Swarm Markets has developed a crucial piece of infrastructure required to create new types of asset-backed tokens. The SX1411 token standard opens up a new world of possibilities for managing an asset’s complete lifecycle while accommodating various roles involved in the constellation of trust required to mint, administer, and transact complex assets.

The smart contract codifies the relationship between a SX1411 token’s underlying asset and the entities responsible for managing those assets.

The Swarm Markets SX1411 token standard is born out of the necessity to use smart contracts that accommodate new functions unavailable using existing standards.

The token is designated as SX1411 because the 1400 token standard series has traditionally been used for securities compliant tokens (though SX1411 is equally suitable for non-regulated assets). With such a huge leap in functionality and utility, naturally Swarm Markets had to turn it up to 11.

Attributes

A major advantage to the SX1411 standard is the ability to use or not use the various attributes depending on the specific needs of an individual asset.

It’s a tokenization Swiss Army Knife!

Blockchains: SX1411 is a system agnostic standard which can be applied to EVM-compatible smart contracts on multiple blockchains.

Off-chain assets: works with blockchain native assets as well as off-chain assets.

Interest: support for interest-bearing assets and assets which pay ongoing dividends.

Custody: entities responsible for the underlying asset’s custody as well as their roles can be identified in the smart contract.

Provenance: an extensible, holistic, on-chain reference to create transparency as to the token’s underlying assets.

Redemption: optional feature for issuers to support redemption processes where individuals can redeem tokens for underlying assets.

Safeguard: empowers token holders to trigger liquidation by a pre-identified Guardian, initiating the redemption of all tokens.

Roles: support for various custody arrangements, liquidation processes, and issuer/administrator relationships.

Compliance: support to connect with dynamic whitelists/blacklists, know your asset (KYA), and KYC.

How it works

SX1411 tokens are the digital representation of underlying assets. Such assets can either be on-chain or off-chain assets.

An Issuer using the SX1411 framework embeds the proof of existence of the underlying asset into the token contract and authorizes the minting of tokens. SX1411 then allows the Issuer to connect with an Agent, e.g. a platform such as Swarm Markets, to help distribute or trade the token. The SX1411 smart contract identifies these various roles along with the attributes, parameters, proofs, etc. which can be managed over the lifecycle of the tokens.

A key trust element for a digital asset is to have clarity and confidence in the documentation as well as the involvement of trusted entities in each role. This can ideally involve, for example, banks, regulators, Big Four accountancies, and other traditional finance sector entities. However, a DAO or a trustee obliged to work in the interest of a DAO would be equally well suited. In the event of loss of trust in any aspect of the token, the safeguard function can be employed by token holders.

The safeguard feature of the SX1411 ensures that token holders play a role in the governance of the token and introduces checks and balances to the set-up. If token holders stake a predetermined percentage of tokens into the token’s safeguard function within the smart contract, the asset is frozen, and contract administration is handed over to a Guardian who triggers any predefined liquidations, materializing the value of underlying assets for token holders.

Going forward

As the asset tokenization space is evolving rapidly, the SX1411 aims to contribute to the tools available to issuers and presents a modular solution for various use cases.

SX1411 supports the work Swarm Markets has undertaken in the last few months to bring new kinds of assets to the crypto market.

Now that the smart contract has been audited and the security of the standard is confirmed, Swarm Markets will be using the SX1411 to bring completely new tokens to the industry and to the Swarm Markets platform.

View the SX1411 smart contract audit on our documentation site here: https://docs.swarm.markets/reference/smart-contract-audit.

Announcing the SX1411 token standard: a framework for managing complex on- and off-chain assets was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

Swarm Markets will launch a peer-to-peer OTC service in Q1 2022 using smart contracts to disintermediate high value crypto and NFT transactions — the first of its kind to be offered by a regulated company. The so-called dOTC service empowers institutions and professional investors to carry out large volume trades directly with other Swarm Markets platform users, replacing costly and time-consuming traditional over-the-counter (OTC) trading.

Swarm Markets’ dOTC service eliminates counterparty risks by restricting eligible transaction participants to users verified on its platform, which is regulated by Germany’s Federal Financial Supervisory Authority (BaFin). For the first time, institutions with a fiduciary responsibility now have a compliant trading tool they can use to minimize or avoid crypto slippage.

High volume swap activity on decentralized exchanges has increased significantly in the past year. According to a report by Messari Hub, the number of unique traders executing trades over $500k has increased by 140% from March to September 2021. However, to date, there is no block-trade P2P smart contract available to institutions that removes counterparty risks.

Carrying out an OTC trade is typically a complex process, requiring costly intermediaries who participants need to trust and who charge substantial fees in return for guaranteeing the safety of a trade.

Trustless execution of a Swarm Markets’ dOTC smart contract eliminates the need for intermediaries so users can carry out trades independently. The dOTC contract enables platform users to safely execute a buy or sell order directly with other platform users in minutes instead of days or weeks — and for a tiny fraction of the price.

