I am Dr. Gemhunter and I am running the AMA with @Tokenaddict today. If you don’t follow me on Twitter yet, here’s my link: https://twitter.com/Dr_GemHunter 😉
Dr_GemHunter:
Okey, then let’s start 🙂
Hey John, glad to have you back with us!
Swarm is in the tokenization space. According to PWC report, the expected market size for security tokens in 2030 is $2,000 billion. You are serving a large market here.
Tokenization is the next big thing in my honest opinion and will revolutionize the financial world. For those who don’t know anything about the term tokenization.
What exactly is tokenization and how does Swarm fit in here?
John:
Good question
Tokenization is effectively the representation of something with a blockchain token. E.g. a property worth $1m could be tokenized on Swarm and represented with 1000 blockchain tokens (SRC20 tokens — modified version of ERC20 for securities) each with a value of $1000. This is making it easier to potentially fractionalise and distribute assets, all at low cost upfront and with no ongoing recurring fee’s. Blockchain of course is the settlement and clearing layer so it is faster and more transparent than what we see today in legacy non blockchain industry, tokenization is removing middle-men and cost.
These tokens would have all the regulatory controls baked in to meet securities regulations with SRC20.
Tokenization will become mainstream over time the same way that many here trade utility tokens and DeFi protocols on Ethereum, huge amounts of assets (art, property, bonds, equity etc…) will be tokenized and traded, creating greater liquidity. We are already seeing regulated exchange spring up for trading such assets, this was a really missing part particularly in EU, having spoken with hundreds of issuers over the years, I am glad to see this all taking shape on both primary issuance and secondary trading outlets for the tokens themselves.
Dr_GemHunter:
Great explanation, thank you!
I also believe, that Tokenization will become mainstream. It’s just a matter of time.
How does Swarm fit in this area? What is it doing, what is it offering?
John:
Swarm is offering open permission-less technology for the creation of tokens and permissioned tokens for securities, Fundraising at no upfront cost, management of token holders, distribution of dividends, totally decentralized technology for the market at pretty much unbeatable cost base.
And a chance to be a part of this, we are a Network of community members all pulling together. No team, but we do have an elected council SNC (Swarm Network Council) to help guide us.
Dr_GemHunter:
You are offering a lot of great features. And that at no upfront costs! Thats awesome.
I know, that these tools come with an audited core app. When can we expect it?
John:
Yea cost won’t be a barrier to use Swarm. You could look to raise funds, tokenize assets, run that campaign at no cost on Swarm, small % from proceeds if you do hit your goals. All goes back to Swarm community and network — 80% to stakers and 20% to treasury.
It is being audited right now, we are still awaiting that report, but technically we can launch as soon as we have that report in our hands, we can make any changes as might be recommended, some small UI tweaks, but as I said we are ready to go as soon as we have this rubber stamp. We believe it’s a massively powerful tool and the issuers we got beta feedback also attested to this. Super simple to use, the basic app demo videos are on YouTube and we are excited. Its been in development for best part of a year and much longer if count the smart contract development. When dealing with securities, utmost care has had to be taken, so we could not rush a product out. It is super close though.
Dr_GemHunter:
Great! As a strong Swarm believer, I can’t wait to see the App in action and used by all the issuers out there. Maybe you cold post the links to the videos, while I’m typing my next question
John:
You and me both. 💪
Here are the links:
Dr_GemHunter:
Thanks for sharing it!
Since our last AMA, we learned that we can theoretically tokenize anything. That alone should make it obvious to the reader what enormous potential lies in the area of tokenization.
Let’s imagine Billy B. has a great project and wants to tokenize it via Swarm Platform. How does Billy B. have to proceed now and what does he have to consider?
John:
Reality is the app could be used to create any sorts of tokens really, they don’t have to be securities, it could even be utility or impact tokens (Like Siemens Energy did with Swarm already), but if it is an STO — like anyone in this space — our good friend Billy needs to consider securities regulations in his jurisdiction for his offering, this includes regulatory approvals for sale of tokens, KYC/AML rules and of course ensure he has appropriate understanding on that from a qualified legal partner.
Swarm does have ability to assist on those areas, but our goal is to offer open permission-less technologies that allow for entirely configurable permissioned tokens and the management of those, we are not here to say what is and what is not a security and we don’t impose restriction on who can use Swarm app. It is a DeFi application, all you need is Metamask to tokenize or run fundraising events and manage all aspects around the token. Then up to issuers to decide what way they want to structure, there really isn’t one size fits all regulations across the EU, but that is hopefully improving with MiCA (market in crypto assets) rules coming.
