It’s not often you get to work on a project with a long-term inclusive vision as broad as Swarm’s. It’s great to ponder the possibilities and opportunities that security tokens are already enabling, but equally important is understanding the “how” of the mission and grasping an understanding of the pieces of the puzzle that will make this all possible. With that in mind, I’ve put together some answers to these fundamental questions in the hope they demystify the various elements that make up the Swarm ecosystem.
What is Swarm?
Swarm is a blockchain that allows real world objects to be “tokenized” using the SRC20 protocol, a cryptographic standard for security tokens, and a world first. Tokenized objects become “assets” that can be easily managed, governed and traded. Swarm is built on TokenD and the Stellar blockchain.
What is tokenization?
Tokenization is the process by which any asset is “converted” into tokens which can then be purchased, traded or simply held. Tokenization of assets happens on the Swarm blockchain. Tokens essentially represent traditional ownership and grant rights to the token holder (owner) which are protected by the immutability of the distributed ledger, a revolutionary technology.
What types of assets can be tokenized with Swarm?
Objects or “assets” such as buildings, farms, businesses, hedge funds, and development projects can be tokenized, meaning that their ownership can be split into any number of pieces called tokens. Tokens that represent an investment in an asset are called “security tokens”.
What are SRC20 security tokens?
SRC20 security tokens:
- represent ownership of part of an object or “asset”,
- allow holders to manage that asset through voting,
- secure a right to any revenue streams from the asset, and
- are tradable in a regulatory compliant manner.
What exactly is the SRC20 protocol?
SRC20 defines a common set of rules that a security token must follow, and gives developers the ability to build applications that utilize the properties of tokenized assets. Applications built in the Swarm ecosystem can communicate with each other and pay for transactions using SWM, an ERC20 compliant utility token. Investment platforms, asset management suites, and crypto exchanges are examples of the types of applications that can be built using the SRC20 protocol.
How does SRC20 differ from ERC20?
Tokens issued using the SRC20 protocol are an extension of Ethereum ERC20 tokens in that they carry additional properties that describe real world assets, such as their location, purpose, legal rights and obligations, and transfer restrictions.
How can I use the Swarm blockchain?
Swarm Invest, launched in January 2018, is the first application to interface with the Swarm blockchain. It allows tokenized assets to be offered as investment opportunities. Individuals can invest cryptocurrency such as SWM, BTC, and ETH (and soon, fiat) into real world assets and receive SRC20 tokens in return, granting them ownership and governance rights, a legally enforceable right to any revenue the asset generates, and the ability to trade the tokens in a regulatory compliant manner.
What does governance mean?
Token holders “govern” the underlying asset using Swarm’s Liquid Democracy Voting Module, built by SecureVote, a pioneer in eVoting. Simply put, owning SRC20 tokens proves your ownership of part of an asset, and allows you to vote on issues affecting that asset.
It is, after all, partly yours.
What type of investment opportunities will be available on Swarm Invest?
Real estate, renewables, agriculture, tech companies, crypto hedge funds, impact investments (development projects and post-disaster rebuilding), infrastructure, and any asset or project that the community of SWM token holders approves.
Is Swarm Invest easy to use?
Incredibly! If you’ve ever owned and transacted with any cryptocurrency, you already have the skills to participate in tokenized investment opportunities..
What else could be tokenized using the SRC20 standard?
Assets such as football teams, concerts, highways, schools and banks can be purchased, tokenized and governed by groups of hundreds or thousands of token holders from all over the world. Alternatively, investors can pool funds and then, by vote, decide on the assets they would like to invest in or purchase.
What is the minimum investment amount required in the Swarm Invest platform?
There is no minimum! SRC20 tokens have 18 decimal places and can be traded in fractional amounts. You can own one millionth of an asset.
How do you utilize Artificial Intelligence?
In the near future, we envisage many investment opportunities being tokenized on the Swarm blockchain via Swarm Invest and other applications. At some point it will become increasingly difficult for individuals to continually determine the mix of tokenized assets they should invest in to meet their ever-changing risk/return profile. We are already building Artificial Intelligence which will enable faster and more accurate investing, customized to a predefined set of goals.
What else can I do with the SWM utility token?
- SWM tokens can be used to directly invest in opportunities offered on the Swarm Invest platform.
- SWM is used to establish stake-weighted voting rights on issues regarding the activities and regulations of the Swarm Foundation, a non-profit organisation which administers the SWM token.
- SWM token holders can earn SWM for participating in votes.
- SWM is the currency of the Swarm blockchain, and is used as “gas” to pay for transactions and operations involving SRC20 tokens.
- Application developers can earn SWM in return for providing services and operations to the Swarm blockchain.
Swarm is the blockchain for private equity. We bring high-return alternative assets to everyone and use AI to continuously improve investments.
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