Real-World Asset Tokenization 2023

According to Security Token Market

Table of Contents

Real-World Assets (RWA) and Tokenization..........................................................................4

Ethereum ($ETH)..............................................................................................................................5
Ondo Finance.............................................................................................................................................................5
INX......................................................................................................................................................................................5
Freeport (Security Token Advisors Client).............................................................................................. 6
RealT.................................................................................................................................................................................6
Vendors using Ethereum...................................................................................................................................7
Provenance Blockchain ($HASH)...............................................................................................7
Figure Technologies.............................................................................................................................................. 7
Hamilton Lane - Private Assets Fund........................................................................................................ 7
NovaWulf...................................................................................................................................................................... 8
Movement Mortgage........................................................................................................................................... 9
Apollo - eMortgages..............................................................................................................................................9
USDF - FDIC-backed Digital Deposits...................................................................................................... 9
Vendors using Provenance............................................................................................................................ 10
Tezos ($XTZ)...................................................................................................................................... 11
Societe Generale-Forge......................................................................................................................................11
BTG Pactual................................................................................................................................................................ 11
AltMe and Altra.House (Real Estate)..........................................................................................................11
Vendors using Tezos............................................................................................................................................. 11
Avalanche ($AVAX)........................................................................................................................ 12
KKR - Feeder Fund................................................................................................................................................12
Security Token Market........................................................................................................................................12
Elan Bearnais - Professional Basketball Team................................................................................... 12
BridgeTower Capital Compliant Staking Rewards..........................................................................13
DEFYCA - Private Debt Products................................................................................................................ 13
Vendors using Avalanche................................................................................................................................13
Algorand ($ALGO)..........................................................................................................................14
Exodus (EXOD)........................................................................................................................................................ 14
Republic Note.......................................................................................................................................................... 14
Bitcoin and USDC Yield Funds..................................................................................................................... 15
Realio Network (RST)...........................................................................................................................................15
Vendors using Algorand...................................................................................................................................16
Polygon Blockchain ($MATIC)................................................................................................... 16
Obligate........................................................................................................................................................................16

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Hamilton Lane - Direct Equity Fund........................................................................................................ 16

Siemens - Digital Bond......................................................................................................................................17
Swarm............................................................................................................................................................................17
Enegra Group........................................................................................................................................................... 18
Vendors using Polygon..................................................................................................................................... 18
Stellar ($XLM).................................................................................................................................. 18
Franklin Templeton’s OnChain US Government Money Fund (FOBXX)..........................18
WisdomTree Prime Products........................................................................................................................19
Bitbond........................................................................................................................................................................20
ABN AMRO - Digital Bond..............................................................................................................................20
Yield Crowd...............................................................................................................................................................20
Vendors using Stellar.........................................................................................................................................20
Bitcoin Liquid Network................................................................................................................ 21
Blockstream Mining Note ($BMN1)........................................................................................................... 21
El Salvador Bitcoin Bonds (Volcano Bonds)....................................................................................... 22
TreeBR - Carbon Credits (Security Token Advisors Client)....................................................... 22
Vendors using Liquid Network....................................................................................................................22
Binance Smart Chain ($BSC).....................................................................................................22
Landshare.................................................................................................................................................................. 22
TradeFlow...................................................................................................................................................................23
Vendors using Binance Smart Chain.....................................................................................................23
Polymesh ($POLY).........................................................................................................................23
RedSwan Commercial Real Estate........................................................................................................... 23
Vendors using Polymesh.................................................................................................................................23
Accumulate ($ACME)................................................................................................................... 23
Inveniam..................................................................................................................................................................... 23
Vendors using Accumulate...........................................................................................................................24
Solana ($SOL)..................................................................................................................................24
Homebase DAO.....................................................................................................................................................24
Ravencoin ($RVN)..........................................................................................................................25
Hydra Chain.............................................................................................................................................................. 25
RenewaBlox..............................................................................................................................................................25
Vendors using Ravencoin............................................................................................................................... 25
Private Blockchains and Real-World Assets........................................................................25

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Real-World Assets (RWA) and Tokenization

For the purposes of this paper, Security Token Market will be focusing mainly on
compliant securities, tokenized asset offerings, and applicable financial or capital
markets instruments on-chain, as that is our wheelhouse. This is not meant to
remove or omit any pieces of the Real-World Assets (RWA) ecosystem that include
more novelty cases, but rather serves to paint the area of focus and relevance being
asset managers, investment and commercial banks, family offices, and other
financial organizations or players. With Bain & Co estimating $77 billion and Security
Token Advisors estimating $80 billion in primary market tokenization, it’s significant.

The general RWA thesis is onboarding any tangible or intangible existing assets onto
the blockchain in order to enable those assets, and asset owners, to interact with the
decentralized finance (DeFi) ecosystem and associated infrastructure. Services like
decentralized lending and collateralization, real-time cross-border trading or swaps,
and capital stack optimization are things that come to mind here.

Onboarding and originating real-world assets with blockchain should enable one or
more of those capabilities that were previously not enabled in traditional form.
Sample assets include private equity and private credit fund interests, asset-backed
securities, money market funds and ETFs, intellectual property rights, and more.