We will give Billy all the tools he needs, but we are not here right now to hold his hand we are offering permission-less technology. Not consulting.
Dr_GemHunter:
Awesome, so Billy needs all the legal documents and would then use your platform to bring their project on the blockchain. With all the tools you mentioned, like paying out dividends, it’s super strong!
It’s like an one-stop tokenization platform, with all the tools you need
This means, if Billy wants to tokenize an energy company or real estate, he might need different legal documents, but the process through your platform would be the same?
John:
Yes pretty much… similar process…
Energy company is a broad definition ;O) energy trading, buying and selling of energy is itself a regulated practice and no one will be tokenizing utility companies any time soon, but there’s strong possibility for tokenization of smaller decentralized power projects that lack liquidity for investors. These have long term constructs that are difficult to exit. Liquidity would be a huge driver for those assets, and easily achieved via tokenization and with AMM model for secondary market, it means there can always be a buyer for correctly structured offering that leverage a DeFi exchange with appropriate regulatory licences,
Also carbon credits are going to be a core use case, ease of trading and transparency on same.
Tokenization and fundraising are two very different things, Swarm app allows for both without restriction. I don’t see that there would be major differences here around the tokenization process itself, in effect in both cases the assets within are represented by a holding company perhaps and it is this vehicle that is being tokenized. We provide the rails to make that happens at very low and no ongoing cost.
Dr_Gemhunter:
oh wow, didn’t think of the carbon credits example at all!
Absolutely true! I always focus on the tokenization part. But true, you can also use it for fundraising
John:
There is a lot of use cases.. mind boggling 🤯
Dr_GemHunter:
haha yeah, love it! As stated before, Swarm serves a tremendous market 🙂
John:
Pretty endless, and we can also provide value to new burgeoning sectors, tokenize NFT for example. Fractionalise it on Swarm…
Dr_GemHunter:
When a project is successfull, what are the fees they have to pay?
John:
Nothing if unsuccessful to make that clear.
If they are a small % of the raise deducted post fundraise. I will share table link https://www.swarmnetwork.org/swarm-network/swm-token
Dr_GemHunter:
Awesome, thanks John!
I just did a screenshot of the fees.. Insane
Dr_GemHunter:
Now we come back to the progress of Swarm. You have been quite active lately, there have been several votes.
First, you paid out the old outstanding masternode rewards. What was that all about?
John:
Masternodes programme at Swarm was really strongly adopted by community, over 400 nodes and 20m SWM locked, this is against a token $SWM with only 78m supply of which circa 13m is owned by treasury, that is huge adoption right there, and when you think of the work required to set up and run a node it was impressive.
The core use case was processing transactions on the nodes, we ended up not needing this use case, so we shut down the programme, Rewards had to be distributed to all those wallets separately which with gas cost right now was costing tens of thousand to distribute. Swarm had to be creative to get the rewards out, we leverage xDAI chain to get them to the Masternode operators at low cost and simple UI to claim. That’s done and now we moved to a simple stake model so that holders can still contribute and earn rewards in another simpler manner.
Now people can stake here and not need to think about keeping a VPS or updating software.
So no ongoing costs.
Dr_GemHunter:
Hehe yeah, it was a thorn. But you guys did it smart using xDAI. Otherwise, the costs would have been more than 20k$ to distribute all the old rewards
John:
Yea, its was some creative engineering to make sure people got back paid due rewards. 👍 It is all solved on that front.
Dr_GemHunter:
By the way, who doesn’t know this. John and Alex payed for the development and all the stuff by themselves! What they have acchieved with their private budget is immense! So from my side: A big thank you!
Then a successful ballot was taken for two new council members (John and Daniel). What impact will the new council members have on Swarm?
John:
No worries… we are proud and the community and Swarm holders will be the beneficiaries 💪
Yes we have multiple new members since the new Snapshot voting platform went live, it’s been incredible to see senior professionals put their name and skill to use to promote Swarm, all at no cost to the Network.
There was a really great addition in Felix earlier, new voting platform is opening up the floodgates.
Come build with us??? We want people with skills, ideas and who want to shape the next leg of our journey.
Dr_GemHunter:
oh yeah, he was the first one, who was approved through snapshot
John:
Swarm is about community first and foremost. Other projects say this, show me one where the development has been funded and taken to this point by its own holders.. And I’m not talking about projects that got team bags, we got zero of that.
It is powerful — a ‘phoenix from ashes’ story and market will take notice of this. Give it some time… 👍
Dr_GemHunter:
Oh yeah, it’s for real a phoenix from ashes story!
