Borrowing and lending in the private asset or the security token space are hardly available, and if they are available, they are only accessible by institutions or high net-worth individuals.
Similarly, the STO market products tend to have long lives with long investment tenors, similar to many private assets, leaving assets idle for long periods.
IX Swap intends to roll out borrowing and lending for STOs in the future to provide access to additional capital for the STO ecosystem.
Why does borrowing and lending against illiquid private assets/security tokens make sense?
Access to Capital: Investors often need capital at short notice. IX Swap allows investors to unlock the value of their assets and borrow against them for capital.
Diversification: Often, private asset security may take up a large part of their portfolio, leading to a high degree of concentration risk. On average, 35% of family office assets are illiquid alternative investments (UBS Family Office 2020 report). Borrowing may help investors by diversifying their portfolios into more liquid assets.
Enhancing Returns: When borrowing or leveraging, returns are magnified both positively and negatively. Return enhancement will depend on multiple factors, including the level of leverage, loan costs, and return on investment. These potential return enhancements would also imply potentially more significant losses.
Borrowing and lending in the STO industry will be a big step forward, providing access to capital for the STO ecosystem.
IX Swap is the world’s FIRST DeFi AMM and liquidity pools for security tokens and tokenized stocks.
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About IX Swap
IX Swap is the “Uniswap” for STOs and TSOs, the regulatory and liquidity solution for security tokens and tokenized stocks.
IX Swap will be the FIRST platform to provide liquidity pools and automated market-making functions for the STO/TSO industry. The platform will facilitate the trading of security tokens through licensed custodians and security brokers, which will provide actual ownership and claim over these real-world assets.