This report will primarily look at Layer 1 and Layer 2 public blockchains that are active
in the asset tokenization & securitization worlds and sample use cases associated
with them, as well as service provider integrations. It aims to be useful to:
● Prospective issuers looking to find blockchains that have proven out similar
projects and initiatives
● Service providers like issuance platforms, transfer agents, custodians, and
broker-dealers to gauge where each chain is positioned in the RWA landscape
● Blockchains & foundations themselves as a comparative tool for future
strategy

We hope this report is helpful in capturing a wide lens of which

blockchains are most active in the real-world asset tokenization and
origination game. Should RWA hold up as the overarching theme of
2023 within digital assets, expect the brand names and pedigrees of
these cases to increase notably, especially across the private equity
and private credit spaces.
Peter Gaffney
Head of Institutional

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Ethereum ($ETH)
Ethereum Foundation

Ondo Finance
Ondo Finance made nearly all of the headlines when it announced its first on-chain
investment fund in January 2023. Ondo essentially purchases BlackRock and PIMCO
money market, treasury, and yield ETFs, stores those traditional shares in a Special
Purpose Vehicle (SPV), tokenizes the SPV, and issues Ethereum-based tokens
representing interests in those funds. The motivation here, which is a recurring
theme in the industry, is enabling stablecoin holders (a $100 billion market) to rotate
into traditional yield-generating products fully on-chain. Ondo’s first live product is
the Ondo Short-Term US Government Bond Fund ($OUSG), which has $67 million in
total value locked (TVL) as of early April 2023 and accepts minimum investment
subscriptions of $100,000 via USD Coin (USDC).

To make use of the RWA benefits, Ondo Finance also

launched Flux Finance, a platform that enables
investors to collateralize and borrow against their
Ondo fund holdings fully on-chain. This is a
remarkable initiative to show how traditional and even
institutional investors can bring clients into digital
assets by holding traditional products, generating
yield, and offering collateralization services on-chain.

Ondo Finance manages the investment funds,

Coinbase Custody holds the stablecoins, Clear Street is
the prime broker and qualified custodian of the
securities, MAV Consulting is the fund administrator,
and Richey May is the auditor.

INX
As a publicly-registered digital Broker-Dealer and Alternative Trading System, INX
Limited (now INX ONE) issued its own $INX token that amassed an initial investment
amount of $85 million across 7,200 investors through its Ethereum-based IPO with
TokenSoft transfer agent. TokenSoft CEO Mason Borda stated, “Token holders receive
40% of distributions from the company with no voting rights, while equity holders
will receive 60% of distributions with voting rights.” Officially, this is a profit-sharing
token and provides distributions with the company net cash flows. Additionally, INX

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Limited redistributes profits to an ever-diminishing supply of INX tokens, as every

token that gets used as a utility for reduced commission fees gets transferred to the
INX Limited treasury reserve.

Through its own offering, INX popularized the ERC-1404 protocol within the
tokenization space, building in certain compliance and whitelisting requirements
according to securities guidelines - something the ERC-20 protocol does not directly
support without outside compliance checks.

Freeport (Security Token Advisors Client)

Security Token Advisors' very own client Freeport works to overlay tokenization onto
the museum-quality and fine art world, an alternative asset class that averages 8.9%
annual returns and outperformed the S&P 500 by 40% since the start of the century.
Freeport has announced early access to common equity shares in individual Andy
Warhol pieces, including Marilyn, Double Mickey, and Mick Jagger.

The common shares will be offered to retail investors under the Regulation A+
exemption on the Ethereum blockchain with Vertalo (Transfer Agent), Dalmore
Group (Broker-Dealer), and North Capital (Custodian). Each piece of art is valued
from low to high six figures and will have a maximum of 1,000 investors (maximum
number of shares is 10,000, minimum subscription amount is 10 shares). The offering
circular also has wording that allows for the future collateralization of these tokens,
which would be a very powerful RWA case for a prominent and historically
wealth-gated alternative asset class.

RealT
RealT is one of the original security token issuers in the real estate security token
playing field. The firm purchases, manages, and tokenizes primarily Section 8 and
government subsidized properties throughout the United States (Detroit, Chicago,
Cleveland, and other cities). RealT then issues these tokens in the primary market via
Regulation D and Regulation S to its following of investors and prospects, who
usually fill the subscriptions within mere minutes.

RealT currently manages over 200 properties worth $70+ million on the Ethereum
blockchain, with each property valued in the low-to-mid six figures. They’ve also
developed a white-label collateralization service with Aave that enables users to
borrow and stake their real estate tokens, which has almost $8 million in tokens
locked to date.

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Vendors using Ethereum

DigiShares, Securitize, INX, Tokeny, Vertalo, Oasis Pro Markets, Securrency, Archax,
tZERO, Polymath, ADDX, Aktionariat

Provenance Blockchain ($HASH)

Provenance Blockchain Foundation

Figure Technologies
As a power user of the Provenance Blockchain, having developed the blockchain
specifically for financial institutions and use cases in 2018, Figure Technologies has a
range of initiatives on and with Provenance. Originally, Figure securitized and issued
a number of HELOC-backed loans on Provenance, including the largest HELOC
securitization in over a decade when it worked with Saluda Grade Asset
Management on a $308 million pool of HELOCs. Since then, Figure has completed a
number of hundred-million-dollar HELOC securitizations with some of the largest
mortgage and alternative lenders across the nation.

