In case you missed our Community AMA for March which took place on our Telegram channel last March 29, 2022 (Tuesday), here’s a quick recap of all the burning questions asked and answered by none other than IX Swap co-founder Aaron Ong and our Head of Strategic Partnerships Darren Wong.
On Security Tokens (STOs) and the STO Swaps Launch
- How many assets do you think the platform will have in the next three (3) months?
As many as we can! Due to regulations, onboarding some of these assets take time and approval, but we are hopeful to have at least something new each month.
- Will all of the deals on the InvestaX website be found on IX Swap at launch?
No, many of the deals currently at InvestaX are still in their primary stage. That said, select projects that the company is working on will be listed on IX Swap once the deals have been funded.
- Do you have any kind of launchpad to make STOs in your roadmap? If yes, when?
Yes, we are looking at the second half of the year. This will depend on the regulators that we are currently working with to streamline the launchpad process versus how it’s normally done now when you would issue a security. Not going to give a specific date, but the team is working on this.
- When would lending and borrowing be officially part of your services?
We are currently targeting the end of the year, and we have a couple of reasons for this. We would like the assets to be trading for some time before we provide borrowing and lending services as many of the STOs are not traded before.
We will need to collect the trading data, assess the volatility, and appropriate margin levels for these untraded assets before we are confident of releasing such products into the market. Private asset lending is unavailable for most in the traditional space due to the lack of data and information.
- How many listings are going to be available by platform launch?
There will be three (3) listings in the coming month/s, and we are staggering the listings to ensure each project has sufficient marketing time to attract as many new users to the platform. MSTO will be the first to be listed on launch day.
- Why should I buy MSTO on IX Swap if I can buy it on another platform? What is the advantage of MSTO on IX Swap?
We expect arbitrage traders to utilize the IXS pools to trade the tokens that are already listed elsewhere. It’s the same rationale as to why would you list on Uniswap if you are already on DEX. On top of that, the DEX concept of earning fees whilst providing liquidity isn’t done on a centralised exchange.
- What’s the strategy regarding marketing to STO traders and who are the natural investors in these STOs?
Generally, the traders of STOs are still traditional traders mainly invested in traditional finance products. We are spending a considerable amount of time educating these traditional investors as STOs act as a bridge for them to get into blockchain, given that the products are still more in-line with traditional assets.
For this reason, we are building our relationships with existing STO exchanges and providing them access to the STO Swap as a third-party application on their platforms so that their users will be able to access these additional assets listed on IX Swap.
That being said, we have also been expanding our reach into DeFi communities and looking to build more B2B relationships with platforms like Nova Finance, which focus on asset management that will allow their users to access and trade STOs.
- Can you give some examples of how we are marketing to our target audience and how successful it has been? How has the ongoing pre-launch marketing been to actual STO investors? What has the response been like – any numbers to share in terms of KYC wallets that have been whitelisted? Or is the marketing via the partners only going to start post-launch?
From our experience thus far, we’ve found that marketing STOs will need to start with basic education given the nascent stage of the industry. Education will be key here for both the crypto and traditional world.
On the education front, the team has also been busy building the IX Swap Academy so that users that have signed up to the platform will have an opportunity to access these materials and learn more about the STO market and other relevant information related to investments as a whole.
We also have the IX Swap Ambassador Program, which we will announce publicly soon and should help create an influx of new users to the platform.
That said, the NFT marketing will start to commence soon, and we will be looking to expand our reach and audience significantly before we launch our F-NFT platform.
Having said that, the best marketing efforts are not just on the campaigns we push out but also to engage with current traditional market leaders and work with them to structure products with us that are better versions of the current products in the financial industry.
As such, a lot of effort has been put into understanding and collaborating with traditional institutions to bring in the mix of DeFi and CeFi with these age-old brands that work with us to use blockchain technology to improve yields and reach where traditional products have not gone. We believe this will further bridge the gap between blockchain and finance.
- How’s the platform tackling the bureaucratic bottlenecks and strict licensing challenges In STO markets?
Exactly. This has been fairly unprecedented, and we face regulations daily. This is what we are trying to solve, to work with licensed entities in a regulated environment to facilitate these STOs. These are with the likes of working with platforms like InvestaX and custodians like First Digital to be able to hold the STOs in a compliant manner. We are still paving the way for the infrastructure of the STO space as we speak.
