In a recent publication, the team behind Fluidity explained the thought behind their latest development: The Fluidity Stack. Through several core components, Fluidity aims to bring added liquidity to every asset class possible.
How the Fluidity Stack Brings Added Liquidity to Security Tokens
The Fluidity Stack is comprised of three core elements: compliance, token structure, and servicing and reporting. With these three priorities in mind, Fluidity aims to bring added liquidity to the digital asset marketplace.
The three main elements of ‘The Fluidity Stack’
Within Fluidity’s structure, all participants have access to the same information. The transparency seen here is designed to produce liquidity. With a properly constructed token structure, the end result aims at the emergence of liquid secondary markets.
Liquidity has become a major focus for Fluidity. In October 2018, Fluidity announced a partnership with Propellr, an end-to-end securities platform with a focus on security tokens. Fluidity and Propellr teamed-up to introduce The Two Token Waterfall framework, which aims to replicate the financial stack of traditional private securities transactions, with optimized liquidity.
Eventually, Fluidity wants to bring forth a tokenization structure that will improve the trading, settling, reconciling, servicing, and reporting for every asset class. They feel as though Distributed Ledger Technology (DLT) will reduce middlemen and costs that currently weigh down the traditional financial securities realm.
In fact, Fluidity is behind one of the major applications in the young security token industry.
The Real-World Implementation of Security Tokens Explained
Other areas of finance have also experienced tokenization: REITs, investment funds, and equity have all experienced the benefits of security tokens. Harbor’s CEO Josh Stein has even noted that professional sports teams have expressed interest in tokenizing ownership.
Developments such as The Fluidity Stack can only add to the increased implementation of tokenizing real-world assets.
What do you think of The Fluidity Stack? Will such developments provide the added liquidity that the security token industry needs? Let us know what you think in the comments section below.
Meet Tim. Tim is a co-founder of The Tokenist. Originally from Kalamazoo, Michigan, Tim is a mechanical engineer by training and has been investing his whole life. He started his career with GE in engineering and operations management where he held various leadership roles before leaving to pursue an MBA (he is a proud former co-chair of the Milton Friedman Group at Chicago Booth). After business school, Tim spent several years with Baird Capital where he made private equity investments in consumer and industrial companies. He left Baird to found Protective Technologies Capital in 2018, where he continues to make private equity investments in family businesses looking for help with succession planning. Tim lives in Chicago, where he enjoys watching Michigan football and basketball and traveling with his wife Kristen. Like Sia, he also likes telling jokes. However, his wife adamantly insists that he not share his “dad jokes” publicly so he reluctantly sticks to writing about finance and technology.