Figure also hosts tailored solutions for equity offerings to fund servicing to payments
and lending. Its expansion into the private fund space was marked through its Digital
Fund Services (DFS) that both Hamilton Lane and Apollo are making use of, while it
built traction on the lending and origination side through Digital Asset Registration
Technologies (DART) to streamline liens and eNotes registries. These initiatives along
with other issuers and users culminated in Provenance reaching over $9 billion in
real-world assets on-chain by early 2023.

Hamilton Lane - Private Assets Fund

Hamilton Lane, $832 billion asset manager who currently has 5 total tokenized fund
projects in motion, issued three new blockchain-native share classes in the $500+

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million Hamilton Lane Private Assets Fund (PAF) organized under the Investment
Company Act of 1940 on the Provenance Blockchain. This is the first ‘40 Act fund with
blockchain-native share classes geared towards the private markets.

Hamilton Lane is managing these share classes through Figure Technologies’ Digital
Fund Services (DFS) to handle cap table management, investor distributions and
reporting, and capital calls. Per the SEC prospectus, each of the existing share classes
will have digital classes (i.e. Class R and Class R-DIG) with their own respective terms
and rights. It also details that “In the future, the Digital Fund Shares may be available
for trading on a public decentralized or centralized electronic exchange platform that
is a national securities exchange or an Alternative Trading System (“ATS”) operated by
a registered broker-dealer and that is subject to Regulation ATS,” while also naming
decentralized trading and swaps as a future possibility, with proper compliance in
place of course.

NovaWulf
NovaWulf is an SEC-registered investment firm with a distressed asset management
strategy and background. NovaWulf submitted a proposal to Celsius, the crypto
lending firm that filed for Chapter 11 bankruptcy, to buy and manage the creditor
claims following the operating fallout (mining, staking, collateralized lending, and
capital solutions).

These creditor claims and associated assets will be equitized (converted into equity)
and managed on-chain with Provenance blockchain, essentially turning creditors
into equity owners in the operation moving forward. Novawulf considered simply
listing this on a Nasdaq or traditional exchange given they have the means to, but
decided to keep the digital-native narrative in place with Provenance and with
Figure Technologies’ management services. After all, Celsius investors were working
in the crypto space and not with traditional financial services. Since these investors
are already existing investors in the original company (Celsius), NovaWulf was
granted an exemption from the SEC that allows them to issue stock (equity) to these
current investors out of bankruptcy - something that is unlikely to pass through the
SEC right now for brand new offerings.

The most interesting piece about this deal is the fact that NovaWulf will be filing
Form 10-Ks and Form 10-Qs as a public company. To our knowledge, this is the first
digital asset security that files 10-K and 10-Qs; pending success, this could be a model
playbook for companies in similar situations and, more broadly, simply for issuers
focusing on the future of public offerings. Additionally, there will be around 100,000
equity holders right off the bat given the sheer amount of converted creditors. This
is huge considering trading activity and market depth is one of the facets that digital
securities infrastructure providers have been struggling with. Lastly, this security will

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trade peer-to-peer on Figure ATS or through Figure’s existing plumbing which will
inherently bolster Figure’s traction in the industry as far as user base activity and
trading volume goes.

Movement Mortgage
Movement Mortgage, the sixth-largest retail mortgage lender in the United States
responsible for $30 billion in retail mortgages annually, partnered with Figure and
Provenance to reduce home equity approval to a five-minute timeline and mortgage
funding to a five-day timeline. Leveraging Figure’s existing Home Equity Line of
Credit (HELOC) services on top of Provenance, Movement Mortgage is able to more
fluidly provide existing customers with funding outside of the typical mortgage route
given the rising interest rate environment that swept the macroeconomic
environment the past year.

Equity terms and transactions records are stored on Provenance and service through
Figure Lending, which was responsible for much of the HELOC-backed loans
mentioned in the section earlier.

Apollo - eMortgages
Referring to the Digital Asset Registry Technologies (DART) system earlier, Apollo,
with $512 billion in assets under management, works with Figure to improve digital
mortgage and eNote (promissory notes) origination and servicing. Choosing to work
with DART rather than the Mortgage Electronic Registration System (MERS), the
incumbent service in the $3 trillion mortgage ecosystem, Apollo completed the first
transaction in March 2022 with the goal of rolling this service out on a wider scale.
Citing settlement improvements and real-time monitoring, Provenance is able to
iterate on incumbent services by essentially creating a one-stop-shop from
onboarding, originating, transferring, and settling in a totally digital loop.

USDF - FDIC-backed Digital Deposits

In order to facilitate digital settlement on-chain, there needs to be a proper medium
of digital settlement. Provenance touts USDF, an FDIC-backed tokenized deposit
minted and supported by the USDF Consortium, that’s designed to provide more
utility and trust than existing digital dollars or stablecoins in the market. The USDF
Consortium includes First Bank, New York Community Bank, Atlantic Union Bank,
and roughly a dozen others; each bank in the consortium honors and accepts the
bank-minted tokenized deposits.

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USDF essentially enables banks to extend existing banking models and structures to
the permissioned Provenance blockchain. This emphasis on working within the
banking framework makes it a potentially more feasible and implementable
alternative to a retail stablecoin or even a retail Central Bank Digital Currency (CBDC).

As firms elect to work with and join the consortium, the strength and viability of
USDF will grow. The key thing to harp on here is that USDF is competing in the
stablecoin-substitute realm, which is a very hot topic given the banking sector's
challenges and even turmoils throughout early 2023. The question of tokenized
deposits vs. stablecoins vs. Central Bank Digital Currencies (CBDCs) is a recurring one
for many digital platforms; USDF is one potential answer among several.

