Mesh offers a Partnership that forges traditional Capital Markets into the Stellar ecosystem.
At Mesh we are driven by the belief that the revolution, driven by Crypto, BlockChain, Instant Settlement, Smart Contracts, Programmable money, will envelop Capital Markets. This coming tsunami of Change will improve the market, include new nimble players (while excluding some), and modernize some approaches.
With many large players and multiple fragmented offerings all adding to the cost of participation, Financial and Capital Markets today are layered, complex to navigate, expensive to join and can only be accessed through an exclusive group of incumbent market gatekeepers.
The Mesh team has extensive expertise and in-depth knowledge of the platforms, infrastructure, instruments, and operations that underpin Financial and Capital markets, and have built a financial market infrastructure solution to solve for the major inefficiencies, inequalities, and waste in the current system.
The team has spent the past three years building this unique, end-to-end platform to compress and optimize current market infrastructure on top of the Stellar Blockchain, in order to bring a decentralized revolution to the Financial and Capital Markets.
Mesh’s contribution to the SDF’s Mission
The Capital Markets of today have enabled a generation of growth and progress for countries and corporations that have been lucky enough to be “plugged in”, resulting in unprecedented growth and prosperity. At Mesh, we believe the markets should be more inclusive, to do so, they must improve.
We must drive change that makes Financial and Capital Markets accessible to more countries, more corporations, and more people. We must standardize and modernize instruments to react to contractual obligations and realities in real time and obliterate some of the risks (costs) that are still prevalent in our current markets.
Mesh’s business innovation and competitive advantage lies in its multi sided platform approach, which has proven in concept and over a series of small trials, that this is possible.
We have pushed the envelope by providing comprehensive coverage of current day Capital Market Instruments and Activities (Pricing, Risk, Corporate Actions), through our Calypso-powered Mesh Oracle. We have built Mesh to combine the best of the current Market with the promise of the future.
Why we built Mesh on Stellar
In Stellar Mesh has found a partner of substance. A partner that provides us with important components and tools to achieve our Mission:
How Mesh uses Stellar
Mesh was built on the Stellar blockchain from day one and has integrated the following Stellar protocols and services into its platform to deliver value to its clients, which in turn will increase trading volume on the Stellar network:
· Mesh will bring flow and liquidity to the Stellar network through issuance, trade and transactions: Mesh is targeting a substantial and liquid global market, and so has the potential to have a sizable impact on the growth in asset value and trading volume on the Stellar network over the medium to long term.
· Digital securities: Mesh aims to be a major player within the Capital Markets ecosystem with the ability to issue cross-asset digital instruments onto the Stellar network. Mesh has already successfully issued 16 synthetic digital assets onto Stellar in its Open Beta phase and aims to have 80 digital instruments at an estimated market value of $800 Million in issue on the platform within the next two years.
· Liquidity is of the utmost importance within the Capital Markets and all Mesh’s issuers will have the ability to decide whether they would like their assets to be made a part of the Stellar DEX.
· Mesh has built an integration and front-end UI to enable trade through the Stellar AMM and DEX for all Mesh assets. This will bring further liquidity to the platform.
Mesh not only utilizes the network and contributes to the Stellar community; it also actively contributes to the Stellar Development Foundation’s Mission.
· Elegant UI: Mesh focuses on building products that provide its users with a great user experience but also with all the necessary tools that Institutional and Retail users need to interact with the market easily, safely, and in a trusted manner.
· Mesh Accounts: All retail and institutional clients are provided with Stellar accounts when registration is completed.
· Trading on Mesh: Mesh utilizes the power of Stellar operations to ensure it can guarantee delivery-versus-payment on all trades, which plays an important part in eliminating settlement risk on Mesh
· Stellar universe of assets trading on the DEX and AMM: Mesh is incorporating Stellar’s top 40 instruments into its platform, making them fully accessible to all its clients. To date, as part of its current Open Beta program, Mesh has launched more than 10 Stellar instruments, including USDC, XLM and Aqua.
