How Synthesis Bank Brings the Benefits of Investment Banking to Blockchain
Investment banking has generally garnered the reputation for being a sport of the rich and not the everyday man.
Finance Magnates Staff | Thought Leadership | Friday, 11/06/2021 | 17:00 GMT+2
What comes to mind when we think of investment banking? Usually, this conjures up thoughts of Wall Street brokers making billion-dollar deals and the general chaos that is the global financial market.
We also tend to think of it as an exclusive and expensive subset that most people in society do not have access to. Investment banking has generally garnered the reputation for being a sport of the rich and not the everyday man.
This means that large portions of the population are shut out from enjoying the benefits of investment banking or buying into profitable investment vehicles.
This, however, is changing with the advent of blockchain and with firms like Synthesis Bank that are bringing the benefits of investment banking to the masses.
No More Middlemen?
The problem has never been that the public has not been aware of the profitability of certain investment vehicles but rather, has not had access to them due to a number of barriers to entry which includes middlemen.
Take the buying of stocks, for example. This would often involve buying through a stockbroker who takes a commission on all trades and oftentimes, stockbrokers would require a minimum amount of investment before they would take on clients.
This means that everyday people who only wanted to invest very small amounts of money would be shut out of the market. Platforms like Synthesis Bank are combating this by leveraging smart contracts.
Smart contracts are created through blockchains and means that transactions can take place automatically without the need for a middleman.
This removal of the middleman also means that the process of investing is cheaper for consumers.
One of the reasons why consumers are drawn to traditional platforms is the sense of security that comes with middlemen. And with technology as relatively new as blockchain, there is concern about what could go wrong.
But Synthesis Bank gives customers assurance but having third parties validate all their processes. Specifically, Certik, a blockchain security firm, reviews both the bank’s blockchain and its smart contracts to make sure everything is up to par and customers are getting the best.
Institutional-Grade Investment Strategies
Besides direct access to the investment vehicles themselves, Synthesis Bank also offers certain trading strategies that in the past, were only available to big institutions.
This includes prop trading algorithms and a number of other strategies. For example, high-frequency trading options are available and usually, these would only be accessible to big investment firms which would pull together large orders for rapid execution.
Using smart contracts and blockchain-based platforms, Synthesis bank can offer this to its customers.
Then there is cross-exchange market making which is a combination of traditional marketing meeting an arbitrage in which a market made is done and one exchange while orders on another exchange are hedged.
Traditional market-making and arbitrage are also available to customers who wish to trade.
These days, it is not only singular big investment companies that can use these sorts of trading tactics and strategies but instead, users connected by the power of blockchain can do so as well.
At the center of Synthesis Bank is its native STB token which is an ERC020 token representing a virtual stake in the bank. Those who buy into the token will receive monthly dividends which are based on the performance of the bank’s investment for that period.
50% of the profits realized via investment activities by the bank will be given back to the token holder in the form of USDT.
Another 30% will be reinvested into Synthesis Bank which, in turn, expands the assets under management and increases the price of the token.
The remaining 20% will be used for ongoing operations of Synthesis Bank as well as various administrative requirements such as legal fees and accounting.
This is an interesting development in that usually, token holding brings in an income via an appreciation in the value of their token but in this case, there will be a monthly reward for investment, and token holders will be notified via Synthesis Bank’s portfolio tracker of incoming dividends.
A pre-sale for the token will be held from July 2021 to August 2021 followed by a public sale in October 2021. There is a total token supply of 200 million STVs, 150 million of which will be available in the public sale.
Tokens will be sold until all tokens are exhausted after which no more tokens will be issued into the ecosystem.
Banking on the Blockchain
Ultimately, what synthesis bank is doing is more than just offering people the chance to buy into high-quality investment vehicles and make a monthly income.
What Synthesis Bank is doing is opening a range of products and services that the public has been shut out of for so long and letting everyone have a piece of the pie.
By eliminating middlemen and leveraging smart contracts to allow its customers to get the best results, Synthesis Bank is leading the way in investment innovation.
Over time, we can expect to see more companies follow this lead and even more capabilities of blockchain investment explored.