Vendors using Provenance

Figure Technologies, Oasis Pro Markets (pending), Vertalo (pending)

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Tezos ($XTZ)
Tezos Foundation

Societe Generale-Forge
Societe Generale, France’s third-largest bank with over $1.5 trillion in assets under
management, issued the first structured product as a security token directly
registered on the Tezos public blockchain. This initiative was a covered bond security
token issuance worth EUR 40 million settled in CBDC issued by Banque de France.
The bank followed up with a EUR 5 million tokenized structured product on the
Tezos blockchain soon after. In January 2022, the Luxembourg Stock Exchange
(LuxSE) admitted the security tokens to its Securities Official List (LuxSE SOL),
making history as the first financial instruments on distributed ledger technology to
be granted admission. SocGen has also backed a Euro Stablecoin on the Tezos
blockchain in partnership with the French startup, Lugh.

BTG Pactual
BTG Pactual, the largest investment bank in Latin America, and Dubai-based asset
manager Dalma Capital announced plans to use Tezos to launch security token
offerings. The banks hope to address a deal pipeline in excess of $1bn for existing and
prospective issuances. Prior to this announcement, BTG Pactual played a key role in
the Ethereum-based issuance of ReitBZ, a Brazilian real estate-backed security token
that raised $10 million. The firm also announced that they would be transferring
these ReitBZ tokens from Ethereum over to Tezos, and have since actually completed
the first successful cycle of distributions to investors.

AltMe and Altra.House (Real Estate)

Real estate tokenization platform Altra.House, based in Estonia, builds its security
tokens on Tezos. With the recent integration of self-sovereign wallet AltMe,
Altra.House now has capabilities for investors to purchase tokenized real estate
offerings for as low as 100 euros and take those tokens into the Tezos DeFi
ecosystem, all while complying with Markets in Financial Instruments Directive
(MiFiD) regulations and guidelines that govern the European Union on this front.

Vendors using Tezos

Vertalo, Archax, TokenSoft, Equisafe

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Avalanche ($AVAX)
Ava Labs, Blizzard Fund

Existing Companies and Security Tokens:

KKR - Feeder Fund
A portion of $491 billion private equity firm KKR’s flagship Health Care Strategic
Growth Fund II was issued as a security token on the Avalanche public blockchain
through Securitize. The tokenized fund will act as a feeder fund to the main fund and
will be open to qualified purchasers in the United States with a minimum buy-in
amount of $100,000 (for reference, the existing traditional fund has a minimum
buy-in of $5 million).

Security Token Market

Security Token Market, a leading data, research, & media firm in the security token
industry, recently closed its Regulation Crowdfund (Reg CF) offering with Securitize,
the first of its kind. This offering will be tokenized on the Avalanche blockchain for
future listing and management.

Elan Bearnais - Professional Basketball Team

French Basketball Club Elan Bearnais issued a security token offering on the
Avalanche blockchain in conjunction with Securitize. This is a common combination

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as we have seen, since Securitize is the most prominent adopter of Avalanche thus
far. Through this offering, French investors will be able to purchase profit-sharing
tokens (Pau Basketball Team tokens) in lots of 500 tokens priced at 0.9 euros per
token. There are 10 million total tokens in the offering, with half originally being
reserved for French buyers for a one-month window that ended in May 2022.

BridgeTower Capital Compliant Staking Rewards

BridgeTower Capital issued a security token that represents staked AVAX rewards
compliantly with Securitize (SEC-registered broker-dealer). BridgeTower onboarded
Lido’s staking infrastructure while also bringing in the proper Know-Your-Business
(KYB) and Know-Your-Customer (KYC) compliance features to allow institutional
clients to participate in staking programs that are consistent with regulatory
guidelines. Rewards will be custodied by BridgeTower and Securitize’ partners and
will only be distributed to investors after the designated lock-up periods.

DEFYCA - Private Debt Products

DEFYCA is a Luxembourg-based private debt platform that launched on the
Avalanche testnet in March, with plans to launch on the Avalanche mainnet in July
2023. The platform will be issuing digital securities to professional and qualified
investors under the European Union’s comprehensive digital assets regulatory
framework, MiCA. Upon launch, DEFYCA will offer two inaugural funds to investors: a
€100 million ($105 million) direct lending fund targeting European small & medium
enterprises (SMEs) and a $200 million private infrastructure feeder fund, a model in
which Avalanche is quite familiar with.

Debt servicing will be managed by smart contracts, including liability matching,

settlement, payment flows, and price discovery, and investors are able to subscribe
via USDC, EUROC (euro stablecoin by Circle), or fiat currency, with Citi acting as the
cash custodian. Investors will likely have access to applicable secondary markets in
the future.

Vendors using Avalanche

Securitize, tZERO, Intain, INX, Tokeny

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Algorand ($ALGO)
Algorand Foundation, Borderless Capital

Exodus (EXOD)
Exodus, a crypto and digital assets wallet that was founded in 2015, issued its own
security token on the Algorand blockchain after completing a $75 million Regulation
A+ capital raise in 2021. The security tokens under the ticker $EXOD (rebranded from
the original $EXIT) represent Class A Common Shares in the Exodus company.
Exodus’ tokens are currently available for active trading on both Securitize Markets
and tZERO, two SEC and FINRA-registered Alternative Trading Systems (ATSs). Given
that Exodus raised the full $75 million limit under Reg A+ guidelines, it is arguably
seen as one of the most successful security token offerings to date, which also
provides beneficial branding to the Algorand ecosystem by proxy.

