The Security Token Rollercoaster

The initial hype surrounding security tokens in 2020 felt like a wild ride at an amusement park—thrilling one moment and nauseating the next. After reaching nearly $22 million in trading volume in August, the security token market plummeted like my self-esteem after a buffet night, crashing down to $9.15 million in September and then to a mere $5.27 million by October.

Overstock’s Digital Dividend Dilemma

With 98% of all the trading happening on Overstock’s tZERO platform, it seemed the company was set for continued growth. They had plans to issue a “digital dividend,” which was supposed to be the cherry on top of this financial sundae. However, that plan appears to have turned into a soggy waffle, as it lost momentum quickly. OSTKO, the security token in question, represents half of the entire security token market cap and, just like my motivation on a Monday, it dropped 18% in value during October.

The Slow Dance of OSTKO and OSTK

Despite being on a downward slope, OSTKO’s journey is worth noting. Starting October at $70—nearly 20% less than its parent share, OSTK—this security token ended the month at $57. Ironically, that was a dollar more than Overstock shares, creating a delightful twist that would make M. Night Shyamalan proud.

tzROP: The Invisible Man of Security Tokens

But OSTKO wasn’t the only character in this drama. TZROP, tZERO’s other major token, saw an even steeper decline with a 60% drop in trading volume from September to just $2.15 million. Think of it as the sidekick who always seemed to lose sight of their heroic potential but still found a way to clutch onto a market cap of $180.7 million, making it the second-largest security token around—at least until it gets kicked off the charts by a newcomer.

What’s Next for Security Tokens?

While the current state of the security token market may look grim, let’s not lay them to rest just yet. New players are crowding into the arena, looking to spice things up. Ignuim and Fundwise recently partnered to launch a tokenized crowdfunding service aimed at small to medium enterprises—proof that innovation isn’t laying down and giving up. And Japanese financial titan SBI Holdings is gearing up for a security token offering focusing on its e-sports division. So maybe, just maybe, the security token fairytale isn’t over yet.