The State of Security Tokens 2022 — Secondary Trading Market Snapshot
General Security Token Performance — STO Index
“What if I had bought every single STO in 2021?”
Per Security Token Market’s Data Scientist Aneesh Shinkre, the theoretical Security Token Index returned 25.5% from January — November 2021, while showing multiple opportunities for 100%+ returns.
The Nasdaq and NYSE showed same-period returns of 24% and 14%, respectively.
What’s truly unique is that the Nasdaq and NYSE are closer in nature to each other than the Security Token Index for one simple reason — the former two consist of publicly-traded companies while the latter is composed of private company shares, Private Equity & Venture Capital funds, real estate, and other early-stage opportunities. The upside potential on the Security Token Index is probably more comparable to the private investment landscape than it is to pre-existing indexes.
Publicly-traded shares have already had their exits — that upside is already factored in. Some holdings in the Security Token Index still have that outsized exit potential which can be achieved through PE/VC portfolio company exits, real estate property sales, private company re-valuations, and additional fundraising (i.e. $5 million Reg CF in Year 1, $50 million Reg A in Year 3).
Real Estate Token Performance
As one of the first-mover industries that adopted tokenization, real estate accounts for a majority portion of security tokens in the existing landscape. These offerings range from individual properties like RealT offerings to 5-Star hotel resorts like the St. Regis Aspen Resort. Security Token Advisors intel points towards a 2022 that will present the first tokenized real estate portfolio, including “city funds” that will be structured to pinpoint certain cities and provide exposure to a variety of real estate assets like multifamily, commercial real estate, performance venues, and open lots within. See how the total secondary trading market cap of real estate offerings grew in 2021 below, sourced from Security Token Market.
Tokenized Stock & Arbitrage Highlights
Security Token Market began tracking tokenized stocks on FTX and Bittrex in Q3 2021. The analyst team puts together monthly tokenized stock arbitrage reports and seeks to build these capabilities out in 2022. This data can be used by prop trading firms, hedge funds, and asset managers for arbitrage that exists across tokenized stocks and analog stocks. See examples from the November 2021 Arbitrage Report below. FTX prices are bordered while corresponding Nasdaq prices are shaded — each differential represents one or more arbitrage opportunities.
Next week’s edition will cover Security Token Market Appetite.
