The integration of the token may end up being a notable first in DeFi: This could be the first time a security token has been integrated into a permissionless DeFi exchange, while retaining all regulatory compliance.
Permissionless protocol, permissioned token
Uniswap is well-known as a permissionless exchange, which allows virtually anyone to participate in trading their assets.
On the other hand, tokens created by RealT are security tokens which are bound by stringent laws and regulations. By law, this type of token can only be purchased and sold by a specific group of people.
An obvious question arises – how could RealT be complying with laws and regulations, when Uniswap assets are available to everyone?
The answer lies in the way RealT tokens are built.
All RealT tokens operate using a whitelist of approved users, who fit the criteria required by US regulations. This whitelist is checked upon each and every transaction of a RealT token; only transactions between whitelisted users will be executed.
By whitelisting the Uniswap exchange address, RealT tokens can flow freely into Uniswap pools and to Uniswap users – provided that they too are on the whitelist.
Uniswap itself provides some distinct advantages to RealT users – advantages which could revolutionize the way we trade security tokens.
This comes from Uniswaps unique bi-asset pooling system.
Each asset in the exchange requires liquidity to be provided in both Ether and the asset itself. A balance is created between the pool of Ether and the pool of the asset (in this case, the 9943 Marlowe token), which readjusts according to supply and demand.
With each asset on Uniswap sharing the common trait of its own Ether pool, assets can easily be exchanged for each other across these pools.
This may be a complex mechanism to understand, but the result is simple – improved liquidity from cross-compatible asset pools.
The use of these common asset pools provides a stark contrast in liquidity to traditional order-matching seen in other less-liquid platforms like Dharma or 0x.
Double your income in Uniswap
Via an automated fee mechanism, Uniswap liquidity providers receive revenue simply by supplying their assets to the exchange.
Revenue is also already generated regardless by RealT tokens, via tenant rent payments on the underlying property.
Thus, RealT token holders who provide liquidity to Uniswap have the opportunity to collect two sources of revenue, all via a single token.
The rise of security tokens on DeFi?
This may just be a hint of what is to come for security tokens on Uniswap and other pooled DeFi markets.
The ability for security tokens to maintain regulatory compliance, while integrating with a highly-liquid and globally-accessible exchange, is a massive value proposition.
Solving classical liquidity issues on securities is an exceptional feat on its own – not to mention all the other the other benefits from tokenization.
This is definitely a space to keep an eye on!