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Similar to Upvest - Asset Tokenization - A practical deep dive
Upvest - Asset Tokenization - A practical deep dive
- 1. Asset Tokenization A practicaldeep dive What we have learned over the last 2 years
- 2. Hello from teamUpvest! Martin Kassing CEO [email protected] Supported by Europe’s largest VC funds We offer full-stack asset tokenization APIs 22 Full-time employees €8m raised in Series A Founded in 2017 20+ customers
- 3. Empowering digital assetfintechs since ‘17 Some of our 20+ clients: €500m 2020 Vol estimate €50m 2019 Vol
- 4. Provided by Upvestpartners Upvest’s end-to-end solution File a security token prospectus with your local regulator Identify and check your investors File prospectus KYC/AML checks Smart contracts for the token distribution Automated distribution to investor base Custody Investors access their assets within any app safely Tokens can be traded at partners’ secondary markets (Q2/20), Upvest provides the settlement Settlement Provided by Upvest Issuance Distribution soon
- 5. All services availablewith <5 lines of code Simple APIs with support of most programming languages Our APIs work well in your existing workflow/product SLAs with 99% uptime guarantee
- 6. Regulatory compliant withadvanced security concept Banking grade security The Upvest Enclave is a highly restricted purpose-built bare kernel environment for the handling of sensitive operations. + Restricted Wallet Handling + Secure Network Architecture + Hardware Security Module Encryption + Authentication and Access Control Licensed custodial and non-custodial setup Live since 2017 and over 20 customers to date. Access of wallets via APIs in existing workflows and end user products. Users don’t feel its blockchain.
- 7.
- 8. Security tokens (STOs)have some killer features Digitalization of securities Instant global trading Fractional ownership
- 9. Reality: Most securitytokens fail 70% of STOs don’t reach their target USD M
- 10. So, what’s missingfor adoption?
- 11. We think 3ingredients are missing Better assets Investment platforms Better UX
- 12. 1. Let’s talkabout better assets first
- 13. Today’s STO economicsaren’t attractive Companies with no brand plan to raise €100m+ >10% of total raise will be used to cover costs of project reducing the ROI for investors <5% target IRR does not move the needle for many investors
- 14. Adverse selection inseed stage STOs 90% of startups at seed stage fail +$150bn in venture capital already available Seed companies that do an STO often failed with their Series A
- 15. Instead, what isworking?
- 16. Monzo did asuccessful crowdfunding campaign Monzo had signaling VC investors that did a professional due diligence before Individual investors identified with their mission to create a ‘better’ bank. They became ambassadors of a paradigm shift in banking Investors received a return of 25x in less then 5 years
- 17. STOs for realestate objects tend to work as well STOs of €3-5m per issuance get filled on leading crowdfunding platforms Successful real estate STO platforms have already a loyal group of +1k investors Retail investors see real estate as a secure investment opportunity
- 18. This shouldn't beit, right?
- 19. The world’s greatestassets are not (yet) on-chain $ 6.960bn Private capital markets have amazing assets not yet accessible to retail investors These players have not incentive to move until enough retail investor demand is high enough to be competitive with institutional demand $ 45bn $ 10bn
- 20. The big guysdon’t need to move until enough liquidity is in retail markets Chicken & egg:
- 21. 2. Let’s talkabout retail investors
- 22. Acquiring retail investorsonline is expensive €250+ to acquire an investor online €1.000 average retail investor tickets for first timers 25% of your raise needs to be allocated to acquire customers Let’s raise €10m for our STO: Issuance €10m Marketing €2.5m
- 23. Fintechs with existinginvestors have it easier Direct investment platforms can utilize their existing and identified (KYC) investor base A variable kick-back of 2% to them might be attractive to sell your STOs +25k Users +3m Users +50k Users
- 24. Again, Chicken &egg: Fintechs care a lot about UX
- 25. 3. Let’s talkabout UX
- 26. What’s the UXfor retail clients accessing their STOs?
- 27. Today’s crypto solutionsdon’t convince fintechs 90% break-up rates of today’s wallet tools Setting gas fees manually for every transaction is a pain Risky private key handling with no recovery option
- 28. Today’s depot bankingsolutions neither 35% of users churn when being re-directed to another page (stats from payment industry) Only 2.5% of individuals in Germany have a depot to store securities The number of depots in Germany are declining since 2007
- 29. What UX worksbetter?
- 30. Checkout securities onlinewithin any app KYC Depot creation Trade assets Let your users create a depot in your app instantly The depot can be transferred to any other app The depot can be created for customers all over Europe
- 31. What pain pointsdo companies have selling STOs?
- 32. Huge cybersecurity risksand costs $4bn of crypto funds stolen in 2019 Crypto custody requires expensive regulatory licenses +$1m annual costs for security and compliance personnel and audits for licensed custodians
- 33. There are plugand play tools (yet) Node Management: ● Software is in its infancy, un-anticipated bugs occur ● Data formats might change unexpectedly Pre-funding of transactions: ● Transactions need to be funded in native currency ● Dilemma of enabling non-crypto investors to transact Calculating of balances: ● When to account for transactions ● Nonce handling for outgoing txs is complex Running a node for your clients means you control the data-feed You easily overpay on Ethereum fees as you want to make sure transactions pass Late or no account updates will confuse your investors
- 34. Betting on oneprotocol can be risky €100k salary for 1 blockchain developer You would need 3+ developers to run a mid-sized STO project Migrating from one to another protocol can take up to 6 months
- 35. A break inthe chain can ruin your project Prospectus filing KYC / AML Token creation Token distribution Token storage Wallet management 9 months until approval Regulatory risk Focus on edge cases Manual distribution Hacked solution Crypto jargon 3 months until approval Regulatory compliant Keep it simple Auto-distribution Secure, great UX Human interface Best practices Worst practices
- 36. Are there companiesthat can help me?
- 37. Yes, Europe hasgreat blockchain companies! Prospectus filing KYC / AML Token creation Token storageToken distribution Wallet management
- 38. So if youconsider doing a STO...
- 39. Our gift tomake digital assets frictionless €0k onboarding fee First 6 months for free 0.15% custody fee AuM thereafter Valid until Easter https://upvest.co/cac2020