Swarm Markets extends the innovations of DeFi to include OTC, disintermediating one of the most centralized aspects of crypto finance, while providing the same level of consumer protection as traditional financial institutions.

For example, dOTC replaces escrow accounts used in the traditional OTC world with self-custody, so participants have control over their assets at all times. The dOTC contract ensures both counterparties are verified users with control of sufficient assets for a successful trade prior to execution, replacing the need for manual proof-of-funds checks and repetitive KYC procedures for each trade.

The dOTC contract can be used for a wide range of digital assets, from ERC20 to ERC721 and ERC1155, enabling participants to trade high value NFTs and to facilitate smoother liquidation of crypto positions. dOTC will also enable contract-based block trades for upcoming regulated digital securities, further extending the cost savings available to high volume traders.

Institutions have very few, if any, viable and trusted trading tools in DeFi to help ride out crypto volatility. According to a report from CompareBrokers, bitcoin volatility rose by up to 86% in December 2021 and has done so in December for the past 10 years. High volatility results in a greater risk of high slippage for larger trades.

The licenses granted by BaFin put Swarm Markets in a unique position to offer decentralized trading infrastructure in both crypto and traditional financial products. The dOTC contract will become a key piece of infrastructure for institutions to support bulk selling and buying of securities on-chain via the Swarm Markets platform.

Swarm Markets’ dOTC service will be open to all users who have onboarded to the platform and new assets eligible for dOTC trading will be added in the coming weeks.

To talk to us about dOTC services, please email swarm@swarm.markets

Swarm Markets to launch decentralized OTC trading was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

Swarm Markets is taking an important step on its mission to digitize finance by developing its first digital security in partnership with Volksbank Mittweida, forging a key trust structure with one of Germany’s most prominent banks.

The first registered bond (Namensschuldverschreibung) will be issued in an aggregate of €1 million on the Polygon chain and sold by Volksbank directly to its retail customers.

Swarm Markets bested a field of competitors responding to an RFP to digitize bonds for one of the world’s most respected cooperative banks, meeting technical and regulatory requirements as well as accommodating Volksbank’s business needs. In this case, aligning with sustainability goals by utilizing Polygon to reduce the asset’s energy burden compared to Ethereum’s proof-of-work (PoW) blockchain.

Bonds will be issued using the SRC20 security token protocol and administered via the MySwarm App, both originally developed by the Swarm Network DAO, using smart contracts newly adapted by Swarm Markets for the Polygon chain.

The bonds represent an important first use case demonstrating how Swarm Markets’ license status — operating under the authority of Germany’s Federal Financial Supervisory Authority (BaFin) — provides unique capabilities to eliminate obstacles to DeFi for institutions.

Swarm Markets is leveraging these licenses to create tools that empower traditional financial institutions to operate in digital asset markets and solve real world problems. Almost all bonds in the traditional finance industry are registered bonds: where the bondholder’s information is kept on record — such as corporate bonds, treasury bonds, or municipal bonds.

This partnership is an opportunity for Volksbank’s investment banking apparatus and its customers to familiarize themselves with financial instruments living on the blockchain. It uses a straightforward asset class and allows users to further explore other functionality that comes embedded with digital assets.

Connecting TradFi and DeFi requires Swarm Markets to go beyond the linear process of software development that crypto industry professionals have applied to digitizing financial instruments thus far. Cooperating with institutions like Volksbank requires an onboarding of relationships that is equally as important as technical onboarding.

Both sides view the bond digitization partnership as a jumping off point from which future opportunities to build new (DeFi) products around new assets will emerge.

In just over 6 months since Swarm Markets’ first public announcement, we’ve built out a formidable tech infrastructure for digital assets supported by a world’s-first regulatory framework, which has now borne its first digital asset anchored in a trust structure with a global banking titan.

We’re proud to make good on our promises in such a short time and we look forward to seeing where innovations and partnerships like this one take us in the future.

Swarm Markets inks deal with Germany’s Volksbank to digitize bonds on Polygon was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

Date & Time: Friday Nov 19th, 13:00 — 13:30 CET
Place: Telegram : Swarm Markets (SMT) — https://t.me/SMTtokensale
Guest: Sam Stone — Head of Product
Host: Susan Pl — Community Admin

Susan Pl:

Hey Everyone!

Thanks for joining us for this tech-oriented AMA with Sam Stone, Head of product here at Swarm Markets. Sam, thanks for taking time out of your very busy day to answer some questions from the community, we’re really glad to have you!

Sam Stone:

Thank you, Susan! Really happy to be here. I often wish I had more time to spend on Telegram. I’ve enjoyed seeing the quality of questions the community has put forward.

Question:

What are the most difficult technical hurdles to overcome developing a DeFi platform that has to be compliant with BaFin regulations, and how are you managing this with such a small development team?

