Why Backed?
Backed’s compliance-first approach and their track record as a trusted issuer make them a strong partner for this initiative. Various reasons include:
- Regulatory Strength: Backed operates under an approved EU prospectus, ensuring compliance with stringent legal and financial standards.
- Alignment with Gnosis: Gnosis VC has led Backed’s investment rounds, reflecting their confidence in their long-term potential and alignment with our goals.
- Market Leadership: Backed brings high-quality, fully-collateralized real-world assets on chain, which aligns with Gnosis Chain’s ambition to lead in tokenized equity markets.
Here are the links for more information about Backed’s Products and Legal Documentation.
Minting and Redemptions
Backed is fully compliant with EU regulations, and the tokens themselves are issued under a legal framework that permits secondary market trading. While these assets cannot be freely minted or redeemed without meeting regulatory requirements, they can be traded in permissionless liquidity pools once issued.
The focus is on leveraging liquidity pools to make bTokens tradable and accessible in a DeFi and international setting while adhering to legal requirements. The “pools” referred to in the proposal are intended to provide secondary market liquidity for bTokens, enabling holders to trade these tokenized securities on Gnosis Chain.
Role of Entities
At present, this initiative focuses on Backed as the issuer of the bTokens, leveraging their expertise in bridging real-world assets to Gnosis Chain. Backed is partnering with 3rd party exchanges and supporting liquidity pools for an easier way for users to exit positions on-chain. In addition, they just launched their bridge to allow the movement of bTokens between Gnosis Chain and other networks. Retail users can redeem directly with Backed subject to KYC and AML requirements, but only professional investors can issue bTokens. We welcome any suggestions for additional professional partners who could further enhance the initiative.
Pool Deployment
Pools are going to be deployed on Balancer. Further pool deployments will be announced in the future to ensure transparency and provide users with all the necessary information to engage effectively.
Benefit to Gnosis
This initiative is designed to benefit GnosisDAO and the broader ecosystem by:
- Enhancing Liquidity: Encouraging active trading of tokenized equities on Gnosis Chain, thereby increasing TVL and market activity.
- Building Market Leadership: Strengthening Gnosis Chain’s position as a hub for tokenized real-world assets.
- Providing User Value: Offering users exposure to tokenized equities within the DeFi ecosystem, diversifying their portfolios beyond traditional crypto assets.
The incentives provided by GnosisDAO are aimed at jumpstarting activity in these pools, which will create a foundation for long-term growth and ecosystem adoption.
KYC
If the pools were to be KYC-gated or restricted to professional investors, we agree it would severely limit the value of the initiative. However, that is not the case here. The proposal is focused on creating permissionless liquidity pools where bTokens can be freely traded once issued, enabling broader participation without direct KYC requirements for secondary market activity.
bMSTR and bCOIN
The inclusion of bMSTR and bCOIN caters to users seeking exposure to crypto-related equities within the DeFi ecosystem, offering a distinct risk/reward profile compared to holding the underlying assets.
- bMSTR serves as a proxy for BTC performance while providing exposure to MicroStrategy’s operational dynamics, appealing to traditional investors seeking a unique mix of corporate and crypto dynamics.
- bCOIN offers direct exposure to Coinbase, a leading centralized exchange integral to the crypto industry’s growth. As Coinbase has stated that Base will not launch a token, bCOIN becomes one of the few ways to gain direct equity exposure to its success.
These assets also enable users in regions without infrastructure for investing in such equities to access them in a compliant, tokenized format. Including bMSTR and bCOIN diversifies Gnosis Chain’s offerings, appealing to both traditional equity investors and crypto enthusiasts who may want to diversify their portfolios but remain within the crypto-aligned equity space.This will also strengthen Gnosis Chain’s position as a hub for tokenized equities.
The idea of adding other index products, such as World ETFs, has been explored in the past and large-cap stocks like Microsoft or Google are also worth looking into. However, in this initial phase, the pool of assets will remain intentionally limited to prioritise the growth of liquidity and ensure a strong foundation for the platform’s development. The bTokens bMSTR and bCOIN enhance the platform’s appeal and align with the ecosystem’s goal of bridging traditional finance and DeFi.
Oracles and Maintaining the Peg
Regarding oracles, this is an important technical component, and Backed is working to provide the most effective way to maintain this. All oracles are found here.
The peg is supported by Backed’s fully collateralized model, which ensures that each bToken is backed 1:1 by its real-world equivalent under an EU-regulated framework.