The most meaningful vote (in my opinion) was regarding the new staking contract. Liquidity was thus increased from only 50k liquidity to almost $600k in a very short time. That is immense. Please tell us more about it!
What is the new staking contract all about, where can what be staked and how, and what are the rewards?
John:
Yes its being trending very nicely upward and we can incent that even more and will to get us over $1m market, then its in a healthy positions IMHO
Ballot of community also lead to developing all new staking contracts so that SWM and or SWM/ETH LP from Uniswap can be staked very simply and farm more SWM. https://stake.myswarm.app/
This ballot also revised the tokenomics, so now anyone that uses the new Swarm powered app — instead of the fee being a stake for duration of the tokens lifespan, a pure and simpler fee model is now in place.
This fee is redistributed back to the SWM stakers.
So with the adoption we are expecting of our app, rewards are going to be directly distributed to the people who helped create that liquidity and who stake SWM. 4 x rewards for LP staking so its more rewarding than pure SWM stake.
Dr_GemHunter:
Yeah, this new staking contract is awesome! You can either stake your single Swarm and earn 1x rewards, or stake your SWM/ETH LP-Token and earn 4x rewards.
As you also mentioned, when proejcts are successfull, these fees will be added to the staking pool, so there is a lot to earn!
John:
Exactly so block rewards you see right now keep its flowing but when minting starts………. whoosh on those APY’s 🚀
That how the minting fees will flow. Block rewards are already going in, same distribution 20% P1 80% P2
There is also other drivers to come soon that can help with this adoption and utilization. More to be seen on that soon.
Dr_GemHunter:
Yeah I love this model! Rewarding the LP the most 😎 I’m excited to see the other drivers coming soon!
John:
We had a market that was totally broken, this is solving it and fast and can even include more pools in future, e.g. USDC/SWM or Sushi SWM/ETH
Ballot can be raised by anyone in Swarm community for such matters — community votes on same. But first lets get it rocking in Uniswap 💪
Dr_GemHunter:
Absolutely, can’t agree more
Two more questions
Competition is the literal driving force. There are several competing projects that are also in the tokenization space, including Polymath ($POLY) and LCX ($LCX).
What do you think you are doing differently or better, and do you think the market is big enough for several of these projects to succeed side by side?
John:
Frankly I’d be really delighted to see them all doing well, the market opportunity is far too massive for even this small cohort of service providers.
At Swarm, our community is the secret weapon (I believe we evidenced this) we believe in the power of decentralization of the Network, its tools created for open and permission-less use.
Technology is not the barrier here to adoption its more on regulatory side that issuers and the market is maturing there.
For what is is worth, Swarm is the lowest cap of all those by far, yet already has multiple successful projects, not sure really what of anything has been done by competing projects. But good luck to them all.
Dr_GemHunter:
Yeah, same here! I think the regulation is the current barrier. But when all the tokenization projects have success, it’s getting more mainstream and we all win
John:
Its not a competition but it’s also fair to say Swarm offer massive amount of functionality in an open permission-less way, that has IMHO lowest cost base in the market and one that the issuers themselves can have ‘skin in the game’.
We have many issuers that are SWM holders, run nodes in past and as per council additional people stepping up all over the world to put their skills to work and help Swarm Network, that is pretty damn cool. These are not anon shady characters, real people with real commitment being offered for NO COMPENSATION.
We are SWARM.
Dr_GemHunter:
John, can’t agree more!
My last question:
What can we expect from Swarm in the near future?
John:
We are on a real roll, people can read more here… this will be more and more regular on updates.
We are going to build I believe one of the greatest applications developed across the entire crypto space, all on the back of some incredible developers hard work and the contributions of community. We will open this up to the market, keep building, keep pushing forward.
We are going into the age where blockchain/crypto is going mainstream, DeFi protocols with billions of dollars and no way to enter and exit real world assets on chain. We will give them tools here to make it all tick and are as it happens already deeply down the path of engagement with several leading DeFi protocols for usage of our SRC20 protocol.
Watch this space. We did not fund and develop this app to gather dust.
The tools will release — we will continue to evolve as as our community sees fit and we will not be going quietly into the night with our tail between our legs.
There are big tailwinds we believe coming for Swarm.
We’d like more people to experience this with us over the life of Swarm Network and excitingly shortly in 2021
Dr_GemHunter:
Well said, John! I’m really looking forward and I strongly believe in Swarm! It was a really great AMA with you!
It’s always a pleasure to have you in here!
John:
Thank you and the community!! we value every contribution and everyone is welcome in our TG also.
