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Swarm 2.0 is live! This major change could revamp the Security Token Offering space.

security token offering

Swarm is a platform that offers enterprise solutions for tokenization of assets and issuance of tokens using its SRC-20 protocol. The tokenized offerings include a wide variety of assets from traditional securities to fine-art.


Why haven’t STOs met expectations

Security Token Offerings were purported to be a revolutionary shift in how entrepreneurs raised funds as well as how securities and real-world assets would be traded. Yet, the rate of adoption of STOs was underwhelming even though there were a few incredibly successful projects.

Security Token Offering

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During the month of May 2019, STOs raised $255 million while IEO projects raised over $1.2 billion, clearly IEOs performed better than STOs. 

So what’s the reason for the lacklustre interest in STO? Increased regulatory compliance and oversight might be the reason dissuading entrepreneurs. But there’s an obvious reason — STOs are capital intensive.


Why Swarm 2.0 can revamp the STO space (Zero upfront fees)

So here’s why Swarm’s latest update could be revolutionary — No up-front fees, as Swarm revealed in a blog post. Up until now, token issuers were expected to pay a hefty fee to launch their security token offering which could have been a major turn-off for cash-starved entrepreneurs (also why IEOs gained popularity). 

Instead of a hefty upfront fee, Swarm proposes that the issuer setup a funding goal of the new digital securities to be issued. After reaching the funding goal, the issuer gets a stake between 0.5–1 % in Swarm’s utility token. 

As Chris Eberle, COO at Swarm was quoted saying “Pushing the value transfer into the transfer/transaction of digital securities pushes us to access and liquidity for everyone faster, and sets the stage for everyone in the ecosystem to be incentivized to deliver value,”.

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