LCX AMA (26/02/21)
I am Dr. Gemhunter and I am running the AMA with Monty today. If you don’t follow me on Twitter yet, here’s my link: https://twitter.com/Dr_GemHunter 😉
Dr. GemHunter: Hey Monty, great that you have time for us today. It’s already 6 pm CET, so lets start 🙂
Monty Metzger: Hello Everybody! Exciting to join this Ama today. Here you can find me on twitter as well https://twitter.com/montymetzger
Dr. GemHunter: I’m excited too, so let’s go 🙂
Tokenization, in my opinion, has one of the greatest potentials on the blockchain. You can tokenize virtually anything, be it company shares, soccer clubs, medical devices to entire hospitals or even tokenization of patents is under discussion. There is an incredible amount of power behind it.
The project $LCX is located in the Security-Token-Offering area. According to the PWC report, the expected market size for security tokens in 2030 is $2,000 billion. So you serve a large market here.
But first, in general: Can you briefly explain what exactly $LCX is all about?
Monty Metzger: LCX.com, the Liechtenstein Cryptoassets Exchange, is a regulated fintech company that focuses on digital asset trading, compliant token offerings and tokenization.
LCX is headquartered in Liechtenstein with offices in Switzerland, India and USA. In 2020 LCX received 8 crypto-related approvals by the Financial Market Authority.
LCX Token is the fuel of our purpose-built platform. LCX Token works as a long-term sustainable incentive mechanism to motivate various stakeholders to participate in the ecosystem.
Here is a great video summarizing what we do https://www.youtube.com/watch?v=I5zHVa7JMx4
Dr. GemHunter: Thats great! I will watch the video later, as I haven’t seen it so far 🙂
You offer 5 different products on your website. Exchange, Terminal, DeFi Terminal, Smart Order and STO Launchpad. Can you briefly explain each product and what is their specialty?
Monty Metzger: Yes, for sure. There are 3 key categories.
1) LCX Exchange
2) Our advanced trading tools
3) Our Token Sale Platform, STO Launch and Tokenization solution
Let me explain in detail:
LCX Exchange is a secure and regulated trading platform for cryptocurrencies. LCX Exchange makes it easy to buy, sell and store cryptocurrency like Bitcoin, Ethereum, LCX Token and more. We have started LCX Exchange just a few weeks ago. We are planning a big growth push… listing initiatives, smart market making and growing liquidity
The Advanced Trading tools include:
LCX Terminal which is a portfolio management platform across all major cryptocurrency exchanges, featuring news, social analytics, and trading signals, powerful analytics and smart order routing — all on one interface.
LCX DeFi Terminal which is a decentralized trading platform for Uniswap with super fast markets data, beautiful charting, tradingview integration and DeFi indicators such as liquidity and volume.
But particularly exciting is that we have build a second layer blockchain protocol enabling limit orders on Uniswap. We call this LCX DeFi Protocol. Furthermore we have build our own — regulated — price oracles. LCX Price Oracles are credible and decentralized Cryptocurrency Reference Prices. As far as I know, we are the only regulated price oracle in the market.
We do this as part of our “price service provider” role approved by the regulator. But now to the last element of our offerings and services:
LCX Token Sale Manager is the most advanced and fully compliant platform for any token sale, regardless of whether it is a utility or security token.
LCX STO Launchpad provides a compliant one-stop tokenization platform for security tokens to automate the fundraising and investor management on the blockchain.
Both are powered by our Crypto Compliance Suite where we manage investors, we provide a token holder registry and more
Dr. GemHunter: Thats really amazing! It’s also great to hear, that the exchange is regulated. Regulation is a big aspect for tokenization. I will go into more detail about this in a sec.
A lot of trading happens on Uniswap and you just mentioned, you are offering a second layer blockchain protocol enabling limit orders. That sounds really cool. How does this work? Do I have to use your exchange to use this tool?
Our DeFi Protocol is a DEX dashboard and trading interface build on top of Uniswap. At https://defi.lcx.com/markets you have super fast markets data. Everything you know from info.Uniswap but much more advanced. This is super helpful and I recommend testing out our DeFi indicators at trading view.
Just click on a trading pair, then click on Indicators and search for DeFi, then you can add liquidity and volume charting right next to the token price. But — most important is when you click on Buy or Sell… this lead you to the Limit orders https://defi.lcx.com/order.
You can sell or buy at markets price immediately or do a limit order, choose the price you want to sell or buy and lock your trade in. Our smart contracts does the rest. Your trade is waiting for execution.
We always track our Total Value Locked and you can see it as well: https://etherscan.io/address/0x84dc33d1f2b2f4284cf9680c3085f7816248bc07.
