Analyzing RWA Project IX Swap: Aiming to Become the Uniswap of Security Tokens
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Analyzing RWA Project IX Swap: Aiming to Become the Uniswap of Security Tokens
IX Swap is telling a compelling story that is gaining significant attention and demonstrating substantial growth potential.
Navigating Web3 tides with focused insightsAuthor: Greythorn
BlackRock CEO Larry Fink believes tokenization is the future of finance and a pivotal market evolution, influencing other major financial players. Our research shows that Dusk Network and Ondo Finance demonstrate that real-world assets (RWA) are becoming a key part of the crypto industry. As of May 2024, the RWA market has surpassed $6.6 billion, and asset tokenization is projected to reach $10 trillion by 2030.
Earlier this month, the World Federation of Exchanges (WFE) published a paper on tokenization, calling it a natural progression in finance. JP Morgan is also notably active in this space, with Fidelity International using JP Morgan’s Onyx Digital Assets platform to tokenize shares in money market funds.
The Depository Trust & Clearing Corporation (DTCC) recently completed a pilot test exploring fund tokenization technologies and standards. Deutsche Bank has joined the Monetary Authority of Singapore’s Project Guardian, a blockchain consortium including JP Morgan, Citibank, BNY Mellon, UBS, and HSBC, aiming to explore an interoperable tokenized fund blockchain platform.
Source: Roland Berger Research
Growing public interest in the blockchain narrative has led to intense competition among projects striving to lead the field. Among these, IX Swap stands out with its unique approach and ambitious goals. IX Swap is a real-world asset tokenization launchpad and decentralized exchange (DEX) enabling trading of security tokens through licensed custodians and broker-dealers. Its goal is to democratize access to private market investments and address liquidity challenges facing the tokenization industry.
Now, let’s dive into what this means.
Let’s go back to 2017. As IX Swap co-founder Julian Kwan explained in a recent interview, at that time, if you were among the top ten cryptocurrencies, you had significant market-making support and could afford listings on major exchanges. However, most altcoins were limited to basic listing platforms, lacking order books, market makers, or liquidity.
The emergence of Uniswap was a transformative innovation in DeFi, allowing anyone holding two cryptocurrencies to create liquidity pools via smart contracts. This enabled asset holders to earn fees and trade directly on the platform.
Today, as more assets become tokenized, the RWA sector faces similar liquidity challenges. IX Swap aims to be the Uniswap for security tokens—enabling anyone holding RWAs and USDC (or other cryptocurrencies) to legally create liquidity pools. This facilitates buying and selling of tokenized assets, addresses liquidity issues, and makes private market investing more accessible.
Source: InvestaX
There's a lot to unpack here. Let’s break it down step by step, starting with the products offered by IX Swap.
Overview of IX Swap’s Products
IX Swap Secondary Trading Product
Over the past decade, capital growth in private markets has been stronger than in public markets, particularly since around 2016. Additionally, private markets have proven more resilient amid sentiment fluctuations. IX Swap aims to leverage these advantages by opening private markets to everyone, offering access to previously inaccessible assets.
Source: EY Research
The platform enables trading of security tokens (STOs) and fractionalized NFTs (F-NFTs), digitizing traditional portfolios and providing access to real-world assets such as private equity, real estate, infrastructure, natural resources, and private debt. It achieves this through regulatory-compliant liquidity pools and automated market maker (AMM) functionality. Acting as a bridge between CeFi and DeFi, IX Swap conducts trades via licensed custodians and brokers, ensuring true ownership and claim rights over these assets.
Source: IX Swap
IX Swap Launchpad
IX Swap’s Launchpad is a crowdfunding platform offering investment opportunities in unique and promising startups. It allows investors to participate in tokenized offerings across finance, blockchain, energy, technology, real estate, healthcare, gaming, and more.
Each investment opportunity on the platform is vetted by the team to ensure safety and reliability. The IXS Launchpad is regulation-compliant, provides a secure investment environment, and uses security tokens to represent investor equity, making transactions transparent and secure on the blockchain.
