Today, we’ll have the privilege of interviewing Zilliqa Colin Miles, Chief Commercial Officer and Co-CEO
What is Hg Exchange and what does it aim to do? How did Zilliqa’s involvement come about?
Hg Exchange is Southeast Asia’s first member-driven private securities exchange that enables access to privately-held shares of high-growth companies and emerging startups. Backed by a community of over 500,000 investors and combining private equity principles, proven exchange solutions, and advanced blockchain technology, Hg Exchange ensures robust deal flow and closure rates, effectively enabling accredited and institutional investors to tap into unprecedented liquidity opportunities. Hg Exchange is regulated by the Monetary Authority of Singapore, having successfully completed the rigorous approval process of the MAS FinTech Regulatory Sandbox.
Zilliqa began working with the founding members of Hg Exchange as part of a joint venture that was originally announced in January 2019, providing the underlying blockchain infrastructure on which Hg Exchange is built. This enables standardization, tokenization (fractional ownership), and long-term cost-savings in the automation of the investment process.
Are the security tokens on Hg Exchange running on the Zilliqa blockchain?
Yes, the security tokens are running on the Zilliqa blockchain. The security tokens are minted, burnt, and transferred via a smart contract written in our secure-by-design smart contract language Scilla. These contracts have been custom designed and coded specially for Hg Exchange. These tokens are not denominated as ZRC-2 tokens and separate tokens are issued for each distinct ABS representing a whiskey barrel.
Hg Exchange recently announced that it would be listing Southeast Asia’s First Digital Whisky-Based Asset-Backed Security (“ABS”) Investment. Why whisky?
Whisky has fast grown in popularity as an investment due to its scarcity with rare whiskies, therefore, being highly sought after not only for consumption but also investment purposes. With every bottle of whisky consumed from a rare cask, each remaining bottle, therefore, becomes rarer and more valuable. Over time, the value of rare whisky has soared a whopping 564 percent in the last decade, outperforming every other luxury asset.
As part of this ABS offering, Hg Exchange enables accredited investors to own a portion of exclusive, rare casks being held and matured at some of the world’s leading Scottish distilleries, including a Port Ellen 1979, Mortlach 1993, Caol Ila 1990, Benrinnes 1992 and a Talisker 1989 — each of which is estimated to mature between 2022 and 2025.
Can you tell us more about the tokenization process? How will this take place and what are the investment terms?
The ABS will be listed and traded on Hg Exchange which is only accessible to accredited investors. Each cask has its own terms determined by the number of bottles expected to be derived from the cask and the bottling year when accredited investors can then opt to redeem the ABS for cash, via the sale of the bottle(s) through an authorized whisky merchant, or receive one bottle of whisky from the underlying cask tied to each ABS. Some casks, however, also have specific terms — the Port Ellen, for example, requires a minimum investment amount.
Whisky is an interesting choice as an emerging asset class. Are there any other luxury asset classes you expect to see on the blockchain anytime soon?
Tokenisation allows investors to access a broader range of investment opportunities due to its ability to enable fractional ownership — we saw this very early on with tokenized real estate investments several years ago. Since then, this has expanded to art which has, of course, catalyzed a new market altogether for digital artists with the rise of non-fungible tokens. As for other luxury asset classes, there have been promising developments with the tokenization of vintage car collectibles as well as wine, which has already seen use cases in the areas of supply chain tracking and provenance.
From art to real estate, asset tokenization has brought about unprecedented opportunities for fractional ownership across multiple industries. Are there any other trends you foresee in the tokenization space in 2021 and is Zilliqa looking to focus on them this year?
When it comes to tokenization, broadly, our ongoing relationship with Hg Exchange is a natural component of our commercial endeavors in this arena. Throughout 2021, we are looking to add value through securitization and tokenization for the real estate, marketing technology, and healthcare industries. However, while there have been promising alternative assets that stand to benefit from tokenization, we’ll take each opportunity as it comes accordingly.
As we reach a new stage of maturity as an organization, one of our core focus areas for 2021 is the broader commercialization of the Zilliqa blockchain. Amid ongoing economic and geopolitical volatility, there have been increased discussions surrounding fiat-backed stablecoins which can offer instant processing, security, and privacy for cross-border transactions at a markedly lower cost. Last year, our $XSGD regulated stablecoin — born out of a partnership with Southeast Asian fintech payments platform Xfers — was made accessible to the general public, and from there, we look forward to powering the Indonesian rupiah-pegged asset $XIDR in this next stage of our partnership.
Simultaneously, social commerce is another notable area that we are looking to focus on this year after having gained valuable insights from our “Tweet and Earn” consumer engagement tool SocialPay. By radically making cryptocurrencies more accessible to a broader base of users by simply engaging with a social platform, we believe that SocialPay is a game-changer when it comes to brand visibility and community building for any business in any industry.
Overall, there are five key areas of thrust that will drive Zilliqa’s velocity in 2021, namely; Retail, Staking, Finance, Solutions, and Investments. In combination, the overriding objective is to achieve what we call #Zilocity, the widespread real-world usage of $ZIL in multiple areas of adoption, and everyday awareness that will propel Zilliqa into the forefront of the global blockchain industry.
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