What is Swarm Markets launches world’s first DeFi-compatible stocks and bonds? | Definition & Examples

Swarm Markets GmbH, a regulated blockchain platform whose trading activities fall under the purview of Germany’s BaFin, has today launched the world’s first tradable, DeFi-compatible stocks and bonds.

The tokenized securities are public investment offerings and brings Apple and Tesla stocks as well as iShares US Treasury bond 0-1 year and iShares US Treasury bond 1-3 year exchange-traded funds (ETFs) to decentralised finance, the firm said in a press release.

Swarm to issue assets on Polygon

According to the platform, the assets will be fully backed and issued by the firm’s wholly-owned subsidiary SwarmX GmbH on the Polygon network. Trading is open to both retail and institutional investors, Swarm noted, with these available as from Thursday, 23 February 2023. Traders can access the market 24/7 on the firm’s permissioned DeFi platform.

The firm plans to increase the offering to more stocks and other real-world assets, including carbon credits, real estate and private holdings. The launch gives investors an opportunity to tap into the benefits of digital blockchain.

Swarm co-founder Timo Lehes, said:

“Today’s announcement is significant for both DeFi and TradFi. There is clear demand for high quality assets to become available on-chain. Institutional participants will now be able to deploy assets from traditional markets via blockchain through Swarm.”

He added:

“The FTX and Celsius crises last year only highlighted key structural and regulatory weaknesses in the market, demonstrating that crypto collateral is too highly correlated and easy to manipulate. Regulation, in the right parts of the ecosystem, is critical while decentralization enhances the transparency required to build trust.”

As per the announcement, Swarm will not take custody of the DeFi-compatible securities, and users will be able to add them to liquidity pools for an opportunity to earn yield. Alternatively, investors can hold the assets in their own Web3 wallets.