· Compliance: Mesh uses all Stellar’s built-in compliance tools and features, such as claimable balances, clawbacks and limits, to ensure it provides clients with safe and transparent Capital Markets infrastructure through decentralized technology.
· Stablecoins: Mesh will issue or utilize already issued Stablecoins on the Stellar network in all jurisdictions in which it operates. Mesh has already issued mZAR, a Stablecoin based on the South African Rand, for its South African operation.
· Mesh is currently in conversation with a large African banking group around using Mesh to issue and manage a range of local currency Stablecoins in some of their operating countries on the African Continent.
· Stablecoin- and CBDC-as-a-Service: Mesh is building a SaaS UI for Institutional clients such as Central Banks, who want the ability to easily issue and manage their Stablecoin or CBDC through the platform. Mesh offers a Suite of Products to control monetary policy and provide clients with the wallets and infrastructure to utilize the issued currencies.
At this stage in our journey, it is very important for us to partner more deeply with Stellar to bridge the divide between today’s traditional Capital Markets and the new realities offered by DeFi.
We are confident that we will deliver to customers and partners, Issuers and Investors, Agents and Regulators, a robust future state of what Capital Markets will become.
Mesh’s Existing Product Suite
It is complicated and complex for non-technical users to interact with the blockchain directly, so Mesh has built an application layer with an optimal user experience for interacting with the Stellar blockchain’s protocol, asset and settlement layers, bringing the power of Stellar to both enterprises and individual users.
Instrument Builder is a token issuance platform which revolutionizes and reengineers the issuance of digital financial assets through a fast, easy and customizable process. Any asset can be tokenized and then transferred or traded across the network, quickly and cheaply.
Mesh enables the creation of digital representations of conventional financial instruments, as well as the creation of wholly new digital assets, both of which are brought to market in the form of tokens, through Mesh’s token creation, burning and minting services. Every asset can be customized rapidly to investor needs and supporting information can easily be linked to the token, instrument, and issuer.
The integration of Instrument Builder with Mesh Oracle, provides significant benefits to issuers by enabling easier, cheaper, and faster access to capital through programmable digital instruments.
New securities can be issued in minutes, with their corresponding rights and obligations encoded, automated, and controlled by smart contracts and the Mesh Oracle. This allows issuers and agents of new instruments to increase the velocity of issuance and reduce the time-to-market of funding events.
Making asset issuance simpler lowers the barriers to entry to the Capital Markets, opening the market up to a larger number of smaller issuers.
Mesh brings efficiency, control and liquidity to traditional assets, whilst also enabling market participants to explore instrument innovation, making the issuance of novel asset classes possible and bringing the innovative capabilities of Distributed Ledger Technology to Capital Markets instruments.
Mesh Oracle and Lifecycle Management
Traditional Asset Servicing and Lifecycle Management is a complex, manual and slow process. Many diverse intermediaries are involved and often the process differs from asset class to asset class and market to market. These processes are usually time consuming, costly, prone to error and are dependent on manual reconciliations.
The Mesh Oracle is a unique platform feature that gives all market participants full control, automation and transparency over a financial instrument’s lifecycle events, from dividend calculation to voting.
The Mesh Oracle utilizes the complex calculation capabilities of an enterprise-grade Trade and Treasury system paired with smart contracts, to control all instrument lifecycle and market events.
Mesh streamlines the lifecycle management process into one elegant and transparent flow for all market participants.
Mesh’s decentralized marketplace and trading platform allows issuers, investors, arrangers, and agents to meet, market and trade seamlessly, through the market mechanism of their choice.
○ Base their investment decisions on real market data.
○ Participate directly in the market and have full ownership and visibility of their assets.
○ Actively manage their relationships with market participants.
○ Have full visibility and transparency of market events, and gain more robust insights into asset details.
