🥴 S-NFT What?!

Republic invented a new acronym and please welcome XY Labs to the party!

Author

Jonah Schulman
October 18, 2021

After week 1 of the Test The Waters Campaign, Security Token Market has received almost $2M in pledges from 300+ investors around the world!

This has been in the works for the past 3 years and I couldn't be more proud and grateful to be a part of it!

Gooood morning, Rainmakers!

As always, I have two captivating topics for you to dive into:

1️⃣ Republic invented a new acronym: Republic has now coined the acronym, S-NFT, which combines security tokens and NFTs! How do fungibility and non-fungibility go together?

2️⃣ tZERO taking more market share: In just the last couple of weeks tZERO has announced two new tokens to list in the next 6 months: Curzio Research & XY Labs!

Without further ado, it's time to…

Get liquid 💧

🤔 Republic invented a new acronym

Republic, one of the most prominent crowdfunding portals enabling retail access to private investment deals, launched Security Token NFTs (S-NFTs)!

The first two artists that will be partaking are Lil Pump & one of the top DJs in the world, KSHMR!

Yeah… um… I am not exactly sure how the heck this is even possible.

Firstly, in general, shares in any security are fungible and NFTs are innately non-fungible.

“Jonah, lol wait, what is fungible and non-fungible?"

Let's get basic on these terms:

Fungibility is the ability to replace or be replaced by another identical item; mutually interchangeable.

For example: All shares of Apple are identical, which allows thousands if not millions of people to own the same asset at the same time.

Non-fungibility is a unique and non-interchangeable unit.

For example: Collectibles like baseball cards, paintings, and even homes… or in today's world, digital art like Cryptopunks.

Now that you know the differences, you may be asking yourself, “How is it possible to offer shares in something that is fungible and non-fungible at the same time?”

Great question and the answer to that question is, I have no idea!

The main thing that I am trying to figure out is how it is possible to have multiple owners of something that is non-fungible.

My initial thought is they are trying to appeal to the masses by calling them Security-NFTs because the vast majority of people are more familiar with NFTs rather than security tokens.

It looks to me they might be fractionalizing ownership in the NFT, but the issue with that is it not only becomes confusing but it also enters a regulatory grey area.

There isn't a ton of public information on this yet, but here is what I found in terms of the offerings:

  1. Lil Pump feat. Soulja boy (single song)

  • Rights: Royalties based on streams

  • Perks: Tickets, merch, etc

  • Tradable: TBA

  1. KSHMR

  • Rights: Royalties based on streams

  • Perks: Tickets, merch, etc

  • Tradable: TBA

Legal structure: They are doing a Regulation CF campaign, which allows you to raise up to $5M from retail investors.

Deal structure:

  • The NFT is created representing rights to royalties of the music artist

  • The NFT is fractionalized into shares that represent a % of the right of the NFT, which are then offered as shares to the public

This is just another reason that we NEED clarity now more than ever!

The industry is going to continue to get creative and bend the rules, until the rules are defined on what we can and can't do.

Althought this is super cool, the more acronyms we have, the more confusing the industry will be.

Either way, congrats to Republic & Opulous, the technology provider behind this deal, for this achievement and we hope to see these S-NFTs with secondary trading soon!

👑 tZERO taking more market share

If tZERO didn't represent the majority of the secondary trading market already, they sure will now!

In just the past couple of weeks, they anounced two more assets that will trade on their platform by the end of the year or by early next.

New assets:

  1. Curzio Research, the financial newsletter based out of the US, decided to delist from MERJ Exchange and list on tZERO!

  2. XY Labs is a tech startup in California with a mission to create software and location-data-driven devices to build a global data network focused on people's dataist relationship to the physical world!

XY Labs is a really interesting security token use-case because they are deciding to tokenize the shares of the already existing privately-owned shares.

24,000 holders!

That's the other side of security tokens and why this industry will explode faster than you might think!

Existing companies with existing shares can simply tokenize and directly list on a security token-powered marketplace like tZERO and commence trading immediately!

Here's an example timeline of XY Labs:

  1. XY Labs raised $22M in 2018 via Regulation A+

  2. 24,000 private shareholders of XY Labs exist

  3. XY Labs tokenizes their shares on the Algorand blockchain

  4. XY Labs chooses tZERO as the marketplace to list these shares

  5. XY Labs trades on tZERO, which is made accessible to the public!

Because the capital raise already happened, there is no lock-up period, which allows the shares to freely trade!

When XY Labs commences trading, this could be a game-changer for secondary trading volume!

“Why?”

24,000 shareholders will now have the ability to sell their shares.

The question remains…how much demand is there from the public?

Time will tell!

What else is Drippin’💦

Connect with us ☎️

Thanks for tuning in! Keep an eye out each Monday for the next security token adventure 🧗‍♀️

Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.

Disclosures:

• No money or other consideration is being solicited, and if sent in response, will not be accepted;

• No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through the platform of an intermediary (funding portal or broker-dealer); and

• A person’s indication of interest includes no obligation or commitment of any kind.