Republic Note
Prominent crowdfunding and capital raising platform Republic launched the
Republic Note, known as $R/Note, as a profit sharing Simple Agreement for Future
Equity (SAFE) offered to investors with the rights to distributions from successful
Republic portfolio company exits. Per the Reg D 505(c) PPM from July 2020, Republic
planned on issuing these notes over the course of a few years, with around half of the
supply being frontloaded in the initial offering. There is a minimum buy-in of $1,000
with a price of $0.12 per note, an initial circulating supply of up to 370 million notes, a
max supply of 800 million notes, and the ability to purchase fractional notes.

Dividends will be paid out in $2 million increments (pro rata to investors) based on
the portfolio company performances and activity. Investors essentially get upside in
the Republic offerings and listings, which Republic invests directly into, without
being on the cap tables directly or without even owning equity in Republic itself. This
is beneficial to Republic as the issuer, as it may raise capital for expansionary
activities or additional investments, and to the investors as they may partake in
Republic’s vetting and investment processes. The token is not yet trading since most
are locked up until mid-2023, but will likely trade on an Alternative Trading System
(ATS) in the future. The offering officially raised $16 million total in 2020 with $5
coming from retail investors and $11 million from accredited investors. In February
2023, Republic raised an additional $3 million from retail investors via Regulation
Crowdfund (Reg CF), which will be tokenized on Algorand with the issuance platform
Upside. Additional structure details from the whitepaper are shown below.

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Bitcoin and USDC Yield Funds

Securitize Capital issued two of its own products built on the Algorand blockchain in
mid-2021: a Bitcoin Yield Fund and a USD Coin Yield Fund. This announcement came
at a point in time when Algorand was gaining momentum in the security token
space off the back of the Exodus closing and listing.

Realio Network (RST)

Realio, a real estate private equity firm and technology service provider, took a
two-fold approach to tokenization. In March 2020, they announced the partnership
with Algorand for their own security token offering via Regulation S to non-US
investors. They would also have the capability to tokenize properties and real estate
assets in their own network on the Algorand blockchain - essentially offering
tokenization-as-a-service to third party deals - creating a business model out of
offering the solution to other feasible companies and projects. The Realio token
($RST) offers profit sharing and equity exposure to the Realio network as a whole,
and also acts as a utility token with staking and governance capabilities.

Realio also announced intentions to list and trade its RST token on tZERO, a
US-based Alternative Trading System (ATS), with long term goals of also listing its
subsidiary or portfolio projects like their $20 million Liquid Mining Fund ($LMX).

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Since RST was structured as a Reg S originally, it currently trades among

international investors and wallets only via Uniswap, as shown on STM.co.

Vendors using Algorand

Securitize, tZERO, Block Time Capital, Archax

Polygon Blockchain ($MATIC)

Polygon Technology

Obligate
Swiss commodities firm Muff Trading AG issued corporate bonds through Obligate, a
debt securities protocol built on Polygon. While the size of this issue was undisclosed,
platforms like Obligate have the potential to be very powerful and scale. Looking at
the greater, macro digital bond platform landscape (see State of Security Tokens
2023 - Institutional Edition), a number of investment banks have moved from
proof-of-concepts to pilot programs to full platform roll-outs, suggesting there is
strong viability and traction.

In true blockchain nature, Obligate enables corporations to issue bonds and debt to
a wide range of potential buyers without relying on banks or traditional lenders.
Based in Switzerland, Obligate has a Know-Your-Customer (KYC) firewall early in the
process to ensure proper regulatory compliance. After completion and subscription
via USDC stablecoin, investors receive ERC-20 tokens representing the bond
allocation and the right to payment at maturity or collateral in the case of a default.
Of course, if these bond tokens choose to list on marketplaces or on decentralized
exchanges (pending compliance oversight), investors have the option to trade or
swap at their discretion.

Hamilton Lane - Direct Equity Fund

Hamilton Lane, who announced three products with Securitize, one with
Figure/Provenance, and previously listed one with ADDX, selected the Polygon
blockchain for its second Securitize-based offering, the firm’s flagship Equity
Opportunities Fund V. The fund exists in traditional form, having raised $2.1 billion in
January 2023, so the Polygon-based offering is seen as a feeder fund offered on a
secondary basis to individual investors.

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Some of the key facets to recognize here is the investment minimum reduction of
99% from a $5 million subscription amount (traditional fund) to just $20,000
(tokenized feeder fund). The fund will still be limited to qualified purchasers, of which
Securitize quotes there are roughly 2 million in the United States, but with a greater
accessibility to the lower-level cohort of that, which could include smaller wealth
managers, family offices, and related investment groups.

Siemens - Digital Bond

The engineering and manufacturing giant Siemens is Germany’s third-largest
publicly traded company by market cap. It also issued a one-year digital bond worth
$64 million on the Polygon blockchain in February 2023 in accordance with
Germany’s Electronic Securities Act.

Since there was not an accepted digital euro at the time of issuance, Siemens
accepted traditional forms of fiat payment while still being able to sell the bonds
directly to investors without engaging a central securities depository. All in all, the
transaction was completed and settled within 2 days, and investors may hold the
bonds to the one-year maturity date, at which point they will be paid out (potentially
in digital year if accepted and feasible at that point in time) and retired.