○ Lower transaction costs and the cost of capital.
○ Gain access to customized digital assets fit for their risk profile, desired returns, and duration.
Mesh Accounts and On-chain Asset Custody Service
Mesh has a unique hybrid account structure that caters both for Institutions with complex structures and for individual Retail users.
All Mesh users can directly access and trade from their accounts, meaning that Mesh does not facilitate trade through an enterprise account (like most online brokerages do), but rather allows all participants, both Institutional and Retail, to have full ownership of and access to their assets.
• All clients have direct access to cryptographically secured, multi-token, Stellar blockchain accounts, managed through the Mesh Vault.
• Mesh can be used for separation of responsibilities through organizational structures, for maintaining multiple accounts, as well as for signatory setup on an account level. This allows Institutions to access the full value of DeFi, while retaining the non-negotiable corporate governance structures which they require.
• All digital assets are held and safeguarded within these accounts on the blockchain ledger, ensuring all clients, down to Retail level, have direct and true ownership of their assets.
• The Stellar blockchain can be queried directly at any time to establish true ownership of an asset.
• Mesh users have the ability to transfer and utilize claimable balances from their accounts.
• Investor Support: Mesh’s multi-account structures and digital asset allocation allows Investors to use the Stellar network as an asset register.
• Compliance: Mesh was built for professional and institutional market participants and is fully KYC and GDPR compliant. Mesh utilizes the advanced protocols provided by the Stellar network to set limits on asset holdings and control signatories on all accounts.
• Mesh plans to expand on this feature by equipping users with a Bring Your Own Accounts (BYOA) feature, in other words, enabling users to set up as many accounts (wallets) under their company or user profile as they require.
Permission and access management
Mesh was built with Institutional clients in mind and therefore provides Institutional users with the ability to set up company structures, control access permissions and signing rights on accounts and to manage the separation of responsibilities easily, without burdening administrators with unnecessary oversight and management duties.
Mesh Investors have real-time access to performance data on all assets held in, and across their accounts.
Mesh’s focus on meeting the needs of Institutional users means that multiple accounts can be grouped and allocated to portfolios, funds and other more complex group structures.
Clearing and Settlement on a Delivery-versus-Payment (DVP) basis
All trades are cleared and settled on a delivery-versus-payment basis. Settlement happens within 5 seconds of trade confirmation through the Stellar blockchain, which means that there is no settlement risk involved in trading on Mesh, enabling the movement of assets through the financial markets.
All participants benefit from faster and more transparent settlement, meaning capital is less tied up and can be allocated more productively.
Stablecoin and CBDC-as-a-Service:
Mesh has built full Stablecoin and CBDC creation and management services. Mesh is building a unique interface for Central Banks, where they can use these services to actively issue, manage, and monitor their issued CBDC and Stablecoin.
• CDBC Monetary Policy Management: Central Banks can use Mesh to issue Stellar based CDBC-denominated instruments toimplement Monetary Policy measures. Typical and supported instruments include Debentures, Promissory Notes, Loans and even Bonds/Gilts.
• CDBC Capital Raising: Mesh gives Governments and State-Owned Entities the ability to immediately raise capital in the Money Markets (T-Bills) and Capital Markets (Bonds, Notes, etc.), thereby stimulating liquidity and adoption of their issued CDBC.
• Stablecoin Management: This same feature enables Mesh to provide all issuers of Stablecoin with an easy-to-use interface and set of management tools. As with CDBC, issuers of Stablecoin can create and denominate a range of Digital Assets on Mesh, driving liquidity and adoption.
• Capital Raising: Businesses of all sizes can use Mesh’s functionality, either directly through arrangers, or through underwriters such as Banks, to raise capital on Mesh, denominated in Stablecoin or CDBC.
• Mesh issues or utilizes Stablecoins in all geographies in which it operates, creating the potential for greater remittance volumes and the utilization of local on-ramps and off-ramps.
