Securities on Ethereum
Ryan Sean Adams recently sent out some writing on how securities are present on the EVM platform Ethereum. This is a pretty big deal. It means that Ethereum went from being this fringe technology platform to something more mainstream. Now, I say “something more mainstream” because we can’t classify any cryptocurrency platform or cryptocurrency as mainstream as of yet. There’s still a long way to go for any of them to become a long-term contender.
Let’s get into the deal.
Ryan Sean Adams notes that the Cadence Group Platform issued a promissory note in 2019 and that it was an Ethereum contract. There’s even a transaction ID that goes along with it. The Bankless writer goes on to share the links to this transaction settled on Ethereum. Yes, the Cadence Group is real and the entity the financial group helped, Fat Brands is real, too.
The company is thinking about the long term and notes to Adams that “so we actually have a path towards the securitization of an asset that people actually want to trade vs. others [who] are just tokenizing things that people have no interest in liquidity for. So when a trustee needs to make distributions, when a bank wants to make a secondary market, the tokens will have a much bigger role to play to know who owns what when.” In other words, NFTs, different types of real estate, or other investment opportunities are great but unless entities are looking at market needs addressing them and then extending to new markets, platforms such as Ethereum won’t grow.
Taking Ethereum Seriously
Yes, of course, it was a security token that was settled on Ethereum. Michael Castillo, a Forbes contributor, also notes that “investment ratings giant DBRS Morningstar rated securities issued on a blockchain”. As it was a security token, it was only open for accredited investors.
That’s another big deal.
First, securities are present on the blockchain platform that is Ethereum.
Second, ratings agencies are taking notice and are interested in seeing additional transparency via the Ethereum blockchain. This is powerful stuff. This gives Ethereum a powerful advantage in the race to throw off the shackles of cryptocurrency pessimism and show real potential in the cryptocurrency sector.
Now, you know that real progress is happening on Ethereum and it is not just about securitization but gaming and and other aspects as well. It makes sense when people such as Drew Harding from Metafactory talk about Ethereum rising to $450 by the end of 2020 when you see segments of activity such as this securitization event. There’s certainly competition in the securitization sector.
Companies such as Medici Ventures and tZero, among others seek to become new platforms for this layer but if Ethereum can continue to show that it has security, transparency and other simple aspects relevant to settlement improvement, it can capture a portion of asset settlements.
Ethereum is going to grow with companies such as Cadence that see value in using Ethereum. The ethereum ecosystem continues to grow with more who continue to interact with Ethereum and use ETH as collateral or a savings vehicle. It takes a bit to eat away at old structures and build new ones. If ethereum can continue to attract more companies and projects that will continue to work on and around it and add meaningful and relevant value, then Ethereum is one ecosystem to watch.