The traditional equities market is full of hurdles and limitations. Investors in the stock market are limited by restrictive trading times, a fee structure that favors platforms over users, and geographical barriers. This is just to name a few, and these issues can prevent newer traders from getting involved in the market and limit accessibility for current traders looking to expand their investment opportunities.
However, the introduction of blockchain-based tokenized equity solves many of these issues. Due to the decentralized nature of blockchain technology, users aren’t limited by the rules and high fees of a centralized entity. Instead, they can choose to trade and invest as they’d like, shopping around for the ideal platform that gives them the most value for their money.
The Value Behind Blockchain-Based Equity
A blockchain-based stocks and equity exchange puts the power in the hands of the trader. There’s no centralized third party to stand in the way and create limitations on what and how one can trade. On top of that, blockchain-based markets allow for 24/7 trading, an option that isn’t made available from traditional service providers. There is also a massive expansion of abilities that are limited by institutions, such as jurisdictional and trading limitations.
For example, decentralized exchanges (DEXs) are a global solution to a regional problem. Users worldwide can access and trade within these platforms, trading their local fiat currencies for stablecoins as an intermediary without any KYC restrictions. Tokenized stocks can then be bought, held, and sold for cryptocurrencies or fiat, or used to profit from other methods only available on a decentralized platform, such as yield farming.
By tokenizing a stock, a DEX can offer profit-making methods such as farming or staking. Not only can stock traders earn from trading their stocks, but also from holding and using them in unique ways that were previously unavailable, especially to retail investors.
In the Hands of Investors
Tokenized platforms often come with a one-of-a-kind governance token for users to hold. In holding these tokens, users have a say in future network features, changes, and developments. For example, they can choose to alter fees and trading rates as a community, truly allowing the users to manage platform growth and development.
Let’s look at NASDEX as an example; NASDEX is the premiere decentralized platform for trading tokenized Asian stocks. On NASDEX, users can put up collateral to mint tokenized versions of their favorite stocks for others to provide liquidity within. Should the minter want to pull out for whatever reason, they simply have to burn an amount equivalent to the initial collateral.
With this process in place, users can choose which stocks are tokenized and which are the most lucrative and deserving of the most liquidity. Such an option provides investors with a vast array of tokens to trade, swap, and hold. Plus, NASDEX is open 24/7 due to its decentralized nature, and will eventually offer additional tokenized options like ETFs and indices.
The Tip of the Iceberg
Of course, tokenized equity options are just the beginning. With the way decentralized platforms are growing and the benefits they provide this early on, it’s only a matter of time before traditional investors realize the appeal of DEXs and tokenized equities as a whole.
Source: Ernest Hamilton, Tech Times