however, is that citizens or residents of the United States, Iran, North Korea and Syria are not able to hold the tokenized stocks at the moment due to regulatory reasons, but in all other jurisdictions no restrictions apply to access the tokenized stocks, he said. But, with a securities prospectus endorsed by the Financial Market Authority (FMA) of Liechtenstein, DAAG’s tokenized stocks are valid in the European Economic Area (EEA), the company said.
While the digital assets industry is still in its infancy, “more and more countries and institutions are realizing that it is here to stay, but it needs to evolve and it will,” Williams said. “Reducing the reliance on financial intermediaries while eliminating as much counterparty risk as possible will only help to promote efficient capital markets with deep useful liquidity in the future.”