Here’s the recap of the AMA held last July 20, 2022, with IX Swap CEO Julian Kwan and co-founder Aaron Ong answering questions sent in by the community.
The questions and answers have been edited and optimized to ensure clarity, while some of the questions were answered in text format and were not taken up during the live AMA due to time constraints.
How is IX Swap doing amidst the crypto market crash?
Out of this meltdown, there has been some positive for IX Swap. Of course, like all token prices, we’ve suffered a lot as we’re part of the market and we have a token in the crypto industry.
On a positive note, there’s also a growing number of instances that show what opportunities are there if we use security tokens as collateral, as well as crypto, in lending, borrowing, and staking.
What it essentially means over time is we have real estate tokens and real asset-backed tokens functioning and being used in the same ecosystem. There’s almost very little chance they could go to zero or that you’d end with something like Terra and Luna.
What are the next steps for IX Swap?
There’s probably 20 to 25 good companies around the world that are now focused on STOs, whether that’s issuance, trading, custody, broker dealers, exchanges. We’re excited to be in negotiations with the next STO partner platform for IX Swap, which is built agnostic to STO brokers, STO exchanges, and custodians.
IX Swap provides the first automated market maker service for all the STOs that will trade on their OTC platform. These are regulated companies, and a lot of them spent years to get licenses. They’re serious businesses, they’ve raised capital, and they have professionals sitting on their board of directors.
Liquidity is still a massive problem in the industry, but IX Swap has some great feedback from the discussions we’ve been having with these companies. A lot of them understand the value proposition that IX Swap brings, they understand the design, the mechanism, the need to have it as a key infrastructure in the industry. We won’t mention names until we ink those deals, but we’re in talks with some of the best platforms in Hongkong and some other key jurisdictions around the world.
That’s what IX Swap is hard at work doing right now. We can’t just knock on these doors and say “plug in to the first AMM architecture” to get these companies to buy in. These are serious companies that have compliance, processes, and approval policies in place that they need to go through.
But we’re very confident that we’ll have a few new partners by the end of the year at least. On top of that, there are more protocols that are looking at the platform. Some of the big layer ones are looking at the potential to integrate with IX Swap.
What is the point of IX Swap integrating with a protocol?
The point is to generate revenues and generate business. We’ve got to look at the other assets that are sitting on these protocols. If it makes sense for us to spend the time and the energy to do a full integration with a protocol, which takes resources away from other things, then we have to be very confident that there’s a strong business case there.
What are the challenges that IX Swap has to deal with in onboarding new STOs to the platform?
We’ve started the first trading pools and are a bit disappointed by the speed of listings, but it’s not from the lack of trying from the business team at IX Swap.
The reality is that many STOs up until this year were often standalone projects that hadn’t really thought through the key ideas around trading, tax, white listings for new investors, and trading venues. Some of them are issued on protocols that no one’s working with, which makes it difficult or impossible to launch on IX Swap.
A very large majority of generation one STOs are not suitable to get into the platform, not from lack of trying, but because they need to pass the KYC policy of the broker dealer and custodian. A lot of these projects are not very high quality and therefore won’t meet the requirements for a licensed platform to confidently have them listed.
We all want to see things move a lot faster for sure, but things are changing holistically within the industry. If you go back six or 12 months ago, every single STO is pretty much a non-branded company, a standalone project, and generally not that big. If you speak to the leading STO platforms around the world today, you have investment banks listing private equity groups, and the largest real estate groups in the country are now issuing their first STOs.
So again, we’re also a bit frustrated with the speed of how things are going, but it is happening and these are much bigger assets. There’s no one that wants to move the project faster than us. We’ve run into a lot of hurdles, roadblocks, and bottlenecks but we continue to push forward through them, and we are seeing a slow and steady growth in the size and quality of STOs that come to the marketplace, and more STO platforms getting their license.
