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Tokenization and STOs - Liquid and Ethereum

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Avatar for Teutonium
Written by   1
2 years ago

Why crypto...

People came to cryptos looking for many things, but, in my honest opinion, the main thing that they came here looking for was freedom!

Freedom from the tyranny of central banking! Freedom from the tyranny of authoritarian governments! Freedom of speech! Monetary freedom! Freedom...

All forms of freedom can be represented in crypto... but, there are a few blockchains that are at extreme risk of having that freedom snatched away. Some chains are not permissionless! In some chains just for you to create blocks, it requires you to pass through KYC and for you to be accepted in by another human being! Some chains are ruled by federations that allow you to enter them through a peg-in, but for you to get out you will have to ask nicely to the federation overlords... I hate this! And this is what Liquid does...

Liquid is a Bitcoin sidechain that Blockstream developed. It allows the creation of tokens backed or not backed by BTC, it runs using PoW, and all the fees are paid in L-BTC, which is tokenized BTC so, miners are the ones creating blocks! But there is a catch... only KYCed people can be accepted as miners and I say "can be accepted" because they also need to be allowed in by the federation!

The federation are a bunch of big OTC desks, big traders, big whales, big big big... basically, in my opinion, when I look at Liquid I see it as another authoritarian government! And hear this, they don't have the ability to stop you from tokenizing BTC on Liquid, but they have the ability to stop you from pegging out of L-BTC to BTC... this is so dangerous!

Looking at this I just feel like we are replacing the old centralized authoritarian system with another new centralized, permissioned, authoritarian system...

With all of this said, there is one single advantage that I see for using Liquid's tokenization, the fact that it is a permissioned blockchain makes it so the number of scams on it decreases by a lot! Because scammers on Liquid will have a hard time getting their L-BTC converted to BTC, this is good for big companies, big STOs, big tokenization, and since this is only on the sidechain and the mainchain Bitcoin stays permissionless and trustless, it is a choice, the choice to tokenize or not your BTC and be subject to the whims of the federation, but I don't like it...

I don't like to be dependent on a federation, this is not what I came here to the space looking for, I came looking for freedom! And this, to me, is not freedom... I want to be free to develop, free to create protocols, free to create tokens, freedom! And this is why I don't like Liquid... and it is why I love Ethereum!

Ethereum, just like Liquid, also allows tokenization! And it has the bonus of allowing smart contracts to be made, advanced automated protocols that don't require human intervention and can be totally trustless and permissionless as long as the devs make it so... This is what I like!

Permissionless and trustless is, to me, freedom! Even if Ethereum does have more scams, even if it has more experiments that fail big-time. It's still far superior in my personal opinion to Liquid...

If big investors need to feel safer in their investments on Ethereum, they can use a combination of platforms like TrustSwap that make the token issuance much more honest, and a token standard like ERC-1404 that make it so the developers of the token, for example, the devs of an STO, are responsible for the token, and the tokens can be recovered from lost wallets, transferred from wallets, frozen in wallets, and blacklisted from wallets by the devs... This is a new token standard developed just for STOs and it is SEC approved!

Using these sort of mechanisms allows the base layer to still be trustless and permissionless and everyone to experiment and try out things while keeping safety at the token level, by making the token more permissioned and less trustless by using an ERC standard that makes it so.

Just yesterday a new STO was announced to be launched on Ethereum, an STO for a new exchange that is going to share 40% of their net cashflow... The STO was SEC approved and it uses the ERC-1404, so, we know that using the ERC-1404 gets the SEC approval for STO issuance on Ethereum.

I hope that more STOs launch on Ethereum using the ERC-1404 standard. STOs will be the next big thing in crypto after DeFi, and I think that most will come to Ethereum! The network effect is there, the use cases, the users, the protocols, the money! The ball is rolling and I think it will be very hard to stop...

Images Free Source - 12,3,4,5,6789101112131415161718192021222324252627 - Tradingview snapshots too.

Question of the day: What other blockchains do you see potential in terms of STOs? In my list goes Tezos, Cardano, Vechain.

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