- The DeFi aspect for STOs is currently not available. Could you share how the interest rates for such DeFi applications on underlying STOs will be determined? Is it interesting enough that we can pull in existing STO holders from various exchanges?
If you mean the transaction fees, 60% of the fees will be generated back to liquidity providers that lock in their STOs. Currently, there aren’t any other STO AMM as equipped as us, so it’s exactly what we want to do – be a home for STOs to list and give access to investors interested in the space both crypto and traditional.
- How about the borrowing rate? For example, if an STO holder wants to stake his STO as collateral and borrow cash, how will interest rates be determined?
These rates will be determined by the lender on the platform, and it is up to the STO holder if they want to take on these rates. However, this functionality will not be out at this iteration.
- How about lending and borrowing on the platform?
Not in this iteration but do check out our roadmap.
- Can you give a list of these private assets you’re referring to?
We can deal with and facilitate STOs that have been tokenized with underlying private assets. However, we do not do tokenization service on IX Swap currently. Having said that, InvestaX is our sister platform that we partner with for the tokenization of assets.
- Are the customers who will use the IX SWAP well-sourced as three (3) listings may not be enough at launch?
We are in conversations with almost every visible STO in the market right now. Most of them are taking the wait-and-see approach as most are unwilling to take a chance on new tech. We will be circling back to each and every one of them post-launch.
- Can you please share some of the challenges or pushbacks as to why existing exchanges would want to get their listings on IX Swap? What’s the incentive for them to do so? Especially with the more established players, how have the conversations been going?
Currently, most exchanges deal with crypto and not STOs. For listings, this would be on the issuers of these assets rather than the exchanges as most of the centralized exchanges do not provide much volume since they are segregated and siloed.
Many issuers are also looking for other places to list, and what we have at IX Swap differs from what’s being offered on centralized exchanges. We also have yield farming on the STO products that aren’t available on centralized exchanges.
We aim to be a DeFi layer that will be able to plug into other STO platforms to be able to access DeFi liquidity and for their issuers to remove “silos” for a global reach.
Having said that, a lot of the established players are still new to DeFi and are looking at our use cases. There are talks possibly for smaller POC (proof of concept) test cases before moving on fully to a DeFi environment.
- For a company like ADDX, is there some incentive structure for them to list their STOs which originated at their end onto IX Swap? Or will it only be more DeFi oriented?
To our knowledge, ADDX won’t be able to work with other exchanges as they’re built on a private network. But we are looking to work with exchanges to provide access to IX Swap through their platform.
Most CEX STO exchanges now have been built on private networks and want to keep the business to themselves. We are quite flexible with exchanges that we are speaking to and are open to working with as many as possible. That said, primary issuers would be the natural funnels for us before the exchanges.
- Will Polymesh assets also be listed on IX Swap?
We are integrating with another custodian to get access to their assets.
- Will Polymesh assets be listed on IX Swap already during the launch on March 31, 2022?
No, because we have to integrate with another custodian that supports Polymesh, and there are not that many in the market right now. Currently, we have a live project we are working on that’s on Polymesh, so once we’ve integrated with the said custodian, we will be able to provide access.
On Fractionalized NFTs (F-NFTs)
- Can you share a little about the challenges faced in implementing fractionalized NFTs?
The fractionalization is not tough in itself, but the challenges that we have faced are more related to the liquidity pools and trying to solve the issue of low liquidity assets for smaller pools of NFTs.
We had published an article on the mitigation functions that we have implemented onto our swaps to facilitate this. We had spent months of backtesting and analysis across different asset classes to assess the viability of using such mitigation strategies.
Another challenge we have encountered was facilitating income-based F-NFTs, which will allow users or investors of the F-NFTs to receive a share of income from these NFT assets. This was not popular until recently when almost every other NFT has issued a security token and required smart contract (SC) interactions to be able to claim these tokens. We are implementing our SCs to enable this function for our F-NFT holders.
- Is there a minimum floor price or some other metric before you accept a fractionalized NFT listing?
No, anyone will be able to fractionalize their NFTs regardless of the price/value.
That said, if users would like to create AMM pools using their fractionalized NFTs, we would recommend higher valued NFTs as the AMM would be inefficient for a small F-NFT liquidity pool. Owners can also put their NFTs in collections before fractionalizing to create bigger value.
- Does the team have agreements with various celebrities who issued NFTs?
We have no celebrities lined up yet, but we are working on collaborating with several prominent NFT projects and owners.
- What is the relationship between the fractionalized NFT and the IXS token? Will it be paired as well to list?
