Investors looking to trade crypto synths and participate in derivatives markets other than Ethereum's Synthetix, Solana's Soleon, and PolkaDot's dTrade now have one more option: Sologenic. Sologenic is a derivatives protocol based on the Ripple network that tokenizes securities, stocks, ETFs, commodities, and other non-blockchain assets. By doing so, it succeeds in bridging the gap between traditional and crypto markets, making crypto more accessible. But what is Sologenic (SOLO), and how does it work?
Derivatives are the second most popular trading environment after spot markets. Given that cryptocurrencies and their underlying technology do a great job at facilitating decentralized derivatives markets, we will take a look at a relatively new project that has the goal of turning blockchain-based derivatives products more effective than ever. However, before showcasing Sologenic's capabilities, we must first explain the meaning of tokenization and derivatives.
In the blockchain industry, tokenization is referred to as the process of converting real-world assets or online objects into digital tokens. Although new trends like non-fungible tokens (NFTs) represent the latest trend in this area, the traditional use case for tokenization is the implementation of decentralized derivatives markets.
But what are derivatives? As the name implies, derivatives are assets that derive their value from another asset. Purchasing derivatives is suitable for investors who wish to buy contracts representing an asset in situations where buying 'the real thing' is ineffective. Think of it as purchasing a contract that tracks the value of gold rather than purchasing real gold bars. Actual gold bars must be transported, secured, stored somewhere, and so on. For an investor simply wishing to speculate, purchasing the asset instead of derivatives makes no sense.
There are plenty of use cases for derivatives and their subsequent markets. Investors participate in derivatives markets to hedge positions, speculate on the future price movement of an asset, or gain leverage. A majority of investors tend to encounter CFDs (Contracts for difference) as their first derivative.
In the cryptocurrency market, derivatives are often decentralized and can be found in the form of crypto synths. A popular example of a project holding such assets is Synthetix, a derivatives liquidity protocol based on Ethereum. By staking SNX tokens, the platform's users are capable of offering derivatives whose prices are tracked by decentralized oracles. In return for staking, they gain fees that are reaped by the market.
So far, Synthetix has been crypto's dominant player for decentralized and custom-made derivatives. No other network, including Solana and Polkadot, has offered a better solution, not until Sologenic at least.
Sologenic is a solution based on the XRP blockchain network created for retail and institutional investors, that tokenizes securities and assets from a wide range of TradFi and disruptive markets. The project's goal is to bridge the gap between the old world of traditional finance and cryptocurrencies by tokenizing the economy, allowing investors to use crypto assets in any way imaginable.
Sologenic is practically an entire ecosystem that offers a decentralized exchange, native blockchain wallet, and a tokenization brokerage solution. But before exploring the benefits of these products and services, we will first explain how Sologenic works and what its purpose is.
Overall, the point of Sologenic is to enable on-demand tokenization of more than 40,000 traditional assets like stocks, commodities, and ETFs from more than 30 global stock exchanges. The team believes that for such a service to meet the demands of the financial industry, it must rely on the use of an advanced and modern blockchain, thus using Ripple.
Each derivative on Sologenic is created in the form of a stablecoin. These stablecoins are backed on a 1:1 ratio basis, in contrast to the real-world asset in question. Stablecoins are used to represent ownership, and when a tokenized asset is created, it is denominated by the 's' symbol.
The key business ideas of Sologenic go as follows:
SOLO is Sologenic's native coin, deployed for liquidity-providing and market-making purposes. The coins are issued on the XRP ledger and allow liquidity to be moved near-instantly. Sologenic's entire ecosystem revolves around the use of SOLO, which is fundamental for removing the entry barriers preventing institutional and retail investors from trading non-blockchain assets. To summarize, the coin is primarily used for buying and selling stocks, ETFs, and commodities via the protocol's services - making it a utility token.
At the time of writing, SOLO is ranked 281 on CoinMarketCap's cryptocurrency leaderboard. The coin has a market cap worth $183 million and is currently priced at $0.91. SOLO's circulating supply stands at 200 million coins, representing 50% of the total maximum supply. SOLO is listed on the following exchanges: ProBit Global, Coinfield, BitForex, HotBit, CoinTiger, HitBTC, as well as Sologenic's DEX.
Sologenic has a rich ecosystem comprising three main products and services. The team already has plans for launching new products in the near future, but for the sake of the article, we will limit ourselves to reviewing the project's decentralized exchange, wallet, and tokenization brokerage solution.
Sologenic's tokenized assets are freely available on the protocol's native decentralized exchange. There, users can trade and hold SOLO, stocks, ETFs, and commodities. The DEX has an online platform but can also be accessed through the project's Android and iOS blockchain wallets.
The decentralized exchange is built on top of the XRP ledger and comes in six different languages. Although the platform utilizes an order-book-styled DEX, users still retain complete ownership over their assets with the help of self-custody - meaning that the exchange accesses funds via an existing wallet held and controlled entirely by the user.
Again, the decentralized exchange is capable of executing trades, completing settlements, and exchanging funds near instantly. But what's even more interesting for traders is the fact that fees cost as low as $0.000005. The DEX processes up to 1500 trades per second, mirroring almost the same experience found when trading on centralized exchanges.
Moreover, traders are not limited to token swaps. They have the opportunity to utilize advanced trading features such as market orders, limit orders, stop losses, and much more.
Crypto investors can access the Sologenic DEX by connecting their wallets. The DEX supports the following blockchain wallets so far:
The SOLO wallet is Sologenic's native blockchain wallet. It is used for storing cryptocurrencies and tokenized assets. Users can add, manage, and activate multiple wallets through the app and track live markets, transactions, and deposit or withdraw assets.
As mentioned previously, the SOLO Wallet hosts both the wallet and DEX. It is available on iOS and Android with no significant differences in either version.
SOLONEX is a tokenization brokerage solution designed exclusively for financial institutions and other institutional-level investors, including banks, investment firms, brokerage houses, and exchanges.
SOLONEX is capable of tokenizing multiple non-blockchain assets, fractional trading, 24/7 trading, launching funding rounds, managing liquidity, and managing custodial services. All in all, it is a trading suite designed to help investors access decentralized markets with the same technical abilities, effectiveness, and security provided in TradFi.
Just like all their other products and services, SOLONEX is also built on the XRP Ledger. Keep in mind that retail investors cannot access the product in question and that all interested participants must first schedule a demo with the team.
As we can see, Sologenic is a derivatives protocol that has great potential. By leveraging Ripple's scalability, consensus mechanism, business connections, and other worthwhile features, the project has succeeded in creating a complete ecosystem with much to offer to both retail and institutional investors.
But as with any other project, Sologenic's current problem is the lack of adoption. Any cryptocurrency focused on providing utility must have a baseline population to make its platform worth considering, especially when liquidity and volume are at play. So for Sologenic to combat dominant derivatives platforms like Synthetix, it has to offer highly competitive features great enough to attract crypto investors from neighboring networks.
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