Crypto startup Swarm is listing tokens that allow investors to purchase fractional shares in FinTech darling Robinhood.
At this point, we should stress the commission-free stock trading app, recently valued at $5.6 billion, isn’t holding a security token offering (STO), and it isn’t planning to make its shares available to the general public through a traditional public listing.
First of its kind
Here’s how it works…Pre-funding of the Robinhood Equity Token (RHET) is now live on the Swarm platform. According to the offer page, there is a soft cap of $300,000 and hard cap of $1 million.
“The first security token of its kind, once the minimum funding goal is reached a Swarm syndicate manager will form an entity using Swarm, acquire equity through established relationships with former employees and other equity holders, and convert committed funds into RHET equity tokens,” a press release boasts.
“Secondary equities transactions and refinancing of legal entities which hold private company equity are not new in the United States. What’s new here is the tokenization of these assets, and the doors opened by this innovation,” says Philipp Pieper, CEO of SwarmFund.
“One of the key innovations of tokenization is that token owners can participate in the value creation of the very network they are part of. Swarm is bringing this paradigm shift to companies that are key players within this movement, but have yet to permit the network to participate.”
Swarm provides blockchain-based infrastructure for the tokenization of assets. Each tokenized asset is represented by a unique security token, created using the SRC20 standard. For individual company equity tokens coming to Swarm, an entity is created for the specific purpose of holding this equity. The ownership of this entity is tokenized for investors to access. Their token holdings represent fractional ownership of that entity, which in turn holds equity in a given company. The SWM token itself is used for gas, governance, and incentives on Swarm.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.