• Mesh has been in production running a Closed Beta trial in South Africa since August 2021 with 1 institutional issuer, 3 synthetic assets and 50 retail investors.
• Mesh launched an Open Beta trial on May 4, 2022 to a small group of “friends and family”.
• For the Open Beta we added a further 13 Synthetic assets as well as 10 Crypto assets to the Marketplace.
• The 2-week trial has proved to be very successful with another 50 active users registering and being verified.
• Mesh intends to ramp up its influencer marketing activities early in June, in collaboration with its first platform partner, a well-known economist and market maven.
• The brand will launch its first public marketing campaign to promote the platform to the retail investor market in South Africa in July.
In 6 months (starting on 01 June to 30 November), Mesh aims to have achieved:
• Growth of retail users from 100 to 5 000 verified users
• Increase from 16 to 30 assets in issue
• Obtain 1 additional strategic partner for an “Ecosystem bubble” (Partner Co-branded dedicated space) use case
How Mesh’s 6-Month roadmap builds towards its 3-Year strategic goals:
01 June - 30 November
· Maturation of Core build
· Operations and infrastructure for 5 000 user growth
· Ecosystem Bubble V1.0
· Retail investors: From 50 to 5000
· Assets issued: From 16 to 30
· Strategic partnerships: From 1 to 2
From 12 to 15
· Core build and growth
· Ecosystem Bubbles V2.0/V3.0
· Retail: 40 000
· Institutions: 9
· Assets issued: 40
· Strategic partnerships: 3
· Mesh.Oracle to protocol
· Retail: 100 000
· Institutions: 18
· Assets issued: 180
· Strategic partnerships: 6
· Digital asset shift to protocol and Mesh marketplace
· GEO expansion
· Retail: 300 000
· Institutions: 30
· Assets issued: 300
· Strategic partnerships: 12
To achieve these goals Mesh will deliver on the following operational plan within 4 strategic focus areas:
Mesh was created to advance access to capital raising and investment, with the ultimate goal of revolutionising financial markets.
The Problems with Financial and Capital Markets today:
• They are hard to ACCESS: the markets are not open to everyone, there are many barriers to entry created by institutional and regulatory gatekeepers. This limits participation in the market, which constrains true market potential.
• The technology being used is OLD and SLOW and the market structures have not changed substantially for many decades. Innovation in this sector remains incremental and siloed, with a predominant focus on cost or feature improvements in specific market verticals, rather than on wholesale disruption.
• The market is BLOATED: there are too many fingers in the pie, and everyone takes their cut - which makes it EXPENSIVE to participate.
• Protected by the status quo, markets are changing only in ways deemed safe and sustainable for those already benefitting from them.
It is clear from this positional inertia, that change is not going to come from within.
Mesh is unique in the market today as it delivers an optimised ecosystem for all market participants: from traditional market insiders like Investment Banks and Institutional Investors, to the more informal Retail / OTC market, which has historically been excluded from direct access to the primary sources of capital.
Mesh’s Financial Markets Platform decentralizes, compresses and optimizes the services provided by a number of traditional market gatekeepers, such as Trading Venues and Exchanges, Central Securities Depositories (CSDs), Clearing Houses, Settlement and Calculation Agents, and many other market infrastructure players.
In providing enabling market infrastructure, Mesh removes the market’s existing barriers to entry: the complex and time consuming processes and the exorbitant fees that the currently inaccessible institutional Financial and Capital Markets are known for.
Why has nobody solved this problem before?
Problem, what problem?
Not many people are aware of the extent of the problem or even that there’s a problem to solve in the first place. Those who do understand the sheer scale of current market inefficiencies are generally profiting off its traditional mechanisms and have no incentive to move beyond the status quo.
Asymmetry of information:
Financial and capital markets have historically been about who you know, and who you trust, resulting in information that is shared only with a select few participants. This information asymmetry has restricted participation in the market and driven systemic inefficiencies.