Currently there are aprox. 140,000 USD in open trades — all limit orders waiting to be executed. Our price discovery engine is tracking uniswap markets in real-time. once the market reaches your price it will auto-magically be traded.
Dr. GemHunter: Amazing, absolutely amazing! I will try it this weekend, as I’m mostly trading on Uniswap :). I guess not a lot people know your uniswap tool. We should change that by today! 😉
Regulation is still the biggest hurdle for tokenization projects in my opinion. Therefore, I would like to go into this part in more detail.
With MiCa (“Markets in Crypto-Assets”), the EU has provided the first uniform rules. However, Lichtenstein is not part of the EU. What is the regulatory situation like in Lichtenstein and how do you assess the current situation? What still needs to change in your opinion?
Monty Metzger: Regulation is at the core of LCX. We have a balanced view on regulation. We have to be able to be innovative and leverage the benefits of blockchain. Nevertheless we want to reach and address the global final markets. And that is only possible if we also innovate the regulatory framework
Liechtenstein is by far the most exciting jurisdiction at the moment. As they have been very innovative. Presenting a light-weight legal framework.
Why is this important? It gives legal clarity to all market participants.
Dr. GemHunter: Absolutely. Thats necessary and needed
Monty Metzger: For Token Issuers (the blockchain projects starting tokens) and for all traders and investors. We work in these regulatory framework and invested a lot to provide our users a secure and reliable experience.
Dr. GemHunter: Yep, without regulation no one would tokenize their business for example
Monty Metzger: For example — all user assets are fully segregated and held in secure crypto vaults. Similar to a bank, who have to keep user funds strictly secured and seperated. It cannot be mixed with operation funds of the company and there is protected against insvolvency cases etc.
Liechtenstein is a member of the EEA, the European Ecoomic Area. And Liechtenstein has union structure with Switzerland. E.g. connecting to the central bank of switzerland and using swis francs. Thus — all companies in Liechtenstein have a hybrid market access. Full access to European Union plus some more EEA countries and to Switzerland. The MiCa regulation proposal by the European regulators is a milestone for the industry.
Dr. GemHunter: Probably you have then chosen Lichtenstein because of the regulation. Smart move 😉
Monty Metzger: When they wrote the doc, they also looked closely to Liechtenstein as a role model. And …. we are there already ready for the upcoming European regulation.
Dr. GemHunter: Amazing Monty!
Monty Metzger: Tokenization and digitalization of every financial asset will be natural step of the finacial industry.
Dr. GemHunter: Can’t agree more
There are different rules and regulations for each country. In Germany, for example, the BaFin (Federal Financial Supervisory Authority) has to be brought on board. Are there certain countries that have to be excluded from your service due to the regulations, or what is the current situation?
Monty Metzger: While we are in this small european country, we are international from day one. As a result our Crypto Compliance Suite is ready to on-board users from more than 230 countries. We have only some restrictions due to regulations and compliance, but we aim to grow on an International level. Thus we have strong partners in Asia and we are building out our presents in North America. With organisations like Global Digital Finance (GDF) or WEF we are engaging in a dialog to shape future regulatory structures and share our insights
Dr. GemHunter: I see, you are going really internationally and expanding world wide.
Monty Metzger: It’s all about Leading Change. As a result we have started a new campaign, honoring the great innovators in the crypto and blockchain industry. The once who combine regulation and innovation.
Here is the video of our campaign https://www.youtube.com/watch?v=pp6RjXGOEYQ.
And also for our korean community https://www.youtube.com/watch?v=QrHeUOgJ0BI
Dr. GemHunter: Yeah, I saw that one. I can only recommend to watch it guys! It’s inspiring
Let’s move to the next question:
What is the process like when a company wants to tokenize company shares? What do you do and what does the company have to take care of? Who approves that the shares are no longer owned by the company and are tokenized instead? Is it a notary?
Monty Metzger: There are many opportunities to “tokenize” assets. In general and under Liechtenstein laws. The token can be seen as a cointainer which can be filled with any right.
A right representing shares, a right for usage (utility token) or a right of ownership (real estate). Plenty of opportunities with the legal structure, now it’s up to the market to decide what investors want to buy.
