Will MERJ Overtake tZERO? — December 2020 Observations
Every month, the research team and I compile the security token trading and data analysis report. If you haven’t read the December 2020 report already, compare all asset prices, volumes, and more in detail here.
MERJ Has Eyes Set on tZERO as They Take 2nd Place
MERJ, the exchange based in Seychelles, a country off the East coast of Africa, has surpassed the longstanding marketplace OpenFinance Network (OFN) for 2nd place in market cap rankings!
The recent Curzio Equity Owners (CEO) listing, as well as the 17% climb, were the main culprits that catapulted MERJ past OFN into 2nd.
Huge congratulations to MERJ CEO, Jim Needham, and the team for this incredible growth! 👏
December 2020 Market Cap Rankings by Marketplace:
- tZERO: 76.48%
- MERJ: 10.13%
- OFN: 7.40%
It goes to show that being the first to do something does not guarantee you will remain in first
It appeared that OFN was in a position to lead the secondary market of security tokens for years to come. They were the first marketplace to facilitate secondary trading for security tokens, with the first trade occurring in November of 2018. This was an unprecedented feat for the security token industry, as well as the financial world as a whole. Although they pioneered the secondary markets, they have since fallen off as leaders of the industry. Just to be clear, I am not taking anything away from them and am certainly not saying OFN is out of the race yet, but their lead is slipping… fast.
Despite tZERO maintaining a dominant lead over MERJ and the other marketplaces, it’s still great to see the growth of the others.
The competition for the largest marketplace by market cap is just beginning to heat up. All it takes is one high valued asset to shake up the rankings. For all we know, there could be an exchange that hasn’t even been established yet that will become the leader.
Stay tuned!
SPiCE VC Feeling Real Spicy in December 🌶
After an underwhelming year of trading activity, SPiCE VC ended 2020 with a bang — appreciating by +180% in December.
Per the Q3 Performance Report, the NAV was $1.32. They have not released their Q4 report as of yet, but you can see the live-trading token on the secondary market was $1.40 — pretty aligned.
The 180% price swing took SPiCE from $.50 to $1.40 as a result of $10 of trading volume. It’s pretty crazy to see these large price movements on such little volume — until we have consistent trading activity with a larger investor base — we will continue to see these swings. For instance, just last week, Protos skyrocketed 400% from only $19 in trading volume.
Get Jonah Schulman’s stories in your inbox
Join Medium for free to get updates from this writer.
SPiCE VC 2020 Trading Highlights:
- High of Year: 12/31/2020 at $1.40
- Low of Year: 11/25/2020 at $.50
- Number of Trading Days: 24
As you can see, there was not a substantial amount of trading activity this year. I would argue this is attributed to the nature of the asset. VC fund investors traditionally hold their investments for the longer-term in order to realize returns; therefore, I believe it is safe to assume we may see less consistent trading activity for these types of assets.
SPiCE VC Overview and Background
SPiCE VC utilizes blockchain technologies to disrupt the venture capital industry with the first truly liquid and inclusive VC fund, issuing regulatory-compliant securities tokens. SPiCE tokens will entitle holders to 100% of net exit revenues. As a reminder, SPiCE VC was the first tokenized security to be listed on a US regulated trading platform (OpenFinance Network).
Unlike Blockchain Capital, SPiCE VC does not actively publish its positional holdings in each portfolio company, citing that may allow analysts to “reverse engineer” private company valuations, which is proprietary information that private companies are not required to disclose. This is less transparent for investors and makes the fund slightly more difficult to value compared to Blockchain Capital.👇👇
Why Isn’t BCAP’s NAV Aligned With The Token Price?
One of the key attributes of security token technology is the transparency of data and information — of course, as a private company, you are not required to publicly disclose anything, but BCAP fortunately does.
Per the Q4 Performance Report: The Q4 NAV was $6.33 — up 14.5%. The majority of the increase was tied to the holdings in crypto assets like Bitcoin, Ethereum, and Filecoin — moving the overall portfolio up 532.9% since inception.
What baffled me most was the discrepancy between the NAV price and the live-trading token price
BCAP closed the year at $3 flat in the secondary market versus the $6.33 reported NAV. Overall in 2020, The NAV was up 73.9%, but the security token was only up 51.5%.
In cases where investors feel the NAV does not properly represent a fund’s value, the token will trade above or below. I suppose, in this case, I can speculatively say that BCAP token holders believe that the NAV price is not a proper representation of the value of the fund.
However, there is more to that claim…
BCAP had a lackluster year of trading activity, which I believe can be tied to these external limitations:
- Small investor base
- Number of OFN users
- Awareness of BCAP
- VC fund investors traditionally hold investments longer to realize returns
As the security token industry grows, the trading activity will increase, and in theory, it will align secondary market prices with fund NAVs.
Time will tell.
Thank you for reading my December 2020 Market Report Review! Check out live prices of security tokens around the world at stomarket.com!
Want to get in touch with me? Questions? Comments? You can drop me a line at Jonah@stomarket.com, Twitter @jschul24, or LinkedIn @jonahschulman. Talk to you next month!
Check out more content on the Security Token Group Medium, here! 🌊