Answer:

The most important technical hurdle we face is ensuring that only users who have met the strict KYC and AML requirements set by BaFin are able to use the platform and protocol at both the UI and smart contract level.

I would say we have cleared that hurdle, yet there are already improvements planned to make the permissioning architecture more flexible and multi-dimensional.

The toughest technical challenges we face are more related to the underlying technology and the complexity of AMM functionality, especially as we want to make it really easy for our users to get the best possible deals. This refers to under-the-hood technology like order routing optimizations, multi-asset pools, introducing new products and integrating with other on and off-chain infrastructure.

We have a really talented decent-sized developer team but we are always looking for new talent!

Question:

I am an SMT token holder, investor. The well-being of our project is important to me. What positive actions are in development, what news awaits us?

Answer:

Great question….

We have a really full and exciting roadmap over the next few months, starting with adding support for new wallet infrastructure, providing business accounts, reducing transaction fees by branching out to new chains like Polygon, working on a new product aimed at institutions, and making our technology available to be embedded in third party platforms.

Most importantly, we are working on delivering regulated assets into the platform, which uses the full potential of our license.

These are all very exciting and we hope to see these grow the user base greatly.

Question:

Is there a time frame when you switch to the Polygon network? When it’s done, do the users have to bridge their assets themselves or will you bridge the assets from the Ethereum chain to Polygon?

Answer:

Rather than “switching” to Polygon, it’s important to be clear that we are adding support for it as a layer 2 solution that will make transacting considerably cheaper. The Ethereum pools and contracts are not going anywhere.

We are aiming to have Polygon live around December/January. There will be separate pools and markets on Ethereum and Polygon, so users will have the choice which chain to use. Users will need to bridge the assets themselves, but we will provide clear instructions and functionality to do this easily.

Question:

How can we move our SMT tokens from Ethereum Chain to Polygon Chain? Or will it be done automatically after Polygon deployment?

Answer:

We are already working on deploying SMT onto Polygon. When done, you will be able to use the official bridge infrastructure created by the Polygon team, either the PoS (Proof of Stake) bridge or the Plasma bridge.

We will also be providing a widget within the platform UI to bridge assets back and forth smoothly. Bridged assets will be instantly available to be used on Polygon.

Withdrawals from Polygon back to Ethereum are subject to some time locks for security purposes. The PoS bridge has a delay of up to 3 hours before withdrawals are possible. The Plasma bridge has a 7-day period where validators can challenge the withdrawal. Learn more about Polygon bridges here: https://wallet.polygon.technology/bridge

Question:

How can I predict fees with SMT on Polygon? When do transactions submitted to Ethereum achieve finality?

Answer:

Regarding transaction costs on Polygon, at this point we can say that they will be significantly cheaper than on Ethereum. There is always the chance the transaction costs go up on Polygon as demand increases, but we are still talking a fraction of what it costs on Ethereum.

Question:

When will the platform be ready for more assets/crypto/stocks? How will you push marketing to support the price of SMT?

Answer:

Regulated assets are not far away. Stay tuned! From the product side, creating value is the best way to get attention. We want to build quality, secure and valuable infrastructure that adds to the toolset available on DeFi.

Question:

Does SMT have plans to make their own wallet on Google Play Store/App Store? If yes, will it be a decentralized exchange (Dex) or CEX app ?

Answer:

A native mobile application is something we would tackle in 2022. Like our current products, a mobile app would be a hybrid of a DEX and CEX, so this would probably not change.

Question:

Can SRC20 tokens live on the Polygon chain integrated with the Swarm Markets Platform?

Answer:

All ERC20, SRC20 and Polygon tokens can be integrated into the platform. Technically there are no challenges here. New assets simply need to meet our compliance and listing requirements.

Once support for a new asset is added to the platform, anyone will be able to create a pool with these assets to their own parameters. For example, custom fee structures, unique weighting combinations, and pools with up to 8 assets.

Susan Pl:

And the dev team is working on adding a “create your own pool” feature , correct?

Sam Stone:

Yes! We’re already testing these! I’m really excited to see what pools users set up.

Susan Pl:

Excellent! That adds a lot of utility to the platform!

Question:

I am new to all this, I still do not fully understand. I guess all I have to ask is, as Swarm Markets gets bigger and bigger, would/or is it already possible for Swarm Markets to play a role in deciding regulations? Would Swarm Markets be a voice for the people using the platform?

Answer:

Being an early regulated crypto project, there may be opportunities for the regulator to learn from what we are doing when deciding on their policies. In many ways the regulator is also new to this space and is adapting with the industry.

One example of this kind of learning exchange was our experience demonstrating that blockchain transactions are visible to everyone on the blockchain equally. BaFin showed genuine appreciation that both they and investors essentially have real-time access to trading activity with no opportunity for manipulation. That just doesn’t exist in traditional finance.

Regulators are not close-minded when it comes to recognizing the benefits of DeFi and blockchain technology — especially when it means better protection for investors. They themselves are a voice for the people too.