We’ve suffered like every blockchain project in the last couple of months, we obviously had a massive token value depreciation, we have a lot of negative investor sentiments, but that’s just another cycle. If anyone’s been in crypto long enough, this is the third, fourth, or fifth time that it happened. We’re confident it will be shorter than previous cycles.
We’re out there looking for our next platform partners, we’re bullish as always on where the market is going, the opportunities for IX Swap, and what we can achieve. We’re very excited because we’ve built something that works, that functions, and that we can grow.
We’re hard at work right now on the business side of things, while we continue to look at other ways to generate revenue on the platform and grow the number of listings and users on the platform and open to retail investors as well.
What are the hurdles when listing an STO and how long does it typically take?
From our experience, it takes about 2-3 months of conversations, demos, and education for each of the listings. Here are some of the challenges we’ve encountered with some issuers:
- Zero crypto and DeFi knowledge, and unfamiliar with Uniswap, which leads to several rounds of educational discussions
- Insufficient liquidity to post other 50% of liquidity
- Long and drawn-out legal discussions
- Inability to provide KYC documentation and audited financial statements
- Integration with non-Fireblocks-integrated blockchains
- Partner platforms are not ready
Is IX Swap pushing their worldwide partners for listings? Does the public know who or what is IX Swap?
Our target listing is at least one per month. We had issues with some listings with platforms not being able to pass KYC or refusing to provide certain documentation. We had to reject their cases, which were initially in the pipeline for the launch. There are still quite a few in sight and in the pipeline.
What’s the update on IX Swap’s B2B plans? Is there a clear timeframe on the new plugin/API product and when this will be up and running?
We’ve been working on it in the last couple of weeks so we can roll out a SAS white-label platform for institutional partners. We finished development last July 11th, and we’re now working on the bug fixes. We will be going through its first integration with InvestaX as a test case before we launch it out to all potential partners.
For STO platforms, it’s not an easy journey to get several listings and liquidity so what this will actually do is that the partner platform themselves can launch their own liquidity pools, which everyone can participate in. However, that is up to the partners to decide on whether they want people to access these pools, it’s within their discretion.
There are at least five to ten different companies that we’re speaking to right now and discussions are still going on over the next couple of weeks.
Is it possible to have a primary listing on the IX Swap platform? If so, can you give more details?
It’s in the works, and we’ve found a quicker and easier way to get this up and running. We’re currently in the planning phase to get this pushed out to create a supply chain of issuances. There are significant legal hurdles that we need to get through first, which we’ve been working on in the last few weeks. The solution we are bringing will allow retailers to take part in the primary deals, which is quite significant.
What is the current process, how long does it take, and how do you plan to streamline that process?
Smaller STO issuances, which will provide more access to retailers.
Is IX Swap still in a proof of concept phase or are we past that? If we are, shouldn’t the site be updated to reflect that?
There are legal restrictions with regards to advertising securities. The legal team is currently looking into this and giving us feedback on the regulations. Generally, we are not allowed to market security products, which is why most”investment” or “brokerage” sites require you to sign up or complete KYC before you get access to more details.
A certain portion of IXS circulation is allocated for marketing purposes. How is that being used?
Giveaways, airdrops, and payment for marketing services by third parties.
When can we expect Americans to be able to participate freely with all the functions of the platform?
TBD. We are exploring a white-label solution for US ATS participants, but many players in the market are not too clear on the SEC direction and where the ATS will facilitate this.
What happens when someone who buys a tokenized asset dies or loses his token?
That depends on the asset itself. Technically, the asset details will be registered with the last broker-dealer transaction and the issuer is able to void/burn these tokens and re-issue new ones (depending on the smart contract standard and chain). This can be done because there is still a “paper trail” or documentation that can be traced to the owner of the asset, but must be done at the issuer level. That said, we have not seen this being done so far.
What are the top 3 priorities of IX Swap?
- Product development
- Product traction/market share
- Business development/listing/SaaS
What’s the update on IX Swap’s launchpad plans?