We can tokenize any asset! And we are now carefully selecting projects who are working on this. If there is somebody out there, just email to tokensale@LCX.com and we tell you more
Let me give you an example: We can tokenize shares of a company. The legal framework provides security that the shares (and all rights associated with it) are reprented by the token. So the token container is filled with 1 share of a company. All investors who invested in such an equity token can go to court in liechtenstein to enforce their rights. Or contact the regulator if there is something suspicious going on. As a trusted technology service (that’s what LCX is), we are liable in many ways and provide the link between the asset and the token
For physical objects the laws even created a new role, called the Physical Validator. We also applied as a Physical Validator, and plan to get the registration later this year. This is relevant to tokenize diamond, paintings or real estate
Dr. GemHunter: Very well and clearly explained.
Who makes sure that the shares are really tokenized? Is this process verified and certified by a notary? And also that the company is allowed to tokenize their shares
Monty Metzger: The Physical Validator is like a notary of the digital world. For example, the Physical Validator has to lock the diamonds in a super secure vault and have to make sure the diamonds are secure and won’t be sold.
For Real Estate we would be write a note into the official real estate registry and block the property. it could not be sold to protect the token holders etc.
Here are more details about Tokenization of Assets https://www.lcx.com/tokenized-securities-tokenization-of-everything/
Dr. GemHunter: Ah wow, very well explained! Thanks Monty!
As you mentioned it in your first post. Since 30. December 2020, you have 8 out of 11 possible roles (TT Exchange Service Provider, TT Token Depositary, TT Key Depositary, TT Price Service Provider, TT Identity Service Providers, Token Generator, Token Issuer on its own, Token Issuer on behalf of the clients) from the Liechtenstein Financial Market Authority. That’s really great. What do you guys expect to get out of this and how will these approvals help you down the road?
Monty Metzger: The approvals by the Financial Market Authority are important. Not only for us, but more importantly for our users. We have obtained more registrations than any other company in Liechtenstein. Even more than some local banks…
Dr. GemHunter: Haha thats amazing, Monty 😄
Monty Metzger: We will role out services and products in each category. A key goal is provide the tools for other blockchain projects to do successful token-sales — in a fully compliant manner. And to offer a trading venure for all digital assets.
A key focus is now on LCX Exchange. Which we developed from the ground up. A super fast matching engine build by LCX. An easy to use front-end and great user experience.
I hope everybody have started to trade already. If not, please join today — and start trading. We also have 3 $LCX trading pairs. Have a look at https://exchange.lcx.com/trade/LCX_BTC for example.
Since a few weeks a professional market making team is working to provide liquidity. We are slowly scaling this up. But — all of you should get started. good arbitrage opportunities as well
Dr. GemHunter: Great news!
Competition is the proverbial driving force. There are some competitor projects that are also in the tokenization space, including Polymath ($POLY) and Swarm ($SWM). What do you do differently or better in your opinion, and do you think the market is big enough for several of these projects to be successful side by side?
Monty Metzger: There is no market if there is no competition. We also hope that many other blockchain companies are coming to Liechtenstein. This strengthens the ecosystem and helps the whole industry to evolve.
Of course we know in detail what Swarm, Polymath or Securitize is doing. But they only offer one piece of the puzzle and blockchain projects still have a lot of work on their own. We are changing that
Dr. GemHunter: Yeah I see. Thats really cool!
There are different fee models if you want to tokenize assets, for example. With Swarm, for example, you have 0% initiation fee and only when you are successful do you pay a percentage of the money raised. What is your fee model and why did you structure it this way?
Monty Metzger: We have introduced the STO Launchpad as a end-to-end tokenization platform https://www.lcx.com/sto-launchpad/. Based on this we will be also presenting our Token Sale Manager, which is for non-security tokens — like utility tokens, governance tokens etc.
This will excite you: We are very selective in the project we choose. Especially now at start. If you would start on your own to prepare a compliant token sale there are many challenges. You need good lawyer (which is costly), you need knowledge on regulation and how to implement this on token level and on platform level…. This can be complex and might costs you $100–200k or more in upfront costs.
Dr. GemHunter: Yeah, I know. Thats really expensive
Monty Metzger: We have a different approach. We provide everything you need. A full legal setup, legal documents and the whole technology platform to do the token sale.
Our Advanced KYC for investor identification, we can also develop the smart contract (token generator) and help with the token audit (e.g. via Certik in NYC) and we manage the distribution etc.
For security tokens, we also maintain the Token Holder Registry — like a real time cap-table and manage the whitelisting This is not necessary for utility tokens. But the KYC, AML and CTF checks are always a must
So what do we charge for this?
We have a different apporach, as we want lead change. We do not charge a set up fee. So no upfront costs. We do invest in the project and do cover the initial investment for legal and tech structures (approx. valued at $200k). We do get a small % in tokens and a success-fee (a percentage of the money raised). The legal setup includes…. a token offering memorandum, a basic information sheet for the token sale, token purchase agreement / terms of sale. This can include the smart contract develop or support — hand in hand with the team and then the fully compliant token offering. We focus on projects raising millions of $.