For those not yet actively participating, Financial and Capital Markets are perceived as intimidating and potentially risky environments to participate in. These “outsiders” remain hesitant to get involved and, in many cases, are actively put off, causing markets to remain closed and stagnant.
With limitations on access to the full spectrum of investable asset classes, investors remain restricted in their portfolio construction and potential return opportunities.
Target Market Value Drivers
No matter the existing role played (or current involvement levels), participants in Financial and Capital Markets are all looking for greater access – access to real-time accurate information for all buyers and sellers, to the entire investable asset class universe, or even just to the market itself.
Mesh also plans to offer a channel to market for developers and data providers that wish to provide services to these market participants.
Image 8: Target Market Value Drivers
Mesh has an insider’s knowledge of how markets and financial instruments function and an outsider’s determination to simplify, compress and create more equitable access to the whole market, for all.
Mesh is building a trusted, decentralised, multi-sided financial markets platform that is attractive enough for all market participants to trade through. Mesh will take a percentage of the money flow on all trades between these different sides of the market.
Mesh’s Business Model consists of three elements: Network Effects through its Channel business model, Mesh Fees, and a Network Activity Incentive Structure.
1. Network Effects
Mesh identifies major influencers and participants in the market and partners with them. Mesh Platform Partners help to drive initial platform seeding in their market. This ensures the platform attracts participants and assets that the market will find both credible and valuable.
2. Network Activity Incentive
Users are motivated to invite their extended network to register and actively use the platform via an embedded incentive engine. Users are rewarded a % of the Mesh fees generated from their 1st and 2nd level network’s platform activity, in perpetuity.
3. Mesh Fees
Mesh charges a fee of 0,125% to 0,4% on all asset flow occurring on platform, as well as fees for the utilisation of services or functionality from the Product suite. If a fee is charged on asset flow, it is charged as a percentage of nominal value and differs by currency and instrument type.
Market Sizing: How Big Can This Business Get
Mesh is a platform that was built to service global Financial and Capital Markets participants, and therefore has the potential to address the needs of a very large market.
Total Addressable Market (TAM):
The TAM for Mesh is conservatively estimated to be $10 trillion p/a, based only on the total global debt issuance in the Government and Corporate Market sectors in 2022.
Serviceable Addressable Market (SAM):
8% of TAM represents the territories where the 42Markets Group and its existing strategic partners have significant market presence. Resulting in a SAM for Mesh of $800 billion p/a by 2026.
Serviceable Obtainable Market (SOM):
4% market share is a conservative estimate based on market analysis of convertible flow in Mesh’s SAM. Mesh believes it can realistically capture 4% of the SAM it is targeting over the next three years, representing a projected asset value issued on Mesh of $32 billion p/a by 2026.
There are many (many) providers that act as gatekeepers to the financial and capital markets system and earn very attractive rents for the privilege.
According to a recent survey by the World Economic Forum and BCG, there are banks, asset managers, exchanges, infrastructure providers, financial technology companies and regulators investigating the emerging uses of DLT within specific asset classes or product lines (equities, debt, securitized products, derivatives and securities financing, and asset management).
Most service either a horizontal or vertical slice of the total market – very few of these players straddle several distinct sectors of the market or are developing a full end-to-end, financial market infrastructure platform like Mesh. Mesh is tracking competitors who have the closest value proposition across the following range of factors:
Mesh’s initial focus is on stimulating the growth of assets on its platform and the global reach of its user network, using the phased strategic growth framework outlined below.
Mesh’s strategy involves contracting with and incentivising a wide range of platform partners in each geography, to facilitate ecosystem growth at different phases of the firm’s lifecycle.
Mesh has contracted with seeding platform partners and key market influencers, who bring a range of Assets and Investors to the platform. Mesh’s first cohort of partners are market insiders, trusted and well known in the market, who whilst they service the big investor communities are also perceived to be innovative and forward thinking.