Question:

As I am aware SMT it’s an ambitious project, please could you tell me what kind of long term agreements you think SMT will reach to be one of the biggest tokens in crypto?

Answer:

I won’t be announcing anything here today, but we are actively pursuing some very interesting partnerships that could potentially exponentially increase our user base and funds.

From the development standpoint, we are steadily building out the infrastructure required by our pipeline of partners in order to bring their assets onto the platform.

Volksbank’s response to our recent Polygon announcement gives a hint of things to come. We aren’t building new features in isolation — our work is driven by business needs and demands communicated to us by our industry connections. That also means announcing some features has to wait until all parties are ready, not just our team.

Question:

Many new projects develop well at first, but then fail to achieve good results. How will you manage and develop your project to gain a position in the market and become a good project in the blockchain industry?

Answer:

I think that establishing our credibility within institutional players in the DeFi space is key. This takes time however we are already seeing the results of these efforts. From a tech standpoint, that also means creating useful tools. If you’re listening to the market and building something people want, then success will follow.

Question:

Since NFT is popular nowadays, is there a plan for NFT integration?

Answer:

Yes, we have a unique product in the pipeline that extends the utility of NFTs beyond collecting and trading them. This is original technology that we are working on which has multiple use cases both for retail and industry. Work on this is ongoing and we are really excited to see the reception for this new offering.

The universal truth in finance is that options, fairness, and good returns create value.

That maxim is just as true for crypto markets as it is in traditional finance. DeFi has reshaped the landscape for crypto investors by improving all three points when compared to the centralized infrastructure of crypto’s early days. Now, Swarm Markets is building a new toolkit for the financial world, leveraging the aspects of TradFi most beneficial to investor interests in order to take DeFi to the next level.

Dyed in the wool DeFi

Swarm Markets stays true to the core aspects of DeFi because we know it’s the bundling of self-custody, person-to-person transacting, 24-hour markets, and transparent operations that results in the optionality and return potential that propelled DeFi into a global phenomenon. But we still see room for improvement.

Working with Germany’s Federal Financial Supervisory Authority (BaFin), Swarm Markets is pursuing two key areas of innovation: compliance and accountability. Adding compliance and accountability to DeFi deters manipulation, brings new asset classes to DeFi, and increases the scope of participants to include institutions and other investors unwilling to compromise on market fairness.

Compliance is another word for fairness

Smart contracts alone are not a guarantee of a fair market. In fact, relying on the transparency of the blockchain alone may increase information asymmetry to the benefit of insiders and market manipulators because investors cannot be expected to have the level of technical expertise required to accurately assess the risk of transacting with a particular smart contract.

Swarm Market’s compliance with BaFin’s reporting requirements improves the situation for investors in two ways:

• Regulators with domain expertise in evaluating the safety and fairness of financial instruments act as a gatekeeper to ensure that the processes and rules written into Swarm Markets’ smart contracts maintain the highest standards of investor protection.
• Regulated assets listed by Swarm Markets are also subject to disclosure requirements that level the playing field for investors by ensuring that the information necessary to make an informed investment decision is available to the public.

BaFin’s approval can then function as a proxy for validating the fairness of the processes enshrined in our smart contract code and responsible governance of the platform. Investors without the technical expertise to audit smart contracts can invest with confidence, knowing they won’t be taken advantage of by the smart contract authors or parties with superior technical knowledge.

Supercharging DeFi with regulated securities

Stablecoins serve as an anchor point in DeFi as evidenced by — among other things — the fact that platform activity on our DAI/USDC pool is second only to our SMT pool. Stablecoins are essential to DeFi because they are connected to value outside of volatile crypto markets, allowing investors to exit crypto positions while sheltering their assets and creating a stable environment for borrowing.

As a regulated platform, Swarm Markets will go beyond stablecoins and bolster market stability with tokenized asset-backed securities (ABSs) and commodities. The market cap represented by regulated asset classes that could be consigned to DeFi dwarfs the size of the entire crypto market.

That’s why Swarm Markets is working with regulators to build the integrations between asset owners, custody providers, issuers, etc. that allow these regulated asset classes to be digitized and enter the world of DeFi. Assets added to Swarm Markets are screened for quality and legitimacy to ensure that markets will be more efficient and more stable as the balance of real-world value added to the platform increases.

There’s one more step we will take to reach the full potential of DeFi beyond supercharging DeFi with this enormous wealth of real-world value and building fair markets under regulatory oversight: deterring bad actors from hijacking the value created by honest investors.

Accountability is more than just KYC

“I expect that projects that solve for pseudonymity are more likely to succeed, because investors can then be comfortable that asset prices reflect actual interest from real investors, not prices pumped by hidden manipulators.” — Securities and Exchange Commission commissioner Caroline A. Crenshaw

Investors the world over have long demonstrated a willingness to share their identity with the entity through which they trade in return for access to safe markets. Swarm Markets has built a platform allowing investors to do just that while maintaining pseudonymity between transacting parties typical of DeFi.