Now, we are looking for outstanding projects. Any recommendations?
Dr. GemHunter: This is really great news. You offer an all-in-one-service. Absolute fair price. Brilliant!
I saw a poll on Twitter earlier asking if you are doing an announcement today. Most of the community said “yes”. Now I wonder, can you announce a tidbit today? 😉
Monty Metzger: Yes, there is a “one more thing” and this is important to Tokenization. On Thursday, March 11th 2021, we will be publishing our technical whitepaper of the LCX Liechtenstein Protocol.
The Liechtenstein Protocol is a new token standard for security token. Blockchain agnostic and cross chain. While Ethereum will still be important for a while, we will also engage with other blockchains to use the Liechtenstein Protocol.
Dr. GemHunter: That’s awesome and also super important. Because this way you remain universally flexible and are not dependent on one blockchain!
Monty Metzger: Here is a short summary:
Liechtenstein has introduced a new legal framework called the Token and Trusted Technology Service Provider Act (Officially: Token- und VT-Dienstleister-Gesetz; TVTG) also known as the Blockchain Act. The regulatory framework enables a technologically neutral token definition building the foundation for a tokenized economy. The new laws bridge the gap between the digital and the physical world and define key roles along the value chain of tokenization. While the new legislation has been implemented, there is a need for a new security token standard to implement compliance and regulatory requirements directly on technology and on token level.
Our technical whitepaper is a proposal of this new token standard as an industry-led initiative, building upon the basic experience and knowledge of other standards such as ERC1400, ERC1400, R-Token or T-REX. The new token standard is blockchain agnostic and will be implemented on a variety of public chains. The blockchain agnostic standard aims to build a framework for the tokenization of securities and to foster the growth and proliferation of asset tokenization as a practice.
The Liechtenstein Protocol standard, and its first iteration, is programmed to automatically enforce specific conditions that relate to legal and regulatory requirements applicable to securities and enables automated compliance of the tokenized asset with pre-defined requirements built in the code.
Dr. GemHunter: Really great news and thats a really big announcement! Thanks for sharing this with us 🙂. I will unmute the chat and the community can ask now some questions
Thanks Monty to share your knowledge with us!
MD SHAMIM HOSSAIN: Whats benefit of holding LCX
Monty Metzger: The LCX Token is your chance to be a part of LCX’s vision to bridge the gap between traditional finance and the new monetary world powered by blockchain and cryptocurrencies.
By purchasing the LCX Token, users get a variety of benefits:
LCX Exchange: Reduction of up to 50% trading fees at LCX’s compliant digital asset exchange.
LCX DeFi Terminal: get full access including usage of our second layer DeFi protocol to enable limit orders on Uniswap.
LCX Terminal: Become a pro user and pay monthly fees of LCX Terminal with LCX Token.
LCX Vault: Pay fees for LCX Vault and our crypto custody solutions.
LCX Price Oracle: pay fees in relation to LCX’s regulated reference price services which we provide as Price Service Provider.
Token Sales: pay fees in relation to token sales hosted or powered by LCX technology.
Furthermore companies and clients of LCX will have the ability to pay fees for listings, exchange membership fees or token sale fees with LCX Token as well.
Eike: When do you expect the licence to trade securities?
Monty Metzger: We are on this since last year in parallel. Our “homework” is almost done and then it’s up the regulators which is a process we cannot influence. At first we need more Security Tokens, as we don’t want to launch an empty trading platform. Thus we are focusing on STO Launchpad first.
Eike: What are smart baskets?
Monty Metzger: Smart baskets are a great additional to our advanced trading tool. We would need some more time to explain. Maybe in the next AMA…
Kane: Would IOTA be a good fit here? I think so. What do you think?
Monty Metzger: Of course. Why not!
A R: How can an STO launchpad be successful without having somewhere to trade these securities tokens?
Monty Metzger: Generally trading and token transactions are possible — as long as the address is whitelisted at our platform. We have done some tests of trading permissionbased security tokens on Uniswap…. it works!
Moreno: As a fan of Wesley Snipes I must ask you if I will be able to invest in his movie fund this year 😂
Monty Metzger: The regulators have given us some extra work and we are working to answer all their questions. It’s in progress and will be launched next to many other exciting projects.
Dr. GemHunter: Thanks Monty for your time! If there are any more questions, feel free to join https://t.me/joinLCX and drop your questions there
Monty Metzger: Thanks @Dr_GemHunter — this was great!