😲 Whoa, is it possible to arb security tokens?

I successfully arbitraged the 1st security token in history!

March 28, 2022

Welcome to the 48 new Rainmakers who have joined us since last week. Join the 2,469 others who are laughing, learning, and staying at the forefront of tech every week!

Gooood morning, Rainmakers! ☀️

This one is super special to me as it marks the 52nd edition of What's Drippin' in 52 weeks!

Thank you to all the Rainmakers who come week in and week out. 

Welcome to year 2 - this party is just gettin' started!

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

1️⃣  😲 Whoa, is it possible to arb security tokens?: I successfully arbitraged the 1st security token in history! I break it down below!

2️⃣  🕺 Coinbase is gettin' frisky with security tokens: Coinbase is following Binance and getting exposure to security tokens in Singapore!

Without further ado, it's time to…

Get liquid 💧

😲 Whoa, is it possible to arb security tokens?

There's been talk between higher powers about... dare I say it... arbitrage.

But, keep this on the DL... if this gets out the fun may end.

Let's get basic on arbitrage:

Official definition: Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset's listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or in different forms.

Jonah's definition: Basically when the same asset is traded on more than one exchange and you notice there's a price discrepancy - there's a way to profit off of that.

For example, let's say the asset on exchange A is $10 and on exchange B it is $15. Because they are the same asset - you can move the asset from exchange A to exchange B and profit $5 off the discrepancy!

Now that you are an expert arbitrageur, join me on this journey of arbitraging the Exodus security token!

The motive behind this was to bring transparency to the security token industry.

After all, the reason why Security Token Market was established was to disseminate security token trading data and information to a global audience.

At the time of this writing (03/27 3 pm EST), Exodus is trading on Securitize at $32.49 and $18 on tZERO!

That is a potential $14.49 profit/share!

So, what does the process look like?

Firstly, let me crack my knuckles before we break it all down.

Here's a brief step-by-step guide on the process I took:

  1. On Wednesday I noticed an arbitrage opportunity between tZERO and Exodus.

  2. I purchased 1 share of $EXOD for $18.38 on tZERO and emailed [email protected].

  3. They promptly responded and asked me to provide an Algorand wallet address. The best way to do this is directly through the Exodus application itself.

  4. tZERO sent me my Exodus share to my digital wallet and I then sent it to my Securitize Markets account.

  5. My share arrived in a matter of seconds and traded my 1 share at $25 for a profit of $6.62!

I plan to write up a more in-depth analysis on the process and what it means for the industry, but interoperability is no longer just an idea... it's a reality!

I have to say I am very impressed with both tZERO and Securitize Markets throughout this whole endeavor!

Their ability to work fluidly in an uncertain regulatory landscape, enable users to move their securities through a public blockchain, and ensure 100% compliance is astounding!

We still have a long way to go, but I see a very bright future for security tokens.

🕺 Coinbase is gettin' frisky with security tokens

A few months ago, one of the largest cryptocurrency marketplaces, Binance, acquired an 18% stake in Hg Exchange - a Singapore-based security token exchange.

There seems to be something brewing in Singapore, as Coinbase Ventures just invested in a different Singapore-based security token exchange.

This time it's the InvestaX exchange announcing the closure of their Series A to further grow their MAS-regulated security token platform.

InvestaX plans to connect centralized finance (CeFi) and decentralized Ffinance (DeFi) so you can buy, sell, trade, borrow or lend your private market assets, instantly, 24×7, across the world!

I like the move here and I can see why Binance and Coinbase have wanted to gain exposure to Singapore's forward-looking country and regulatory clarity.

In fact, according to an official report released on August 1st, 2017, titled “A Guide to Digital Token Offerings,” the Monetary Authority of Singapore (“MAS”) provided regulatory clarity on security tokens stating:

“…if a digital token constitutes a product regulated under the securities laws administered by MAS, the offeror issue of digital tokens must comply with the applicable securities laws.”

It's been almost 5 years and the U.S. still has yet to provide clarity.

Since then, many Singaporean firms have been approved and regulated to trade security tokens and Coinbase & Binance are taking full advantage!

Who's next? FTX? Crypto.com?

💦 What else is Drippin’

  1. Bitbond Launches Token Tool for Web3 Powered Asset Tokenization: BitBond, one of the first fixed-income bonds ever - is making asset tokenization easier.

  2. Worldcoin to Raise $100M at $3B Token Valuation: The crypto that pays you by scanning your eye via a physical device is perplexing but has raised a lot of money.

  3. Galaxy Digital Holdings executes the first OTC bitcoin transaction with Goldman Sachs: The institutions are coming... are you?

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

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