KYC and AML checks restrict known bad actors from onboarding, but accountability is more than just connecting identity while onboarding. Detecting manipulation and having a system to enforce accountability after onboarding are inherently deterrent to bad actors looking to exploit investors. While it’s impossible to promise absolute security, markets are more likely to be free of manipulation when participants know they will be held accountable.

It also gives confidence to investors when they know they are free to engage in P2P transactions with counterparties unknown to them without the risk that they may become a party to wrongdoing and face consequences like wallet blacklisting and frozen assets.

It’s Swarm Market’s view that adding an identity layer to DeFi provides a substantial value to users and it appears that regulators across the globe agree.

We believe that most investors are attracted to DeFi because of the potential for profitable returns on their investment and are glad to trade a small bit of anonymity in return for protecting their investment. Moreover, we don’t stop people who believe in absolute financial privacy from transacting elsewhere and anyone can build services utilizing our identity infrastructure.

Much more than more of the same

DeFi has proven out from a technological standpoint. Swarm Markets believes the time has come to broaden the focus beyond raw speed and technological innovation in order to attract more participants and build more efficient, fairer markets. Whereas early DeFi projects succeeded in translating key transaction functions of financial markets into code, Swarm Markets is building on that work to transform the regulatory apparatus for protecting investors into processes and code.

We’re executing on regulatory compliance to ensure fairness for all market participants, expanding the set of options for investors by adding new asset classes to DeFi, and leveraging accountability to keep out bad actors who threaten the integrity and profitability of our platform. Our ecosystem of accountability, fairness, and efficiency is purpose built to give investors access to the full potential of DeFi.

DeFi’s next breakthrough is investor protection was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

Implementing Polygon helps everyday users

Swarm Markets is engaged in a full-court press to transform crypto and DeFi, simultaneously building a toolset for institutional capital to access crypto markets, while working with regulators to bring new assets to the platform.

One of our key objectives is to reduce friction for everyday crypto investors. Lowering the transaction fee barrier caused by high gas fees on a congested Ethereum network has been a high priority.

Swarm Markets’ AMM contracts have now been deployed to Polygon’s Mumbai testnet for the final phase of integration and testing. It will soon be possible to transact with liquidity pools on the Polygon network for a tiny fraction of the price of equivalent transactions on the Ethereum network.

Lower prices and a better user experience with Polygon

We launched Swarm Markets on the Ethereum blockchain because it’s a battle-tested and highly adaptable protocol: a Turing complete blockchain with a robust PoW validator network. The recent increase in activity — much of it from DeFi projects like ours! — has put a burden on the network that makes it cost prohibitive for certain types of transactions.

Polygon, a so-called Layer 2 technology, makes Ethereum transactions more scalable by parceling off parts of the validation work to the Polygon chain before validating aggregated transactions on the Ethereum chain. The result is higher throughput, lower fees and a better user experience.

A seamless transition between chains

The decision to implement Polygon as the first new blockchain and first Layer 2 solution for the Swarm Markets platform was a no-brainer. It is easy to deploy Ethereum-based smart contracts on the Polygon network, which has a security profile attractive to institutions and regulators. Polygon also makes it easy for Swarm Markets users to move assets to and from the main Ethereum chain.

The rewards structure will remain largely the same. Technical details about how rewards and SMT fee discounts will operate on Polygon pools will be communicated prior to going live on main net. Gas fee reimbursements will likely not be necessary for Polygon transactions.

New liquidity pools will be added to the platform as soon as testing is complete and smart contracts are live on Polygon’s main net. Follow us on Twitter and Discord for updates on the Polygon implementation and other Swarm Markets news.

Swarm Markets Polygon implementation enters final phase with smart contracts deployed to test net was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

Note: the rewards policy posted on the Swarm Markets GitHub repository is the only authoritative source for information on platform rewards. Both policy and distribution records are accessible there. Any future changes to the rewards policy will be announced in advance and updated on GitHub here: https://github.com/SwarmMarkets/smt-rewards-distribution

Liquidity providers and traders get rewards every week just for using the platform. There are even special reward boosts for users who hold SMT or who add liquidity into our SMT liquidity pools. Below is all the information on how SMT rewards are calculated and distributed.

Liquidity provider rewards

Liquidity provider (LP) rewards make up the largest tranche of weekly SMT rewards with a total of 75% of rewards going to LPs. LP rewards are calculated based on the 7-day average (mean) of added liquidity as a percentage of the weekly average (mean) of total liquidity.

A Loyalty Boost is then added for users who hold a high ratio of SMT to assets added to liquidity pools. Adding liquidity to SMT pools earns LPs a 4x bonus compared to other asset pools.