We’ve been trying to strategize with some other partners on how we can bring the launchpad a lot faster than initially planned. We planned to push out the launchpad in Q4, but we’ve actually moved it up to this quarter because we want to create a pipeline of issuances for ourselves and for the platform. This will essentially close the ecosystem loop and supply chain for us to be issuing STOs, and for everyone to participate in these STOs as well.
You don’t have to be an accredited investor to invest into these, but we’re working on that right now. We’ve completed the plans for it already and are just getting the timelines and integration details of how we can push it out in the next couple of months.
How about IX Swap funding? How is it?
Around the middle of Q1 this year, we started speaking with some strategic investors. We’re trying to create longevity for the platform and hold on to as many IXS treasury tokens as possible. We believe that fundamentally, the price is at the lowest that it will ever be, and we’re just getting started here.
Our goal is to grow the platform with more STO listings, more STO platforms using IX Swap, more trading pools, as well as the other things on our roadmap like the primary issuance and NFTs.
With that in mind, we’re speaking with very large market makers, with some blockchain VCs, with one or two protocols about additional funding. The goal would be to raise equity for the company with the right type of groups that can add value outside of money as well. We’re talking with some interesting and very diverse groups of investors right now that can see the use case of IX Swap.
The environment we’re in is pretty brutal for any type of fundraising, but we’re focused on that on top of many other things in terms of improving the product and adding features and functions.
Can we get a more specific timeline on how long our runway is?
Long enough, and we are currently closing out a funding round.
How about the funds from the IX Swap token sale?
There’s no magic that lets you do one thing and everything dramatically changes, so what we’re doing right now is we’re building the project up and we’re working through what we can do today. We don’t have unlimited resources, which is often forgotten because we can see all these other big blockchain projects with billion dollar foundations.
This all goes back to all the discussions we had with many investors, including how big should the sale be. In the beginning, we wanted more capital but we kept to the original private and public sale raises with a balanced approach to what we think is good for the token supply, the token holders, all the participants, and all the other third-parties involved in the launch.
We spent the money building the platform, and the C-levels have taken no cash salaries from day one. That’s not bragging rights, but we want to highlight how we purposely left as much cash in the business to pay for engineers, marketing, listings, and all the things needed to make a project work.
We’re doing everything we can from a structural perspective to set it up whilst running into huge headwinds related to macro environments and tokens. No one wants to see their token price on the gutter, it doesn’t help anyone, and certainly not the token holders.
As we move forward, we continue to make decisions on a daily basis. We watch our costs very closely, and we continue to build and move things as quickly as we can. It is what it is, but we’re also susceptible to other participants in the space, such as other STO platforms, STO issuers, and how projects issued their STOs.
How is the product side of IX Swap moving along?
We need to scale up, but no one ever wants to be the first, what with all the testing and trial needed, but we’ve got those things out of the way. We’ve got the first pools listed, we’ve got the first STO broker partner, we’ve got the first STO custody partner, and functionalities on IX Swap are working as they should.
We were able to build a working model that’s very complex behind the scenes. We understand there is still a lot of work to do like how our UI/UX needs to be improved, but we always value our community’s feedback and are open to constructive criticisms.
We want to get as much feedback as possible on the product side so we can create the product that works from a user experience perspective – we’ve got individuals buying, selling, or contributing to a pool, we’ve STO issuers, brokers, and custodians, and IX Swap ourselves. So we have four or five key participants involved in any transaction, and we have to make it work for everyone. We’ve got a lot of work to do on that front, and would like to close more capital to give us a lengthy runway.
Any update on the NFT side of things?
We know everyone has been waiting for the launch of the fractionalized NFT platform, but we made a decision to hold back its release. It is already in staging, which means we just need to push it to production and work on bug fixes, which shouldn’t take that long.
As to why we pushed it back, we rearranged the roadmap to prioritize things like primary issuance and the SaaS platform. We’re also in the final stages of developing a distribution model for both NFTs and STOs. This is basically a platform where issuers can come directly to the dividend distribution feature, and they can distribute their dividend payments, airdrops, everything to anyone holding their tokens.
