Swarm Markets gives institutions the tools to smash the crypto market asset wall

Swarm Markets’ unique status as the world’s first licensed exchange for securities and crypto enables us to respond to crypto market demand for asset classes with real-world value in a way that is completely unique from every other player in the crypto space.

As we explained in a previous post, crypto markets have hit a wall. Market cap expansion cannot continue at the same rate unless assets from the traditional finance world are moved onto the blockchain. Thousands of alt-coins trade on crypto exchanges, but they don’t offer investors real risk/return diversity because their values mostly rise and fall with the price of Bitcoin. Crypto traders are crying out for real-world assets.

The crypto industry has responded to these demand signals in three ways:

• Stable coins
• Tokenized stocks
• Synthetic instruments

While these types of tokens are creative solutions to moving past the asset wall, their effectiveness is mitigated by the risk they carry with them of becoming targets for regulators. The market needs more options in order to tap into DeFi’s true potential for disruptive innovation.

Swarm Markets is different by default

Our model is integrative, compliant, and inclusive. Not only do institutions finally have a place to trade, exit, and arbitrage crypto positions, but we give institutions a toolset that allows them much more customization than is available to them in traditional finance.

Swarm Markets’ regulated DeFi platform frees up capital market players to put any asset or instrument in their current portfolio onto the blockchain and, more importantly, to apply their creativity and sophistication towards developing new financial instruments not possible elsewhere.

With no costly intermediaries like market makers and a frictionless issuance process, they could, for example, create a product that mirrors a particular ETF risk/reward profile that is explicitly for the blockchain as well as offer stock/currency pairs that are more accessible to a foreign market. For example, Tesla shares that don’t just trade during trading hours, but 24/7 against Thai Bhat — if that is what the market wants.

Fund managers would be able to integrate a staking product with a yield into the risk/reward profile of their instruments, combining the attributes of the liquidity pool with the staking yield as a part of a single strategy. This structure is not possible anywhere else in the finance industry.

Putting the plan into action

At the start, hedge funds and family offices can increase their exposure to crypto markets by putting crypto assets onto the platform and making them available to liquidity pools instantly. The volume of capital which institutions are capable of deploying will make this first step a giant leap for crypto markets.

Over time, Swarm Markets will make it possible for institutions to add infinitely more building blocks, starting with products that have a wide market appeal and an uncomplicated regulatory structure like certain stocks and commodities. More complicated instruments based on assets like real estate portfolios as well as derivatives will follow as we extend the issuance framework in cooperation with regulators.

Instruments backed by real-world assets offer true diversification because their value is completely independent from Bitcoin.

Crypto market traders will finally be able to transact in asset-backed securities pools with assets that have a real value independent from BTC. Traders will no longer just trade back and forth between tokens whose values are linked — leading to the accumulation of real wealth outside of crypto.

The journey begins by demonstrating to asset custodians in the institutional world that Swarm Markets offers a usable and dependable toolset for deploying assets. It’s a step-by-step process to create intuitive workflows that reduce friction in order to maximize participation by institutions. The magic of DeFi is that profit is it’s own use case. As real-world assets from the traditional finance world flow onto the Swarm Markets’ platform crypto’s asset wall will come crumbling down.

Find out more about swarm markets here: https://swarm.markets/