LP rewards key facts:

• LP rewards pool: 75% of total weekly rewards
• User’s SPT value prorated according to proportion of total liquidity on platform
• $0 — $10 million liquidity added to platform: APY capped at 500%
• $10 — $100 million liquidity added to platform: APY capped at 250%
• $100+ million liquidity added to platform: no APY cap
• Up to 100% additional Loyalty boost for SMT holders
• 4x bonus for adding liquidity to SMT pools

Trader rewards

Rewards for traders are calculated after the LP rewards pool so that the trading rewards total is 1/3 of the LP rewards pool total. Individual trading rewards are based on the percentage of the total aggregate value of trades for the previous week in USD after which the loyalty boost is applied.

Trading rewards key facts:

• 25% of total weekly rewards
• Individual trading value prorated by total value of transactions
• Loyalty boost

Transact for free with gas reimbursements

All gas fees for swaps and adding liquidity are paid back in SMT at the beginning of each following week. Swarm Markets calculates the 7-day average USD value of SMT and reimburses customers in for the gwei (in USD) paid at the time of each transaction.

How to earn SMT loyalty boost rewards

Loyalty Rewards are paid out weekly based on the ratio of SMT value held to the value added in liquidity pools.

To calculate the amount of SMT held, Swarm Markets adds the amount held in a user’s trading wallet, proxy wallet, SMT added to liquidity pools, and any unclaimed SMT rewards.

• SMT held in: trading wallet, proxy wallet, liquidity pools, and any unclaimed SMT rewards
• Ratio of SMT held vs total asset value added to liquidity pools determines loyalty rewards:
• Bronze: 1–5% of liquidity value held in SMT: +25% boost
• Silver: 5–10% of liquidity value held in SMT: +50% boost
• Gold: lesser of 10%+ of liquidity value or $1M held in SMT: +100% boost
• Boost factor applied to LP rewards and trading rewards.

When and how SMT rewards are paid

Weekly distributions of SMT are based on the predefined weekly SMT rewards release schedule. The SMT rewards will be calculated and made claimable via the Swarm Markets platform after one week. The exchange rate for all SMT rewards is based on the 7-day average (mean) price for SMT in US dollars.

If the total amount of rewards is less than the Swarm Markets’ budget for the week, then the remaining SMT rolls over into the rewards pool for the following week. If the total amount is greater than the budget for the week, then the APY is reduced in order to normalize the rewards for everyone equally.

Swarm Markets has already distributed the first weeks’ rewards. At the moment, it’s still possible to earn additional rewards by joining the Launch Liquidity Program. Even more rewards will be distributed from the community rewards pool to help grow the platform and encourage more users to bring more assets to our ecosystem.

Swarm Markets weekly rewards distributions for liquidity providers and traders was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

Security is one of the main issues if not the top concern for most people entering DeFi. While DeFi has proven itself from a technology perspective, many investors are confused about how their money is exposed to risk. Media headlines suggest the frequency of hacks and rug pulls is increasing. Nevertheless, some platforms are safer than others. Asking the right questions empowers you to invest with confidence.

The DeFi pyramid of trust is divided into 5 layers. Characteristic of a pyramid is that the bottom layers must be supported sufficiently before moving on to the top layers. As you inform yourself about a DeFi platform by asking the questions below, you move up the pyramid and reduce your exposure to risk.

Is the network stack secure?

The pace of technological innovation is fast in the blockchain world. Often, new tech is released to the public before all the security vulnerabilities have been identified. That’s why it’s best to avoid platforms built on untested technology.

One example is the choice of so-called Layer 1 technology. In other words, which blockchain is used, e.g., BSC vs. Ethereum. While networks like the Binance Smart Chain (BSC) offer some advantages over Ethereum in terms of speed and lower transaction fees, they tend to have fewer validators, fewer code contributors, and fewer stakeholders monitoring chain security. It’s no wonder that they are not generally accepted by institutions and are hacked more regularly than Ethereum chain platforms.

The tools used to transact with Layer 1 can be just as important. Industry standard wallets like MetaMask have been subject to real-world testing in the marketplace for years. Restricting platform interactions to tried and tested technology may cause friction, as users are forced to transition to safer wallets and workflows, but the trade-off is reduced risk.

Are the smart contracts audited?

It’s essential that a platform’s smart contracts be both public and audited by respected industry professionals whose job it is to understand security vulnerabilities. Audited smart contracts show that platform creators have the investor’s best interest in mind and are committed to improving their own code.

In the early days of blockchain, people thought any evidence of human involvement was inherently untrustworthy — a smart contract was all you needed to be safe. While that may be true for a developer who can read code, today’s typical investor is unlikely to be a smart contract expert.

In the end, all smart contracts are audited — either by professionals working to improve safety of the platform or by hackers looking to exploit bugs. Don’t risk your money with platforms who give hackers the first opportunity to find vulnerabilities.

Who are you transacting with?

One of the most important questions you can ask is whether the organization you are entrusting with your money is open to interacting with you directly. Accountability to users is central to building trust. Someone that can be named is someone that can be blamed, as the saying goes.