IX Swap’s SaaS Solution
IX Swap’s SaaS Liquidity Solution enhances liquidity for real-world asset platforms using automated market makers and liquidity pools. Through a monthly subscription-based SaaS model, IX Swap connects security token issuers with liquidity providers. The platform automatically matches buy and sell orders, ensuring continuous liquidity for security tokens. The service leverages smart contracts to facilitate secure and transparent transactions, making it easier for token holders to trade without significant price slippage.
Key advantages include regulatory compliance, ensuring secure and legal operations, and cross-chain compatibility. These benefits enable the solution to operate across different blockchain networks. IX Swap also offers comprehensive advisory and support services.
IXS Token
The IXS token is the native token of the IX Swap platform and the foundation of its ecosystem. With a built-in deflationary mechanism, IXS increases scarcity and value through ecosystem growth incentives and buyback and burn operations. Benefits of using IXS include fee discounts, access to the IXS Launchpad and SaaS Liquidity Solution. The IXS token also serves as the native payment token for InvestaX, supports staking for rewards, and enables liquidity mining to boost returns. Additionally, holding IXS tokens grants on-chain governance rights, allowing participation in ecosystem management.
Below are the current market statistics for the IXS token as of June 20, 2024:
● Market Cap: $121,211,081
● FDV: $124,855,283
● 24h Volume: $1,624,331
● Circulating Supply: 174,746,266 IXS
● Total Supply: 180,000,000 IXS
● Max Supply: 180,000,000 IXS
● Network: Ethereum (mainnet), Polygon (bridged)
Source: ChainBroker
Source: ChainBroker
If you’d like to learn more about IX Swap’s products, simply visit their website to explore further. In the next section, we’ll share some reflections from our initial exploration of this topic.
Exploring IX Swap: Insights and Reflections
Source: IX Swap
Understanding Fractional Ownership
Fractional ownership is often seen as a key advantage for increasing liquidity. By dividing assets into smaller shares, it enables broader investor participation, thereby increasing the number of potential buyers and sellers and enhancing liquidity. However, fractional ownership is not new; traditional finance already offers partial shares. For example, through services like Robinhood, you can own fractions of stocks, or through companies like Fundrise, parts of real estate. Moreover, fractional ownership alone does not create demand—it merely makes smaller portions of assets available for trading. Demand depends on the asset’s value and market conditions.
IX Swap enables fractional ownership through asset tokenization and simplifies issuance and trading via its decentralized exchange, potentially boosting liquidity. While blockchain technology can streamline the creation and transfer of fractional shares, it doesn’t automatically increase demand for the underlying asset. Distinguishing between fractional ownership and ease of issuance is crucial when assessing its impact on liquidity.
For instance, the IXApe token represents fractional ownership of Bored Ape #2371 NFT from Howey Tez’s Bored Ape Yacht Club. Tokenizing this NFT into 5,000 IXApe tokens democratizes ownership and distributes economic benefits linked to this high-value digital asset.
Compliance and Legal Considerations
Under the law, digitally fractionalized real-world assets (RWAs) and NFTs are classified as securities. This prevents IX Swap from operating as simply and intermediation-free as Uniswap. Security tokens must comply with regulations involving broker-dealers and custodians.
This is why Uniswap is unlikely to list RWAs. When you participate in an IX Swap liquidity pool, your RWA is held by a licensed custodian—not just managed by a smart contract. A wrapped token representing your RWA enters the pool and tracks your share. This structure enables IX Swap to bridge traditional finance and the decentralized world, offering a legal way to trade tokenized RWAs.
Thus, while IX Swap cannot be a fully decentralized, universal, and permissionless protocol like Uniswap, that doesn’t necessarily make it inferior. Most markets still require regulatory frameworks—especially for security tokens—and there remain many exciting opportunities within legal boundaries.
IX Swap’s Advantages Despite Major Financial Players
While large institutions are exploring tokenization, IX Swap enables broader user participation by offering accessible services within KYC frameworks. IX Swap democratizes access to tokenized assets, providing opportunities for small investors who might struggle in large institutional settings. Unlike traditional exchanges, on-chain trading on public blockchains is open to all, enhancing transparency.
IX Swap bridges traditional finance and decentralized markets, complementing efforts by large institutions while expanding access to public blockchain technology. Uniswap’s growth demonstrated retail demand for crypto trading; IX Swap aims to meet similar demand for tokenized assets.