Swarm
Also in Germany, Swarm is making use of Polygon to improve the accessibility of
United States-issued stocks and ETFs. Shares of Apple, Tesla, and BlackRock US
Treasury Bond ETFs are being wrapped and issued as compliant tokenized securities
to retail and institutional investors. Trading of these fully asset-backed tokens will be
24/7 real-time on Swarm’s permissioned DeFi platform, which is regulated by
Germany’s Federal Financial Supervisory Authority (BaFin).

Swarm developed this solution through recognizing that international investors

desire direct access to traditional US investment products (i.e. publicly-listed stocks,
bonds, ETFs) while also having the comfort of trading and operating in real-time so
as not to be limited to US trading hours. More importantly, compliance practices

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regarding tokenized stocks become ever more significant and crucial after 2022’s
crypto exchange fall-outs, thus positioning Swarm well. Users who are already in the
DeFi ecosystem with stablecoins and tokenized products will be able to swap directly
in or out of Swarm’s products without ever leaving the ecosystem; this is a powerful
step towards building a robust real-world asset distribution strategy.

Enegra Group
Enegra Group is a global commodity trading platform based in Malaysia that
tokenized 100% of its equity originally on the Ethereum blockchain across 85 million
$EGX tokens with Tokeny in 2019. In November 2021, Enegra migrated its tokens from
Ethereum to Polygon in favor of reduced fees and greater scalability potential within
the DeFi ecosystem. The collective value of the equity was $28 billion in the primary
market; a portion of the tokens began trading on the BigONE exchange, and the
token is the largest by market cap on the secondary markets to date, coming in at
$15 billion per Security Token Market as of April 2023.

Vendors using Polygon

Securitize, Tokeny, INX, DigiShares

Stellar ($XLM)
Stellar Development Foundation

Franklin Templeton’s OnChain US Government Money Fund (FOBXX)

The $1.5 trillion asset manager Franklin Templeton unveiled the first US-based
mutual fund to record and process share ownership and transactions on blockchain
in late 2021. Working with Stellar (XLM), Franklin Templeton created the OnChain US
Government Money Fund (FOBXX), which is available to US retail investors through
the firm’s digital asset application Benji Investments.

The digital product has garnered $225 million since its inception date 2 years ago
(April 6th, 2021), and its allocation makeup is nearly identical to the firm’s US
Government Money Fund (FMFXX) with $4.8 billion in assets. The key differences are
simply the fact that shares will be managed on a decentralized cloud-based ledger
rather than on a single Excel sheet, and that shares will open up to 24/7/365 trading
without the need for daily human settlement (i.e. during the redemption process).

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Instead, orders can settle either in real-time or at a predetermined time on a daily

basis that’s automated through ledger directions.

Lastly, the blockchain-based fund charges a Gross Expense Ratio of 8.76%, although
investors can take advantage of a large fee waiver that expires at the end of Q2 2023
and brings the Net Expense Ratio down to just 0.20% to incentivize capital versus the
flagship US Government Money Fund (FMFXX) 0.53% Net Expense Ratio.

In the discussion of stablecoins vs. deposit tokens vs. yield-generating substitutes,

FOBXX was one of the first of its kind: a professionally managed money market
product on the digital asset rails. It’s probable that investors begin to rotate from
stables into yield-generating products on-chain, as covered throughout this
publication, especially as US interest rates maintain these current levels.

WisdomTree Prime Products

WisdomTree Asset Management, who has pioneered the Exchange-Traded Fund
(ETF) industry for the past two decades and manages $70 billion in assets, entered
the blockchain-based fund space with a whopping 10-product announcement.
Working with Securrency for transfer agent services and Stellar for record keeping,
WisdomTree Prime will issue investment products ranging from money market
funds to treasury products to inflation-protected securities, even to an S&P 500
Twitter Sentiment Digital Fund.

The firm’s initial product is the WisdomTree Short-Term Treasury Digital Fund
(WTSYX), which tracks the Solactive US 1-3 Year Treasury Bond Index. It will be made
available to US retail investors through the WisdomTree Prime app and interface
expected to launch in 2023. The wave of products will all be registered 1940 Act
open-ended funds. In the WTSYX press release, WisdomTree referenced how ETFs
drew market share from mutual funds since investors simply needed an individual
brokerage account to buy ETFs. “Today, all an investor needs is a smart phone to

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access digital assets,” shows how powerful WisdomTree Prime could be in getting
these traditional funds in front of a wide audience.

Bitbond
Asset tokenization platform and service provider Bitbond issued its own security
token (BB1) in 2019, raising $2.3 million from investors. The security token offering
(STO) was Germany’s first and was BaFin compliant. Structured as a 10-year
subordinated unsecured debt offering, investors will expect the next coupon
payment on July 1, 2023. The token lives on the Stellar blockchain and distributions
are made to investors via XLM.

ABN AMRO - Digital Bond

In January 2023, ABN AMRO became the first Dutch bank to successfully issue a
digital bond for a client on a public blockchain - Stellar. Working with Bitbond and
Fireblocks, ABN AMRO raised 450,000 euros for APOC, an aviation client of the bank.
Subscribers to the bond were existing equity holders, which acted as a distribution
channel for the bond issue, and proved the concept that digital bonds could be
issued to existing investors; this is a playbook that other banks and corporations will
likely make use of.