DeFi allows decentralized transacting — direct peer-to-peer trading with self-custody of assets — but DeFi platforms are built by individuals working together with common enterprise. The names and professional histories of a platform’s creators should be easy to find. The company should have a physical address and support channels where you can talk directly with team members should you have a problem.

Who are they transacting with?

DeFi platforms are not always transparent about the service providers responsible for carrying out essential platform functions and often cannot assure users they are not transacting with bad actors. These secondary repercussions can lead to tainted assets which cannot be converted back to fiat.

Funds earned on a platform that uses a mixer service to anonymize wallets could automatically be flagged as fraudulent or suspicious. The same is true of trades involving wallets belonging to hackers or associated with money laundering. Those funds will be sanctioned by Chainalysis and the tainted assets restricted from exchanges or prevented from conversion back to fiat.

If the platform doesn’t know who is transacting, then you cannot be sure your assets won’t be tainted.

Who are they accountable to?

The real people who build a DeFi platform should be accountable to authorities in specific jurisdictions whose job it is to protect investors. Government regulators use a rule set created after decades of experience with bad actors in the traditional financial system. DeFi platforms should benefit from this experience and view compliance as a tool to build stronger protections for users.

Swarm Markets operates under the watchful eye of Germany’s Federal Financial Supervisory Authority, BaFin. Working with government regulators means answering all of the questions above and more. Our governance, technology, data handling, etc. are all monitored to ensure we maintain the same level of security as other financial service providers like banks and hedge funds.

Now that you’re armed with the knowledge to assess risk in DeFi, you can feel confident when you put your money to work for you in DeFi. Visit the Swarm Markets website to learn more about the world’s first licensed DeFi platform.

How to evaluate DeFi platforms for safety and security: the DeFi Trust Pyramid was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

It’s hard to believe it’s only been just over two months since Swarm Markets emerged from stealth mode. In that short time, our licensed DeFi platform has been recognized for our unique potential to revolutionize finance by closing the gap between crypto and traditional finance.

We wanted to take a moment to collect some of these responses since we appreciate that not everyone can follow Swarm Markets on all the different channels where we receive recognition. The examples below are just a small slice of the pie — many more people and media outlets have shown their interest and support.

These are some of the highlights. They show how inspired people are by Swarm Markets after just a short time.

Crypto Industry Supporters

It makes sense that crypto insiders would recognize one of their own. The crypto industry has come out in support for Swarm Markets in a big way.

Bryan D’Souza of R3 was one of the first to create a visualization of how Swarm Markets fits into the greater capital markets and blockchain ecosystem in a detailed post on LinkedIn.

Swarm Markets has gotten a lot of love on LinkedIn from true titans of crypto, like Alexander Hoeptner, CEO BitMEX.

The line between crypto and TradFi is getting blurry, not just because Swarm Markets is bringing together both sides of the finance industry, but also because more traditional finance industry professionals are moving into crypto. Iqbal Gandham is a great example. His experience at eToro and Nutmeg prepared him for a move to Ledger and underscores the value of his praise of Swarm Markets.

Crypto heavy hitters have also shown their support on Twitter. DeltaDAO board member Kai Meinke counts as one of our most vocal supporters.

Kyle Sonlin of STO Market clearly sees what Swarm Markets means for the future.

Crypto Media Recognition

Swarm Markets has also been written about extensively in the crypto media. We are particularly proud of the deep dive by Edward Robinson of the Defiant who really took the time to explain what new asset classes and a more inclusive exchange means for crypto.

Many people in crypto consider Swarm Markets’ destiny as a major crypto industry to be a near certainty. It’s for that reason that the crypto media has sought out the opinions of Swarm Markets founders for our opinions about major trends in crypto, like this article in Crypto News featuring our co-founder Philipp Pieper.

Of course, it’s helpful to Swarm Markets that we are regulated in a forward-thinking jurisdiction that is taking a prominent role in integrating crypto into the financial system. Naturally, CoinDesk reached out to Swarm Markets to write about the implications of a law which will bring $415 billion into crypto.

Mainstream Financial Leaders and Media

It’s often difficult for crypto projects to break into the consciousness of mainstream media consumers, but Swarm Markets’ relevance extends beyond the cryptosphere because we offer the only opportunity to participate in crypto and DeFi for many financial institutions and retail investors.

We may be relevant, but we still weren’t expecting the praise we received from Investing.com. They clearly expect big things from Swarm Markets and we plan to deliver.

Sometimes publications that may not have the largest reach are capable of penetrating highly specialized and lucrative markets. At $2000 per year, a subscription to Global Risk Regulator is not for the casual reader. However, we were honored to be featured in an publication that is read by the movers and shakers in the banking industry.

Being pioneers in the regulated DeFi space has also brought attention from top media outlets who recognize that Swarm Markets is an industry thought leader. CNBC is one of the largest and most recognized financial news outlets in the world. When a major DeFi story broke earlier this week, they went straight to Swarm Markets to publish our opinion.

