Swarm Seeks To Democratise Venture Capital By Selling Share-Backed Tokens

Nicholas Maithya - August 17, 2018

In an announcement on Wednesday, Swarm Fund revealed that the official opening to the investors to buy into the Robinhood equity token (RHET) to reserve tokens. According to the announcement, accredited investors can reserve their stake in a fund created for the purpose of holding equity in Robinhood.

The news of the tokenisation of Robinhood’s equity comes amid scepticism by many other firms that Swarm had intended to tokenise. This will be the first token of its kind. In June, Swarm announced that intended to create similar tokens for Coinbase, Ripple and Didi. Instead, the companies were hesitant with Ripple openly condemning the tokenisation while Coinbase went as far as sending a letter to the Fund directing them to Cease and Desist.

Novel token

According to information available on Swarm website, the RHET is an SRC20 token. This means that the token is explicitly devised for trading assets and securities based on the distributed ledger technology. These kind of tokens exist on a private blockchain and is based on the Stellar protocol. The Swarm website also notes that the SRC20 standard is different from the ERC20 standard in that latter is the unofficial standard for initial coin offerings.

Per the announcement, the tokens are divisible into small fractions and hence they can be available to the kind of investor who may not be in the position to afford the actual share. The company projects that the market cap for equity will double within five years to $5 trillion, thanks to the tokenisation of shares.

Similar to equity-holding, holders of tokens will be able to engage “in collaborative decision-making, via a voting system baked into the SRC-20 protocol.” Also, the announcement clarifies that the token holders can engage in “governing the underlying asset using Swarm’s Liquid Democracy Voting Module, built by SecureVote, a pioneer in eVoting.

Discontent

However, according to an article carried by CCN, the entire secondary token market that Swarm has created is without the blessings of Robinhood. Be that as it may, Swarm has proceeded with the exercise arguing that it is completely on the right side of the law.

Nicholas Maithya

Nicholas is a Financial Analyst by profession, who enjoys writing about investments, technological developments, business, economics and other financial topics at various financial publications. Join him here on Wallstreetpr.com as he endeavors to deliver to you the latest breaking news on the above mentioned fronts. Contact him by email at [email protected] or follow Nicholas Kitonyi @nmaithyak on Twitter.

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