With the technical foundation in place, an innovative model to create Digital Cash through a stablecoin solution and a groundbreaking STO, Danish blockchain company Aryze is raising 29 million USD.
This spring, Aryze announced that it was the first company in Danish history to complete an ICO out of Denmark, raising 1.6 million USD. This was the first step of the young blockchain company’s mission to create Digital Cash through a stablecoin solution, enabling instant cross border payments at near zero cost.
Since the successful ICO, Aryze has hired additional developers and focused many resources on reinforcing their business model. Now the company is prepared for the next stage, thus announcing a new and ambitious funding round with the target of raising 29 million USD.
“The money is partly to be spent on developing our products, but the largest expenditure is buying access to banking infrastructure through a model yet to be disclosed. We need to own a large part of the infrastructure in order to secure that we have the risk-offsets required to keep our Digital Cash stable and free of credit risk,” Aryze co-founder and CFO Morten Nielsen explains.
The aim is not to disrupt or overtake the banks, but to become a part of the established financial sector. And if the blockchain company’s cross-border and remittance payments service is to function with a stable and safe Digital Cash solution, access to banks, KYC, AML and financial tools is a step in the right direction.
“It’s this one time we need to raise funds, and we’re writing history, from a financial perspective, with our model. New models can be a bit complex, but there is a sound reason for us making this move.”
The foundation for a stable currency is vital
Today, Aryze has a two-pronged strategy. On one side of the business, the goal is to create enterprise solutions based on the distributed ledger technology, which on Aryze’s platform makes it so simple to make payments that one might not even realize it is crypto solution.
The second element is the company’s stablecoin: Digital Cash, which keeps the value of the underlying sovereign currency, but all the benefits of blockchain. And since Stablecoins are believed to be the holy grail of cryptocurrencies, many crypto startups around the world are working on developing them.
“It will be a big part of our business, and also one of the first products we develop. We work on gateway APIs, allowing our stablecoin to be used across blockchain solutions. Others are working on something similar, but our model is so thorough because we take into account the demands of the real world. We cannot expect anyone to place a lot of assets on our blockchain solution unless we have eliminated all the risks, ”says Morten Nielsen.
For the company’s stablecoin, this especially means devising mechanisms that keeps Digital Cash stable and without credit risk.
“A dollar is a dollar is a dollar. And here we go much further than everyone else, because we know it will be critical to adoption. When you trade oranges globally, it is an incredibly competitive market and your net profit may be down 5 percent. It’s simply unacceptable to have an additional risk component – fluctuations in the currency – just to have a more flexible payment solution, ”says Morten Nielsen.
Debuting a new investment model
In this new investment round, Aryze makes use of a so-called Security Token Offering (STO), as one of the first companies in the Nordics to do so. The model is similar to the previous ICO model, but in a more regulated manner. The new model imitates traditional shares, since it is tied to the value of the profits in Aryze – and, to a lesser extent, to speculation.
In Aryze’s case, the company issues a token – alongside their stablecoin, that is – which ensures a distribution of revenue to investors.
“We spend half of the profits on buying back tokens, which we then remove from the market, so the remaining tokens increase in value – similar to stock repurchases. In this sense, the STO is more like a stock exchange listing than crowdfunding,” says Morten Nielsen.
However, it also means that this new round of financing is subject to some rules that an ICO is not affected by. Throughout the STO, Aryze must be open and transparent in their whitepaper, and just as in a financial prospectus, take into account risks and the competitive landscape. Ultimately, they may only sell their token to approved professional investors.
An exchange listing with digital benefits
Despite the amount being raised, and the model resembling an actual stock exchange listing more than a traditional startup investment, the company never doubted which route to take.
“The STO is providing us with great opportunities for promoting ourselves in the space where our clients are to be found going forward. Meanwhile, we are able to have investors from all over the world, providing exposure that we would not be able to receive through other channels,” says Morten Nielsen
While for a young company like Aryze, there is an advantage in not having to go through the heavy and expensive administration of an actual stock exchange listing, Nielsen also believes it would be unethical not to use a crypto model as it would go against the company’s mission.
“It wouldn’t make sense to build a product for tokenizing assets and then do a traditional share issuance. If we are to be a trustworthy provider of stablecoins that are secure, in a universe where tokenized assets are being traded, we also need to do it ourselves,” Morten Nielsen states.
Ready for the big investment
Despite the ICO taking a while – with the sluggish crypto market in 2018 – Aryze is optimistic prior to the new large investment round.
“We’ve spent the last six months improving our business plan, and we’ve created a much more solid foundation for the business all while developing our products. In fact, we are ahead of schedule with our technical solution so our road to market is shorter than expected. We are 100% ready for the investment round.”
Aryze will launch their STO in the beginning of August.