The jealous technology stocks of speculating coins, “fake” Tesla and Apple stocks began to trade on the blockchain

Is it feasible to transfer the stock market to the blockchain?

According to news on July 7, for many years, Wall Street financial tycoons have been thinking about the question: Is it feasible to transfer the stock market to the blockchain? Blockchain is the basic technology behind cryptocurrency. But in this rapidly evolving world of decentralized finance (or Defi), innovators will not wait for these discussions to unfold. Instead, they have begun to act and have established “fake” stocks that track some of the largest companies in the world, which can also be called virtual mirror stocks.

In the past year, projects such as Mirror Protocol and Synthetix created virtual mirrored stocks of Tesla , Apple, Amazon, and other large technology companies, as well as mirrored assets of many popular exchange-traded funds (ETFs). These new assets and the procedures that allow them to be traded have been carefully designed to reflect the real-time prices of the stocks they track, without involving any actual stock or ETF purchases or sales. So far, the trading volume of mirrored stocks is only a small part of the regulated exchanges. But for cryptocurrency enthusiasts, the potential benefits are huge.

The jealous technology stocks of speculating coins, "fake" Tesla and Apple stocks began to trade on the blockchain

These mirrored stocks are joining a strange new world of assets, such as digital art and the highlights of NBA games currently traded on the blockchain. However, unlike modern art and dunks in the irreplaceable crypto world, these tools raise the question of how they can adapt to the global stock market and brokerage industries, which are regulated by a large number of rules from dozens of countries. At present, this is an innovative case, far ahead of regulation.

This is what Do Kwon likes, he is the co-founder and CEO of Terraform Labs in South Korea, which created the Mirror Protocol on the Terra blockchain. Do Kwon imagines himself as a Robin Hood who specializes in robbing the rich and helping the poor in modern finance, just like Vlad Tenev or Chaath Palihapitiya.

Do Kwon stated via email that Defi is “so powerful in providing financial services to people deprived of citizenship around the world, so it’s best to act quickly to break the status quo. Don’t wait for a fragmented regulatory framework to be developed before innovating.”

Synthetic assets

For Do Kwon and other proponents of these virtual assets, avoiding various rules and obstacles in the financial world is an important feature of new assets, not loopholes. He said that this opens up opportunities for wealth creation, but currently only a few lucky people can get it. Users can anonymously trade cryptocurrencies anywhere, 24 hours a day, without being hindered by capital controls, by imposing “know your customers” rules on broker-dealers, and without worrying about the limitations of traditional financial systems.

Do Kwon stated that Terraform Labs will not receive any revenue from the fees charged by Mirror Protocol. These funds flow to users as an incentive to provide liquidity. Instead, the company makes a profit through the creation of a cryptocurrency, which tends to increase in value with the popularity of projects such as Mirror Protocol.

So, how exactly do these mirror stocks work? In fact, it is very complicated. But in simple terms, under the Mirror Protocol, the idea is to make the price of mirrored stocks roughly the same as real stocks by providing traders with arbitrage price differences and incentives to manage the actual supply of cryptocurrency. When the price is too high, users can create new cryptocurrencies by issuing collateral, and they can be destroyed when the price is too low, thereby pushing the price up or down.

Through these incentives, Do Kwon stated that mirror stocks closely track the prices of real-world assets, “but they are still just cryptocurrencies on the blockchain, providing clear price exposure.”

“Trojan Horse”

Cryptocurrency is traded in decentralized automated markets such as Uniswap and Terraswap, and allows users to buy and sell these virtual assets directly on the blockchain. This is a centralized cryptocurrency transaction that is different from those operated by companies such as Coinbase Global and Binance. The model.

So far, the trading volume may not be high enough to make Nasdaq or New York Stock Exchange executives sleepless. For example, according to data provided by Coinmarketcap.com, the market value of the mirrored Apple stock is approximately $34 million. In contrast, the true value of Apple’s stock is approximately $2.3 trillion.

After comparing the prices of various mirrored stocks and real securities at different times in the past week, it is found that the difference between the two ranges from a few cents to a few dollars. For example, in the afternoon trading on June 30, the price of the mirrored Tesla stock on Coinmarketcap.com was $6 higher than the real stock of $684 on the stock market.

However, given some ambitions in the Defi field, these projects deserve the attention of traditional financial institutions. As the digital asset management company Arrington XRP Capital said in a report analyzing and describing its support for Mirror, Defi’s goal is not to simply improve the user experience of the banking system, but to completely destroy it. The company wrote that these new synthetic stocks “are one of the most obvious Trojan horses that Defi has used to enter the traditional market.”

Or be regulated

A spokeswoman for the US Securities and Exchange Commission (SEC) and Nasdaq (Nasdaq) representatives declined to comment.

Joseph Saluzzi, the co-head of stock trading at Themis Trading, gave testimony to Congress on market issues. He said: “Because these virtual assets are not regulated or traded on national stock exchanges, I think the SEC will object to them. According to the Securities and Exchange Commission, their mission is to protect investors and maintain fairness and order. and efficient markets, and facilitate capital formation. for me to say, it sounds like a investor protection. “

Binance, the world’s largest cryptocurrency exchange, has attracted the attention of German financial regulator BaFin. The cryptocurrency it provides is linked to the performance of popular US stocks, but is backed by actual stocks. BaFin said in April that Binance may have violated securities rules when issuing mirrored shares of Tesla, MicroStrategy and Coinbase.

Regulators may also start to pay more attention to the Defi field, after the “Stablecoin” (Stablecoin) has shown some noticeable signs of a plunge. Stablecoins are also a digital currency designed to closely track the value of currencies in various countries. Technology tycoon and NBA Dallas Mavericks owner Mark Cuban (Mark Cuban) is an enthusiastic and influential investor in the Defi field. He recently called for the regulation of cryptocurrencies.

Billionaire, cryptocurrency investor, and Galaxy Digital founder and CEO Mike Novogratz recently stated on Twitter that if participants in the Defi market do not begin to comply with the so-called know-your-customer and anti-money laundering Rules, they may regret it. He wrote: “Either invest in compliance now or pay later. If we want this ecosystem to grow and grow, we need to realize that we need to operate under the rules set by society.”

Do Kwon said Terraform Labs has not had any conversations with regulatory agencies in the United States or elsewhere regarding mirroring stocks. The company also did not communicate with exchanges such as Nasdaq or companies that manage mirrored ETFs.

But he added that to prevent the trading of mirrored stocks and other virtual assets, you will have to close the open source software code that constitutes the underlying blockchain, which is used by a global user base including many anonymous players. Do Kwon also said: “As long as there are enthusiastic believers that this technology has the possibility of success, abolishing cryptocurrency, Defi or virtual assets is an impossible task.”

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-jealous-technology-stocks-of-speculating-coins-fake-tesla-and-apple-stocks-began-to-trade-on-the-blockchain/
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