Synthetic versions of popular tech stocks like Apple, Tesla, and Amazon have started trading on blockchains, joining a growing pool of various crypto assets.
Digital assets are designed to reflect the prices of the shares they reflect, but they are not actual trading of real shares. Although sales volumes are still only a small percentage of transactions on real exchanges, crypto enthusiasts are excited about the potential. For proponents, it is a way to trade equity-like assets without any of the restrictions.
According to Fortune, the tokens, created by projects like Mirror Protocol and Synthetix, are traded on decentralized and automated markets like Uniswap and Terraswap.
Unlike traditional stocks, synthetic assets manage to avoid all the rules and barriers of the regulated financial world. Proponents call that a feature, rather than a bug. The way that fake stocks work is complicated, but they are essentially designed to reflect the prices of real stocks. There are incentives for merchants to mitigate price discrepancies, such as the ability to create new tokens when prices are too high or destroy tokens when prices are low.
Traders can trade synthetic stocks anonymously, 24 hours a day and without restrictions such as “know your customer” rules or capital controls.
As mentioned above, the actual trading volume of the tokens is still very low. Apple’s mirrored stock, for example, has a market capitalization of around $ 34 million. Apple’s actual NASDAQ market valuation stands at about $ 2.3 trillion.
Tokens join a growing number of digital assets that take advantage of blockchain, the underlying technology behind cryptocurrencies like Bitcoin. Other popular digital goods include non-fungible tokens (NFTs), which is a type of blockchain-powered asset that records ownership of digital goods.
The crypto asset market is also booming. In June, an NFT of the original source code for the World Wide Web was sold at auction for $ 5.4 million.
Of course, unregulated financing options like synthetic tokens could soon catch the eye of enforcement agencies like the Securities and Exchange Commission. Billionaire crypto investor Mike Novogratz, for example, recently said that decentralized finance companies should start complying with some rules soon to avoid the wrath of regulators.
“Invest in a layer of compliance now or pay for things later”, Novogratz wrote. “If we want this ecosystem to grow, we must recognize that we must operate within the rules established by society.”
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