The pools will be able to be created with a stablecoin pairing, as well as IXS pairings. More utility will be announced towards that launch, so stay tuned.
- Will the F-NFT feature be self-service? For example, import an NFT contract from OpenSea and it creates an F-NFT contract or does it requires intervention from the IX Swap team?
No intervention is required. Anyone will be able to easily come to our platform to fractionalize it themselves by sending it to our smart contract.
- There are many artists related to NFT, such as artworks and music copyrights, and I think it would be good to contact them as well.
You hit the nail right on the head because income-producing NFTs are our primary targets.
- Can you show some achievements the team had done so far? What are some major achievement targets for IX Swap in the future?
We built the world’s first STO swap platform and it’s going live in a few days.
We’ve also completed our F-NFT smart contracts, and this has been submitted for audit and release in Q2 2022. We are also currently working through some regulatory approvals and will announce them to the community once these have been finalized.
- Does IX Swap care about the chart? Is it strategy or philosophy?
Yes, we care about the price but the project doesn’t solely function based on the price action. Building the infrastructure out and building an organic community for the STOs is more sustainable.
That said, the marketing from the NFTs should provide some nice upside as it is more relatable, and we can cater to a much larger audience.
- I get the sense that based on the listings in ADDX and InvestaX, for example, the profile of the investors is more real-world TradeFi types. Is that still going to be the trend? If so, it feels like it will be a slow burn unless the whole world suddenly wakes up to the possibilities of a tokenized world. And even then, the big institutions are not ready.
Not all institutions or traditional products. We only want to work with forward-thinking institutions that see DeFi structures as a way to improve current products. No one will come to DeFi to buy a 3% bond if they can buy it on a local exchange.
- With the current staking program, what are the tax implications of the way the staking was implemented? Previously we got IXSGOV when staking, but that’s not the case this time around. Exchanging for IXSGOV would have triggered a tax event and the same with the return of it at the end of the staking period, but with my coins just ‘locked’ it seems this is different.
We’re not a tax advisor, but I would assume the staking rewards provided would be additional income that they would have to declare. We wouldn’t give advice on this as different jurisdictions have different tax laws.
- What if we need to buy more quantity than what is available in the sell order book?
There is no order book on IX Swap. In theory, they will not be able to buy more than what’s in the pool. However, in reality, with how AMMs work, if one side of the pool is depleting, that also means that the price per fraction increases. The lesser the pool on one side, the more is required to pair it.
As such, this will incur a really high selling price of each fraction, which will increase the number of sellers of these fractions as they will be earning much more than the equilibrium value, which would add more supply of the fractions into the pools.
- Is the mitigation mechanism unique to IX Swap?
Yes, none of the other platforms has implemented this. Most swap platforms use an AMM pool to adjust the slope of K to mitigate volatility but that in itself has issues when it comes to arbitraging the assets.
We saw some issues with the previous DEXes and what happens when low liquidity STOs were listed there and the same issue will persist with small F-NFT pools so we decided to tackle to problem head-on.
- Will KYC be necessary to use your platform?
To trade STOs, yes, but not for the F-NFTs for the time being.
- Do you plan to launch your token on other exchanges like Gate or Huobi?
Given the time and capital expenditure required to list on any exchange, we will be focusing on the top five (5) exchanges and Huobi can be considered in the same bucket.
- Do you have any plans to list IXS on Coinbase or other exchanges?
Stay tuned! We are currently not looking to over-expand our liquidity to other platforms at this phase. As we are doing well now, we are also not looking to create sell pressures on these platform listings unless we really believe that it is better for the growth of our coin. Look at the initial day sell pressures of Apecoin listing on the first couple of days for example, but we will announce if we will have plans to list, as usual.
- When will tokenized stocks (TSO) be available on IX Swap?
Now that the NFT contracts have been submitted for audits, we’ve started working on the TSOs and building that out. There will be both spot and futures markets for TSOs.
- If we need further clarification or information about the project, do we reach out to you here (Telegram) or is there an opportunity to ask the team directly? What is the state of play?
We publish our news, announcements, and updates on our blog and Twitter account so you can access the information you need easily.
- Do you allow for the tokenization of private assets?
Yes, that’s what we do.
We’re happy to have the chance to directly answer so many questions from the community members and to see how engaged and excited everyone was for the launch! We are looking forward to doing more AMAs as we develop our platform and partnerships. Thank you for tuning in!
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.