We decided to push it back because the NFT market isn’t great right now. A lot of the partners and platforms that we intended to work with, their NFTs are at a point where probably about two or three ETH at the floor price but are trading a sub 1 ETH floor now. With valuations that low, it doesn’t make sense to be fractionalizing these assets at this point.
On top of that, there are a couple of additional features that we are trying to work out, one of which is a proxy integration where users of the NFT or the fractionalized NFT can get access to the NFT group themselves.
For most DeFi applications right now, the moment you put your asset into the smart contract, you lose all utility for it, so we’re still trying to work around that issue. But the main reason we haven’t pushed it out is because the NFT market is basically bad right now and most people are not willing to divest their NFTs assets at this point.
If you think about fractionalization, it is essentially selling a portion of your NFT to take profit at the current level. Most NFTs have dropped significantly in value, and we just don’t see the point of pushing the F-NFT platform right now.
We’ve actually already strategized how we would push out the F-NFT platform, the team spent months preparing the marketing plan for it, with the whole lore and things set up to drive. From a planning perspective, we went hard on the NFT side because we worked out that there’s going to be a massive subset of NFTs that are security tokens, whether the issuers believe that or not.
You haven’t released the F-NFT platform, despite being ready to deploy, due to market conditions. What if the bear market lasts for 2 to 3 years?
We halted the launch due to market conditions and sentiment of the NFT community, but this doesn’t mean we are delaying it indefinitely. We paused it to focus on our core competencies, which are STOs and developing the B2B solution to increase traction and adoption. The F-NFT development will continue once these initiatives have been rolled out.
Is there a limit to the number of people that can own a fractionalized NFT?
Technically, no, but it’s more of a business decision by the owner of the NFT. The concept of fractionalization using tokens versus fractionalization using pieces of paper is that the former is faster, cheaper, and more efficient but it’s not really a cost issue.
For example, A can sell 49% of his asset, composed of two shares at $50,000 each. John can also do the same and fractionalize 10% or 20% of his asset and do it in 20,000 units. That’s where this is headed, so we need to do more work in this space and work out what’s optimal for people in the system.
Fractionalizing NFTs can be super easy but we want to make sure that whatever we build is usable, scalable, and has downside protection.
What kind of NFT will be on the platform?
There’s actually two parts to the NFT. The NFT rollout one will basically allow anyone to fractionalize any NFT so if you hold one in your wallet, you can come to the platform and fractionalize it yourself. You don’t have to pay for any gas fee since this is a free function that we will provide. The second part is you can create a launchpad, a sort of funding round, for your NFT.
Any update on the IXS Academy?
Without a doubt, education is key especially when you’ve got a new technology with a new subset, like security tokens in the blockchain space plus all these different things.
We’ve got CBDCs, stablecoins, cryptocurrencies, NFTs, security tokens – who knows what’s next? This is why we’re very big believers in the need for education. Behind the scenes, we’re hard at work on the IXS Academy. Our goal is to have our own learning hub focused on our assets, on STOs, and try to drive more adoption by driving more awareness and clarification on how things work.
The IXS Academy should be ready in a couple of weeks and the first iteration is basically what you’ll see on Binance Academy. For the next iteration, we want to upgrade it to what you see on Coinbase, where you get to complete quizzes, questions, tasks, and modules, and you get paid a certain amount of money or crypto.
This is to incentivize users to sign up on the platform, complete the KYC, and learn more about the STO markets because even the issuers themselves, with some already issuing tokens, still have significant lack of knowledge about the STO space.
The STO issuances that came out before were mostly random assets, a lot of them were just in the market trying to raise money and do a quick cash grab, so a lot of them still don’t really understand STOs or even what swapping on a DEX is. That’s one of the big hurdles we face when we talk to issuers since we also have to educate them, we have to explain what a DEX is, and walk them through every single step of how to use a DeFi application or even Metamask.