Yet, questions remain: Is there genuine demand for these assets? Tokenization experiments like Galaxy Digital’s Stradivarius violin are intriguing but their long-term sustainable demand is uncertain. How many people get excited about co-owning a Ferrari or an NFT? Assuming everything should be tokenized is questionable.
Team, Funding, and Partnerships
The IX Swap team began developing the concept of an automated market maker for security tokens in 2017. The platform officially launched in September 2021, founded by Julian Kwan, Alice Chen, and Aaron Ong. Julian is an entrepreneur experienced in digital platforms and blockchain, Alice brings corporate and legal expertise, and Aaron focuses on capital markets and investment advisory.
Source: IX Swap
Recently, IX Swap was acquired by the parent company of InvestaX, a leading licensed tokenization platform based in Singapore. This acquisition aims to strengthen its capabilities, tackle liquidity challenges in the industry, and expand its market presence and product offerings.
Funding Rounds
IDO Round 1 (September 7, 2021): Raised $186,165 at $0.389 per token on the OccamRazer platform, achieving a 2x dollar return. Pre-money valuation: $70.02 million.
IDO Round 2 (September 8, 2021): Raised $100,000 at $0.14 per token on Poolz, achieving a 5.56x dollar return. Pre-money valuation: $25.2 million.
KuCoin IEO (September 3, 2021): Raised $700,000 at $0.14 per token on KuCoin Spotlight, achieving a 5.56x dollar return. Pre-money valuation: $25.2 million.
Private Round (June 2021): Raised $1.75 million at $0.05 per token, achieving a 15.55x dollar return. Pre-money valuation: $9 million.
Partnerships
This year, IX Swap established several key partnerships to enhance its platform. The collaboration with Electrowizy will focus on gamifying renewable energy asset management, while the partnership with Nanuhm Angels aims to globalize Korean content tokenization for retail investors. Support from Spartan Group and Faculty Group reflects IX Swap’s commitment to democratizing RWA access. Collaborations with Cogito Finance and QuillAudits enhance liquidity and security, while alliances with AlphaX and RealtyX aim to revolutionize real estate tokenization. Through these strategic partnerships, IX Swap is committed to pushing the boundaries of the RWA market and driving innovation in decentralized finance.
Competitors
IX Swap offers a unique, legal, and compliant secondary trading platform for RWA tokens. Unlike others, IX Swap operates an active AMM model and provides retail investors with securities licenses supporting stock trading—a distinctive feature in the industry.
Source: IX Swap
Beyond the RWA projects already assessed by Greythorn, Centrifuge is a key player in the RWA space, specializing in tokenizing assets like invoices, royalties, and real estate. It integrates well with DeFi protocols such as MakerDAO, boosting liquidity. However, its focus on specific asset types may be limiting, and it lacks the same user base or liquidity as larger platforms.
One of Centrifuge’s projects, Tinlake, allows creation of asset-backed pools, offering flexibility in managing diverse assets. It ensures transparency and on-chain securitization but may be difficult to understand and use, and faces liquidity challenges.
RealT focuses on real estate tokenization, enabling fractional ownership and rental income distribution. While great for real estate enthusiasts, its narrow focus and concentration in the U.S. market may not appeal to investors seeking diversification or international exposure.
Maple Finance targets institutional borrowers and lenders, offering a secure platform with credit risk assessment and undercollateralized loans. Ideal for institutional use, it may not suit those looking for broader RWA investments and faces regulatory hurdles due to its lending model.
Goldfinch aims to provide credit to emerging markets, offering a unique investment opportunity with community involvement in underwriting and governance. However, this focus comes with higher risks due to economic instability in emerging markets, and its liquidity remains limited.
Tokeny offers comprehensive asset tokenization solutions, including compliance and issuance, with strong ties to financial institutions. However, it primarily focuses on token issuance and compliance, pays less attention to secondary market liquidity, and hasn’t achieved the same adoption or user base as larger platforms.
IX Swap aims to connect DeFi with security tokens, delivering liquidity and compliance for tokenized real-world assets. This gives it a unique edge, though IX Swap still needs to build up liquidity and user adoption to rival larger players in the space.
