Amun AG has listed an ETP on SIX stock exchange which generates income via transactions that are validated on the Tezos blockchain. An industry-first that indicates the increasing popularity of the Tezos blockchain.
Swiss-based Amun AG has listed an income-generating exchange-traded product (ETP) on Switzerland’s leading stock exchange SIX, with the ticker AXTZ. The ETP is based on the Tezos token and has been issued in partnership with the Tezos foundation. According to Amun, it is the first Tezos-based ETP that allows investors to earn a passive income.
AXTZ generates income via transactions that are validated on the Tezos blockchain. Tezos is a liquid Proof-of-Stake system that requires miners to stake a certain number of Tezos tokens to participate in the consensus over the blockchain. The process of staking Tezos tokens (XTZ) is called “baking.”
Hany Rashwan, co-founder and CEO of Amun, said, “Investors will be able to buy a stock for as low as $20 and we bake/ stake on their behalf and return it to them as a dividend without them required to do any staking on their own.”
Both retail and institutional investors can buy the product and participate in the rewards for contributing to the stability of the Tezos blockchain, “without the need to ever have to set up a crypto wallet or taking care of a private key,” said Rashwan.
The firm will charge an annual management fee of 2.5%. Coinbase Custody will provide custody services for the underlying Tezos tokens.
Tezos is becoming increasingly popular for the issuance of tokenized securities
One reason why Amun has chosen Tezos is the underlying asset’s stability. Research analyst Wilson Witham, says, “Tezos is quietly becoming a viable option for the issuance of tokenized securities. There’s growing confidence among security token issuers that Tezos can provide the tools and security necessary to facilitate similar efforts.”
Proof-of-Work consensus mechanisms have scalability and efficiency issues, which is why other blockchains are now transitioning to POS. Ethereum, for example, is transitioning to PoS in its next iteration, Ethereum 2.0, in Q1 2020. This transitioning process will take time and come with challenges. Tezos, on the other hand, is already using a POS-based protocol, meaning it is one step ahead in many aspects.
“Tezos’ on-chain governance also gives it an interesting dynamic. Security token issuers can participate first hand in the future direction of the protocol,” adds Witham.
Amun expands to Germany with listings on Boerse Stuttgart
ETPs track either one single cryptocurrency or a basket. They are listed on exchanges just like stocks and their prices can fluctuate on an intraday basis. On the contrary to mutual funds, they are not actively managed and usually come with lower fees.
SIX Swiss Exchange defines ETPs as “collateralized, noninterest-earning bearer debt securities which replicate an underlying (generally from the commodities sector), either on a regular or leveraged basis. Like ETFs, they trade in a multi market-making segment, but in legal terms, they are not funds.”
Amun has also launched seven of its ETPs on Germany’s Boerse Stuttgart stock exchange, which has just recently launched a crypto trading platform. These ETPs are available in Euros, compared to the previous ETPs, which were available in USD and Swiss Francs only.
Laurent Kssis, Managing Director of Amun AG, comments, “For the first time, European investors have access to an institutional-grade, low-cost, exchange-traded investment vehicle in Euros tracking a basket of cryptocurrencies and other single issuances.”
Rashwan adds, “We now have 25 total ETPs, making Amun far and away the largest issuer of crypto ETPs. At this point, 75% of all crypto ETPs have been issued by our firm.”