IXS Academy will be a key point for a lot of new users and issuers to come onboard.
What’s the news on the updated roadmap?
As of today, we’re finishing the dividends part of the roadmap, and we’ll be finalizing the SaaS white-label model as well. Next, we will be working on the primary issuance and the release of the NFT platform will be the next one after that. Hopefully by the time we do that, the market will be better.
What about additional utility for IXS?
The challenge right now on additional utilities for IXS is that the token price is so low. The initial vision that we have is IX Swap access, aside from being our native token. STO partner platforms would buy IXS, they would use that to incentivize issuers of STOs. A lot of the bigger real assets will be tied to stablecoins, but there are still a lot of interesting ways that we can use to generate IXS demand.
Ultimately, we’re going to start pushing forward on that. We want the token price to go up at least double or triple from now. We will announce when IXS will be used on the InvestaX platform. We mentioned that for a long time, but we would like the market to recover a bit and get some assets coming along the pipeline.
We’re in a bit of a holding pattern here but we do want to create strong use cases for the token. We need more products, more STOs on the platform, more partner platforms integrated with IX Swap so we can drive these use cases. There’s no magic bullet here. We just have to keep on going, keep pushing ahead, and try to reach out to more people out there.
Any insights you can share on who are constantly selling IXS tokens?
The IX Swap team is not selling their tokens, and it also doesn’t make sense to liquidate anything at these levels. Unfortunately, we don’t track any specific wallets, and this would only work for DEX trades. Most of our volume is on KuCoin and it’s a blackbox (unable to see who is trading what).
Can you please name one or two actions that the team took to support the token’s price? Also one or two actions that you took to price correct more apart from the market conditions?
We don’t support market pricing because that’s market manipulation, which is not legal. Besides that, it would essentially drain our liquidity, which is a cash burn that could be used for building instead, which is more valuable. Similarly, we would be going against the macro trend, which is generally not the best idea if we want to support prices.
How will future token price affect the token utility? Will a $100/token price affect trade tokenomics?
Tokenomics should remain consistent as fees are adjusted on a % basis of overall trade size or valuation, hence not affected by token price increases.
Can IX Swap do more frequent updates?
When we were just starting out the project, we were doing updates every two weeks and we found that we were repeating a lot of the same information over and over again because the development time generally takes months. We felt that it wasn’t very useful after a while but we’ll be happy to do that again if that’s what the community wants.
We’ve been hyper transparent about what we’re doing because everything related to securities has to be reported to the regulators, to partners so we have to make sure everything is squeaky clean. If once every two weeks is a bit much, we can do maybe once a month.
Right now, we’re focused on the business side of things, so we’ve got a lot of discussions on a daily basis about driving the business elements of the platform forward. We’ll be happy to share more of that with the team. Of course, we want to have exciting and useful updates, and we think the next half of the year will have more activities than the first half because now, we are live and can actually sell it.
Is IX Swap a long-term project?
Everything takes longer with any startup anywhere in the world. It’s always harder, longer, and more difficult than expected but everything’s going okay. We’re really excited by the growth and the movements in the industry.
If you saw the post we had about Raoul Pal’s Real Vision interview with Sam Bankman-Fried, you’ll see that they couldn’t be more bullish and optimistic about security tokens. Raoul Pal looks at it as an enormous opportunity, and we believe in the same thing.
Meanwhile, SBF talked during the FTX Bahamas conference about how the real opportunity in blockchain is the capital markets, the private markets, and the tokenization of real assets. Cryptocurrency is just a subset of that. That’s how he sees the world, and that’s what we in IX Swap believe as well.
And there you have it for our latest AMA. Make sure to follow us on our social media channels so you won’t miss any of our upcoming AMAs – with another one coming soon. Keep your eyes peeled – details to follow.
About IX Swap
IX Swap is a next-generation platform that leverages DeFi services backed by 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.