The convergence of traditional and blockchain-based financial markets is now a given. But it still takes people and businesses to make it happen. The proportion of FinTechs seeking regulatory licences is one measure of who is doing what. Now a regulated Swiss security token start-up, STOverse, has hit upon an idea that the Peter Thiel of Zero to One would recognise instantly as an unsuspected secret hidden in plain sight: DeFi can be a source of capital and liquidity for securities tokens. In terms of Total Value Locked (TVL), DeFi has grown ten-fold since the beginning of 2020, clearing US$100 billion in November 2021. Staking is now an US$18 billion market, providing investors in security tokens with an obvious source of yield. By building a security token issuance and trading market based on liquidity pools operated by smart contracts that balance supply and demand algorithmically, STOverse aims to build a bridge to DeFi market-making exchanges, starting with SushiSwap. Its target audience is SME issuers and investors and DeFi investors familiar with liquidity pools. If it works as intended, STOverse could help the security token markets move from latent to actual growth. Dominic Hobson, co-founder of Future of Finance, spoke to Francesco Biviano, founder of STOverse, and Florian Ducommon, a partner at Bonnard Lawson, a law firm specialising in Fintech and Blockchain in Switzerland.

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