Yield Crowd
Yield Crowd announced the tokenization of its $50 million real estate portfolio on
the Stellar blockchain in April 2022. Yield Crowd’s portfolio, managed and sponsored
by Olson Capital Investments, is
fractionalized and issued as a
fixed income security token
(YIELD) that distributes 9% APR
payments via USDC. Not only is
this one of the first real estate
token projects on the Stellar
blockchain — as the more
common suspects have been
Ethereum, Avalanche, Algorand,
and Tezos — but it’s also a
portfolio approach rather than an individual asset or property. The minimum
subscription amount is $25,000 and the offering is open to US accredited and
international investors via Regulation D and Regulation S exemptions, respectively.

Vendors using Stellar

Securrency, Block Time Financial, Bitbond

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Bitcoin Liquid Network

Liquid Network

Blockstream Mining Note ($BMN1)

Blockstream is a Bitcoin infrastructure firm founded in 2014 that owns and operates
one of the largest North American Bitcoin mining facilities. Blockstream has been
financing much of their operational expansion through security token offerings
known as the Blockstream Mining Note (BMN). BMN is structured as a
revenue-sharing note, of which its $BMN1 token has historically been shown to
outperform spot Bitcoin itself per a Security Token Market deep-dive report.

Blockstream raised $46 million across 8 different tranches of BMN notes, which are
fungible with each other, from qualified international investors through STOKR and
Bitfinex Securities. BMN1, a specific tranche within the collection, is listed and
currently trades on Bitfinex Securities as tracked on STM. The Blockstream Mining
Note is minted and issued on the Liquid Network, a Bitcoin Layer 2 solution that
supports asset tokenization and issuance.

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El Salvador Bitcoin Bonds (Volcano Bonds)

It was June 2021 when El Salvador announced Bitcoin would be considered legal
tender in its jurisdiction. Shortly thereafter, a tokenized Bitcoin bond offering was
announced. The ten-year 6.5 percent bond offering would raise funds to purchase $1
billion worth of Bitcoin in an effort to boost the country’s treasury of its new official
currency, which ultimately reduces the active circulating supply to external bitcoin
buyers.

Dubbed “Volcano Bonds,” the bonds are to be issued via a security token on the
Liquid Network with the proposal being voted in favor of 62 to 16, as publicized in
January 2023. Official uses of proceeds will be paying down sovereign debts and
creating Bitcoin infrastructure.

TreeBR - Carbon Credits (Security Token Advisors Client)

TreeBR is a company looking to improve the carbon emission and offset markets
through tokenization. Having worked with Security Token Advisors around
go-to-market and listing strategies, TreeBR ultimately issued $TREE tokens, each of
which represent one ton of carbon dioxide (CO2) offset, on the Liquid Network
through a Regulation D offering to US accredited investors with Seychelles-based
national exchange MERJ.

Vendors using Liquid Network

Bitfinex Securities, STOKR, MERJ, DIGTL

Binance Smart Chain ($BSC)

Binance Smart Chain

Landshare
Landshare is a real estate investment platform that enables international investors
to purchase a range of equity shares and debt in residential United States properties
with a minimum buy-in of $50. Offerings include buy-and-hold cash-generating
properties and flips, providing investors with additional precision for their allocation
strategies and decisions. Landshare has its own Know-Your-Customer (KYC) portal to
accommodate eligible international investors.

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TradeFlow
TradeFlow is a DeFi and digital asset management platform that offers trading and
execution services in a closed system governed by its TFLOW utility token on
Binance Smart Chain. More relevant to this publication, TradeFlow announced a
signed agreement with DigiShares to issue security tokens in its future Investment
Pools Platform. All security tokens issued within the TradeFlow ecosystem will be
minted on BSC and managed via DigiShares.

Vendors using Binance Smart Chain

DigiShares

Polymesh ($POLY)
Polymath Network

RedSwan Commercial Real Estate

RedSwan CRE is one of the original real estate security token issuers in the industry.
Having tokenized over $2.2 billion of commercial real estate assets in the primary
markets including Class A mid-rise and high-rise apartment complexes in California,
New York, and Texas, RedSwan’s marketplace is powered by the Polymesh
blockchain, a blockchain developed by Polymath specifically for compliant security
token issuances. It was noted in a case study that RedSwan minted 12 different
security tokens (12 properties, a unique security token for each) in under an hour
through the Polymath Token Studio as a sample of the protocol’s simplicity and
precision. RedSwan looks to reach all three levels of investors (retail, accredited, and
institutional) with its offerings and terms varying in makeup for each level.

Vendors using Polymesh

Polymath, Oasis Pro Markets, Entoro

Accumulate ($ACME)
Accumulate Network

Inveniam
Inveniam is a power user of the Accumulate blockchain, a Layer 2 solution designed
to make a more user-friendly identity and on-chain management experience. Rather

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than relying solely on randomized transaction identifications, Accumulate’s

transactions resemble that of a computer folder file or of a website URL, showing a
clearer pathway of accessibility and identity such as acc://bob.acme.

Inveniam is a data oracle developing “Data 3.0 for Web 3.0” who makes use of the
Accumulate blockchain to store and credential asset level data and marks across real
estate, private equity, private credit, and other sectors, industries, and use cases. The
firm has roughly $55 billion worth of onboarded assets to its administrative platform,
with marks and updates (including property appraisals, tax assessments, valuation
reports, deal items, and cap tables) being stored with Accumulate.