On-Chain Analysis
Since last November, the IXS token has consistently outperformed the market, entering a sustained upward trend with several consolidation phases. Despite strong performance, the project’s market cap remains relatively small, resulting in occasional volatility and high price swings. While technical analysis may have limited effectiveness for such projects, below is an overview of the token’s performance since then.
Source: TradingView
Data from Nansen’s Smart Money feature shows a steady increase in the number of smart wallets and holders since the beginning of the year. However, this growth has not been accompanied by significant increases in balances. Note that this metric only considers wallets performing well over longer periods. In today’s market, individual investors often use multiple wallets, so this data may not present a complete picture. Still, it’s an interesting trend.
Source: Nansen
Last week, one of the largest IXS accumulation wallets was identified, holding assets worth $1.1 million, including 198,839 IXS tokens valued at approximately $150,000. The wallet belongs to well-known KOL and investor Chicken Genius, who publicly disclosed his wallet this year. Wallet address: 0xeb2eb5c68156250c368914761bb8f1208d56acd0. No significant IXS selling occurred from this large wallet in the past week.
According to Bubble Maps, the token distribution excluding exchange balances and bridged assets is as follows:
Bullish Fundamentals
● IX Swap is telling a compelling story that is gaining notable traction and showing strong growth potential. If this momentum continues and the project maintains consistent, credible activity, it could ultimately be recognized as a pioneer in its field with higher valuation potential.
● In the current market, many newly launched projects carry high fully diluted valuations (FDV), suggesting they may be overvalued relative to fundamentals and market position. IX Swap, however, has an FDV of around $135 million, closely aligned with its market cap. This offers a more balanced valuation and an attractive risk-reward profile.
● The project prioritizes security and compliance, which is critical for building investor trust. This focus reduces risks associated with fraud and legal issues, making it a more reliable investment.
● IX Swap is led by a transparent and experienced team, essential for understanding the market, avoiding common pitfalls, and executing its vision effectively.
Bearish Fundamentals
● Although IX Swap’s market cap is under $200 million and presents certain appeal, it still carries risks inherent in the highly volatile cryptocurrency market. Sudden market downturns could negatively impact the value of the IXS token and investor sentiment, leading to potential losses. Investors should prepare for possible market volatility.
● The regulatory environment for DeFi and tokenized RWAs is constantly evolving, meaning IX Swap may not be able to operate in many countries. Regulatory changes or stricter compliance requirements could adversely affect IX Swap’s operations and growth prospects.
● The DeFi space, including real-world assets, is highly competitive. IX Swap faces intense competition from established players and new entrants, which could limit its market share and growth potential.
● Achieving widespread adoption and maintaining liquidity for tokenized RWAs may be challenging. If IX Swap fails to attract sufficient users or liquidity providers, it may struggle to meet its growth and revenue targets.
Disclaimer
This document has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (“Greythorn”). The information contained herein is for general informational purposes only and is not intended to constitute financial or investment advice. This document does not constitute an advertisement, nor is it an offer or invitation, or intended for the purchase or sale of any financial instrument or participation in any particular trading strategy. In preparing this document, Greythorn has not taken into account the investment objectives, financial situation, or particular needs of any recipient. Accordingly, individuals or entities receiving this document should evaluate their personal circumstances and consult their accounting, legal, or other professional advisors before making any investment decision.
This document contains statements, opinions, forecasts, and forward-looking statements based on a number of assumptions. Greythorn assumes no obligation to update such information. These assumptions may or may not be correct. Greythorn and its directors, employees, agents, and consultants make no representations or warranties regarding the accuracy or likelihood of realization of any forward-looking statements or the underlying assumptions. Greythorn and its directors, employees, agents, and consultants make no representation or warranty as to the accuracy, completeness, or reliability of any information contained herein. To the maximum extent permitted by law, Greythorn and its directors, employees, agents, and consultants shall not be liable for any loss, claim, damage, cost, or expense arising from or related to any information contained in this document.
This document is the property of Greythorn. Any individual or entity receiving this document agrees to keep its contents confidential and not to copy, provide, disseminate, or disclose any information contained herein in any form without the prior written consent of Greythorn.
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