Top to bottom — how liminal.market works
I have explained how much simpler blockchain makes things, so how do we put those stocks on a chain?
There are two approaches to implementing stock trading using blockchain technology
- Bottom-up
- Top to bottom
Let’s explain this a bit
Bottom-up
Going with a bottom-up approach means you start at the bottom of the chain, creating what is needed to issue stocks on a chain. This involves all kinds of regulatory issues. You need to build rather complicated mechanisms to make sure all the rules are followed. There is even a standard for this EIP-1450.
You now have a ready-made system that can issue securities on a chain. You will need to issue it to some blockchain stock exchange that has rules meant to protect the shareholder.
Then the next step is to convince somebody to use it.
This way, it will take years before you see Apple or Microsoft issue shares on a chain, and those are technology companies and should understand the benefit, imagine a company that doesn’t care about that stuff.
There are companies doing this, Polymesh and Tokeny are an example. Do you know of any other? Join our Discord and tell me ingig#9494
Top to bottom
This is what Liminal.market does.
We are still using a broker(it’s not shown in the picture to simplify), that broker communicates with the stock exchange(or rather a market maker) to buy and sell shares. We are far from the issuer.
The broker is a licensed broker registered with FINRA/SIPC.
When you register with Liminal.market, your information is sent to the broker. We only store your email in an encrypted form, nothing else.
Your wallet is then connected to the account at the broker.
Now that we have the connection between your wallet and broker, you can start executing trades using your wallet.
Liminal.market has just given you access to 5600+ stocks and ETFs running on the US market.
This is the quickest way to expose the markets to the blockchain world. It’s a bridge between these 2 worlds.
There is no legal issue with doing this because your token is simply a user interface element of your status at the broker, no different than that html page or an app that displays it.
There are limitations, you cannot put your shares on a DEX, and we don’t allow you to transfer shares from one wallet to another.
But, you immediately start to see the benefit of transparent record-keeping that blockchain brings
This is only the first step, limitations will be lifted with time, giving you the power to put your shares as collateral on other DeFi services.
When those who are doing bottom-up have finished on their end, we will switch over to them to simplify our system infrastructure.
Please check out our documentation and our Discord server if you find this interesting.
Our Twitter is @liminal_market