This first group of platform partners are looking to bring new flow and new potential profit avenues into their businesses. They want to reach into sectors of the market they are not currently servicing. Mesh provides a digital distribution channel for these partners and they will lend market credibility to Mesh in its early phases.
A live Closed Beta trial was conducted between August 2021 and May 2022, in collaboration with one of Mesh’s early platform partners. The trial was focused on a narrow market segment and asset type to test the market, de-risk and gain traction with early adopters in a limited use case.
As it enters each new geographic market, Mesh will establish a market foothold by negotiating platform partnerships with carefully identified local market players, leveraging these partners’ existing brand equity amongst their broader communities, and then scaling through the platform’s built-in network effect:
· These are firms who are friendly towards innovation and new technology and have deep local market knowledge to help improve the asset mix and adapt the platform offerings to the unique demands of their market.
· Mesh will use this phase to test the network effect embedded in its business model: specifically, to test the utility and value of the Mesh incentive structure for platform partners.
This phase focuses on validating Product-Market fit by measuring how well Mesh’s value proposition works for its different market segments. Mesh will gain a lot of local market knowledge from its partners – driving uptake of the instruments on platform and driving growth in the number of investors coming onboard.
In this phase the business will target the large fund managers in its existing partner base, encouraging them to onboard the thousands of funds they have on their books and invite a larger group of investors to register on the platform.
Primary activities in this phase will include:
· Establish and position the Mesh brand and its disruptive voice amongst a highly targeted but broader audience
· Demonstrate platform value and establish Product-Market fit. Stimulate demand by creating scarcity and building anticipation.
· Test how the network effect scales: monitor the slope of the organic growth curve based on the number of assets (Equities and DCM) and number of participants that come to platform.
This phase involves a heightened focus on customer Acquisition, Retention, and Growth in platform usage amongst Mesh’s current markets, with the objectives of capturing market share organically through network effects and delivering sustained value to all stakeholders.
Primary activities in this phase will include:
· Widen reach and capture market share in expanded geographies by fanning the network effect amongst Mesh’s existing user base, by identifying new platform partnership opportunities and by achieving broader awareness and salience through targeted marketing.
· Grow the value of registered users by stimulating repeat visits and regular platform usage, to grow Customer Lifetime Value.
· Expand into a multi-geography reach, targeting the UK, certain identified EU and African countries. Mesh plans to reach 6 countries in its first 2 years of operation.
In this phase Mesh will grow into new markets, focusing on three key objectives: Acquisition, Retention and Value Growth, to ensure Mesh scales exponentially to become a vast, trusted, and interconnected ecosystem.
Primary activities in this phase will include:
· Stimulate the Network Effect: scale referrals from the growing user base by stimulating network effects and building a dynamic user community.
· Amplify Brand and Grow Reach: Integrated marketing communications strategy, including PR, Search, paid digital and targeted social communications strategy to expand reach and impact.
· Upsell current and new functionality to existing and new platform partners, markets and sectors, stimulating exponential growth
· Enter new markets to expand user base and promote asset flow
* The amounts shown are budget requests and not (yet) granted to the projects. During the Community Vote phase, voters can indicate whether the project deserves the amount it's asking for (budget request). The total pool of XLM available for SCF#11 is 8M XLM. SDF will allocate the XLM equivalent of the specified USD budget of the submissions with the most votes in descending order of rank until the earlier of (i) the XLM Pool is fully distributed (ii) there is not sufficient XLM remaining in the XLM pool to fully fund the next ranked submission or (iii) there are no remaining eligible submissions. The USD valuation of the budget request in XLM will be calculated using the CF Stellar Lumens-Dollar Settlement Price on December 5, 2022 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR). Learn more in the SCF Handbook.
*The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on July 5th as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
**The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on December 16, 2021 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
*The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on September 27, 2021 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
* The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on the date of transfer as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)