When a managing director from Deutsche Boerse calls you out as “the future,” then you know you’ve done something right. It was a proud moment to have Jens Hachmeiser of Deutsche Boerse announce Swarm Markets to his network.

Bringing together the disparate worlds of crypto and traditional finance sometimes means communicating with people who don’t follow the same news media and social channels. We have a big tent to fill and we are building awareness and excitement not just for the SMT token, but for our entire unique platform.

Just consider what it will mean to enable a retail investor to become a lender and liquidity provider to a hedge fund — that’s a tectonic shift which will forever change the power structures of finance. Even if you haven’t yet considered all of the revolutionary long-term consequences of Swarm Markets’ innovations, rest assured the professionals whose job it is to plan for the future of finance are thinking about us.

Support from both TradFi and Crypto industry signals a bright future for Swarm Markets was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.

Swarm Markets’ public token sale was a hit and we are building momentum in the coming days with exchange listings, the platform launch, and a massive marketing campaign.

Token Sale Results

SMT exploded right out of the gate with our Launchpool pre-sale. The Launchpool community showed their support for the Swarm Market’s platform in a big way — staking 3x the nominal value of the pre-sale allocation to secure their chance at getting SMT.

Over $1.5 million worth of LPOOL was staked in the first 24 hours and Swarm Markets was a top 5 project by the end of the pre-sale. ​​399,358 USDC was raised from 810 participants. Impressive results for Swarm Markets, especially considering the market conditions.

The action during the batch auction followed a different path, with bids trickling in slowly as participants completed the onboarding process and the biggest bids coming in during the final hours before the end of the auction. In the end, the auction raised 609,242.06 USDC at a closing price of USD $0.10 per token — outperforming the pre-sale and allowing everyone who bid to go home with some SMT. One deep-pocketed Swarm Markets fan even placed a bid for $2.09/SMT!

The preceding private sale concluded at selling 6,515,226 SMT for $488,642. The entire token sale raised a total of $1.5M for 16.6M SMT.

Next steps for Swarm Markets community members

Auction Participants
Auction participants can claim tokens from the Gnosis auction page now. The tokens will appear as vSMT (vested SMT) in your wallet. In order to have a fair distribution of tokens and ensure long-term price stability, all token sale tokens are vested and appear as vSMT.

vSMT tokens can be “unwrapped” and converted to SMT using the smart contract function “ClaimMaximumAmount” according to the vesting schedule of 20% at the Token Generation Event (TGE) and then an additional 20% each quarter after TGE. There is no time limit to claim your vSMT or convert to SMT.

The Token Generation Event (TGE) will occur on Monday, August 2nd at 12:00 noon CET. vSMT can be unwrapped by visiting https://swarm.markets/unwrap.

After vSMT tokens have been converted to SMT they can be traded instantly on any platform without restriction.

Launchpool buyers
Launchpool pre-sale participants will get SMT delivered to their wallets directly from Launchpool. Launchpool will act as the custodian of their vSMT until the vesting schedule allows the tokens to be unwrapped to SMT and distributed to buyer wallets by Launchpool.

Community Boost Airdrop and Early Bird Campaign
Swarm community members who took advantage of the Early Bird Campaign and Community Boost participants will have SMT tokens distributed to their wallets at the time of the TGE. These are not vested tokens and they can be traded immediately after they appear in your wallet without requiring any further actions.

Launch Liquidity Program
Our team is diligently assisting liquidity providers with the process of adding liquidity to trading pools. The platform will launch only after that process of working through our Launch LP sign-up list is complete.

The Launch Liquidity Program will remain open until the platform’s public launch. Liquidity providers who want to benefit from additional rewards by adding liquidity prior to the public launch of the platform can still sign up.

Note: Rewards decrease the later you add liquidity, so do not wait! Only liquidity providers who actually add assets to the platform will receive rewards. There are no rewards given to those who sign up for the program, but who do not complete onboarding and add liquidity.

Product Launch

The Swarm Markets platform opens to the public after launch liquidity has been added. This will occur sometime after trading begins on outside platforms — giving everyone a chance to get SMT.

In the interim, Swarm Markets has made a beta version of the platform open to select individuals from the traditional finance and crypto community so that they can share their experiences using the platform. The launch will also be supported by a global marketing campaign to build excitement for the launch.

Where to buy and sell SMT

The team is working with exchanges and market makers to ensure immediate listings for SMT on platforms where anyone can buy and sell tokens without needing to onboard to the Swarm Markets platform.

Expect to see trading pools on Uniswap and other DeFi/DEX exchanges immediately after TGE.

Swarm Markets will announce listings on DEXs and CEXs to the community via e-mail and social media.

Stay tuned by following us on Twitter & Telegram Announcements Channel for the latest information on listings.

Token sale victory lap — when & where to trade SMT was originally published in SWARM on Medium, where people are continuing the conversation by highlighting and responding to this story.