BaFin-regulated DeFi platform Swarm launches liquid staking tokens

Rick Steves

Swarm’s regulatory compliant operation requires all users to undergo know your business (KYB), know-your-customer (KYC) and anti-money laundering (AML) checks to remove counterparty risk. 

Berlin-based multi-asset DeFi platform has launched institutional-grade liquid staking tokens that can integrate into DeFi automated market maker (AMM) pools, to generate additional yield in a protected environment.

Liquidity providers receive trading fees proportional to their share of the pool and additional loyalty rewards are available by holding Swarm’s native payment token, SMT.

Swarm’s liquid staking token structure allows investors to be exposed to the value of the underlying asset, earn yield from validator fees and trade in and out of their position at any time, instead of having assets idling, the firm explained.

Liquid staking tokens for Solana Network’s native token SOL are the first to be made available, with Eth 2.0, DOT and AVAX to follow.

MetaLink Capital, among other private investors and funds managing more than $100 million in AUM, have made a commitment to support the new tokens.

Swarm’s regulatory compliant operation requires all users to undergo know your business (KYB), know-your-customer (KYC) and anti-money laundering (AML) checks to remove counterparty risk.

Staking is the new mining

Phlipp Pieper, co-founder of Swarm, said: “Staking is the new mining as ESG is stimulating investor interest in proof-of-stake networks. We’re making it easier for people to have a tradable position on their staked assets, giving institutions an entry point in the price discovery process for proof-of-stake networks.”

Toby Lewis, Director at MetaLink, said: “We are interested in liquid staking because we can take a position across a variety of Layer 1 Blockchains with 24/7 risk management, giving us the ability to react instantly to market moves. Due to the self-custody nature of DeFi, we will have complete control over our positions and assets at all times. We are keen to use Swarm’s infrastructure to get access to more complex strategies on emerging different layer 1s like Solana.”

Timo Lehes, co-founder of Swarm, said: “Our infrastructure hacks trustlessness. By removing counterparty risk, institutional capital can finally move into these products to earn high yield and loyalty rewards in a low-yield paradigm.”

In the past 12 months, annualized staking rewards have grown to $15 billion, according to Staked’s State of Staking Q1 2022 report. Average staking yields have grown to 15.4% in Q1 2022, up 11% compared to Q4 2021.

Swarm DEX deployed on Polygon Network

Earlier this year, Swarm Markets deployed its decentralized exchange (DEX) on the Polygon Network, posing a lower-cost option for users of the BaFin-regulated DEX and its existing Ethereum-based products.

Swarm Markets is said to be the first licensed automated market maker (AMM) protocol available on the layer 2 solution and is joining an industry trend to offer alternatives to Ethereum’s rising network fee.

Other leading names within the blockchain space have made the same move, including DEX Uniswap, NFT platform OpenSea, and metaverse market leader Decentraland, who all added support for layer 2 solutions within the last year.

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