Lastly, Inveniam developed a solution for Chainlink to call-upon and extract private
asset data that sits on Accumulate and make use of it within other public
blockchains (whichever can interact with Chainlink). This is an effort to create a more
fluid data ecosystem while still enabling Accumulate to be the underpinning
foundation.

Vendors using Accumulate

Inveniam

Solana ($SOL)
Solana Foundation

Homebase DAO
Homebase is a real estate tokenization platform built on
Solana that sold out its first ever offering, a $235,000
single-family home in McAllen, TX, in March 2023. Homebase
aims to allow US accredited investors to purchase shares
through Regulation D offerings in single-family residential for
minimum subscriptions of $100 via USDC on Solana. With its
mission of “helping Americans pursue the American Dream,”
Homebase’s vision is to help American investors build more
tailor-made portfolios in the real estate space through the
platform’s fractional offerings.

Homebase makes use of Special Purpose Vehicles (SPVs) to

crowdfund each offering individually and pass income,
revenues, and distributions through to investors.

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Ravencoin ($RVN)
Ravencoin Foundation

Hydra Chain
Hydra Chain Technologies, an active Wisconsin-based real estate development firm,
partnered with DigiShares to issue real estate security tokens on the Ravencoin
blockchain. The first property’s funding in River Falls, WI totalled $625,000, with other
properties in the Hydra Chain network to be tokenized in the future.

RenewaBlox
Also working with DigiShares, RenewaBlox is a renewable Bitcoin mining operation
with issued shares on the Ravencoin blockchain and future plans to list on tZERO
ATS for secondary trading. To counteract machinery deprecation associated with
ASICS and Bitcoin mining equipment, RenewaBlox structured its tokenomics to
reinvest 25% of all mined Bitcoin back into the operations itself, which will lead to
greater long-term production and efficiencies due to the quality and upkeep.

Vendors using Ravencoin

DigiShares, tZERO

Private Blockchains and Real-World Assets

This report focused primarily on public blockchain real-world asset tokenization
because that’s where much of the general industry will play. When a real estate
private equity firm wants to raise capital in a digital way, they’ll likely issue a
Regulation D offering to US accredited investors through a registered Broker-Dealer
that issues ownership shares on a public blockchain.

However, that’s not the end-all-be-all story. Private blockchains serve a very strong
purpose on the institutional side of capital markets - one that doesn’t necessarily
need to access the general public or even need to be facilitated in a decentralized
manner. This side of industry is more focused on capturing efficiencies to improve
operations, reduce risks, and ultimately increase the bottom line: which is what
technological revolutions and progressions have almost always provided. To
denounce or omit the role of private blockchains in the markets would be silly and
irresponsible, especially since successful cases on the private side may give these
large institutions confidence to eventually work with public chains.

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On the institutional level, real-world assets have frequently been taking the form of
money market funds, deposit tokens and digital dollars, and other high-quality liquid
assets. These are the types of assets that in traditional form are typically used behind
the scenes in many banking operations and responsibilities, including collateral and
treasury management, risk mitigation, and mandated reserve compliance. Banks,
asset managers, and service providers in between have begun to see benefits from
running these activities on private blockchains.

Brief examples of this can be seen through:

● JP Morgan’s Onyx division, the mastermind behind the blockchain-based repo
network that has almost amassed $500 billion in transaction volume since late
2021
● Digital Asset’s Daml Finance interface, which underpins Goldman Sachs
Digital Asset Platform (GS DAP)
● R3’s Corda blockchain that serves to run high-volume collateral swaps for
HQLAx, an institutional-grade tokenization platform with partners and users
including Goldman Sachs, Santander, UBS, and BNP Paribas
● Broadridge reaching $1 trillion in monthly repo volume on a private distributed
ledger platform

Even on the investible product side, we are seeing private blockchains being used to
connect buyers and sellers through digital interfaces.
● Equity Shift, an SEC-registered Broker-Dealer (BD) and Alternative Trading
System (ATS) that uses its patented Blockchain Instrument for Transferable
Equity (BITE) to connect buyers and sellers of pre-IPO shares and private
equities
● BondbloX, a Monetary Authority of Singapore (MAS) Recognized Market
Operator (RMO) fixed income platform that targets the “High Earner Not Rich
Yet” (HENRY) cohort with fractional bond issuances on the Hyperledger
Sawtooth corporate blockchain
● Deutsche Bank launching the beta version of its Digital Assets Management
Access (DAMA) private fund platform with Memento Blockchain

Between operational use cases (such as the repos and collateral swaps) and product
issuances (like pre-IPO shares and private funds), there is certainly value baked into
the private blockchain ecosystem. Institutional proof-of-concepts can go either way
(public or private), but pilot programs and product lines are more likely to be done on
private chains this year simply for internal familiarization sake. Eventually, this will
spillover into the public chain side, just as JP Morgan moved from private Onyx
initiatives to swapping tokenized Singapore Dollars & Japanese Yen on Polygon.

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*Financial & Legal Disclosures*

Please be aware that anything stated, mentioned, referenced, linked, or
covered in this publication is neither financial nor legal advice. The Security
Token Market and Security Token Advisors teams may own or consider
owning one or more of the cryptocurrencies, security tokens, stocks, ETFs,
and/or other financial investments included in this report.

Please do your own research on any financial and legal decisions, and
consider consulting a financial advisor and/or attorney before making any
decisions or choices that may be reflected in this publication.

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