Trillion dollar crypto opportunity 👀
Real World Asset Tokenisation - traditional finance is excited about the idea of putting ownership of assets like precious metals, art, homes on blockchain. Will that bring the golden age of crypto?
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DeFi can take the big leap by integrating with real-world assets.
How?
Tokenisation. It's about creating digital twins of these assets on the blockchain.
The promise?
A more stable DeFi environment, faster transactions, fewer intermediaries, and maybe, just maybe, getting traditional financial institutions to stop rolling their eyes at blockchain and take a serious look.
The Trillion Dollar Crypto Opportunity
Going by technology theorist Carlota Perez's research, "Real World Asset Tokenisation (RWAs)" may be the next phase of substantive crypto development.
According to Perez, technology is adopted in predictable waves — exuberant bubbles are followed by seemingly existential crashes prior to long "golden ages" of growth.
We saw such a pattern back in 2001 when the so-called dot-com bubble burst and The New York Times declared that “Dot-com Is Dot-Gone and the Dream With It”.
Read Justin Banon’s column - here.
So, what’s RWA Tokenisation?
Love Bitcoin? Great.
Now, imagine using similar technology to represent real-world assets like your car or a piece of art. That’s tokenisation for you.
It’s essentially taking something physical and giving it a digital identity.
In a nutshell, it’s turning tangible assets, from homes to paintings, into digital tokens. Imagine the title deed to your house but on the blockchain. This can then be traded or fractionally sold to multiple investors.
Here's why it’s turning heads
Cost-effective: Bid adieu to brokers, banks, and lawyers.
Accessibility: Unlike traditional markets, digital asset platforms operate 24/7
Democratisation: Anyone can get in, not just the ultra-rich.
Transparency: Clear, accountable processes, making transactions trustworthy.
Stability: Traditional assets like stocks or bonds aren't as volatile as many DeFi tokens.
Collateral Options: Businesses could, say, tokenise their invoices for short-term credit.
Fractional Ownership: Fancy owning a piece of art or real estate? Tokenisation could allow multiple people to own fractions of such assets, which can be traded across decentralised platforms.
Global Market Access: These assets are not confined by geographical boundaries, allowing for worldwide investment and trading.
The Blueprint
When we talk about turning an asset digital, it's a bit like making a video game character for it. Here's how it happens:
Choosing the right token model: There's a variety of digital molds your asset can fit into:
ERC-20: The general-purpose model.
ERC-721: For those unique, one-of-a-kind items.
ERC-1400: The advanced, feature-packed model.
Crafting the Asset's Digital DNA: It's about deciding which details are public and which stay behind the scenes. Different assets have different needs, so it's essential to tailor-make each one.
Check the Blueprint: Before launching, you need some techies to give the nod of approval, ensuring no hidden bugs or sneaky loopholes.
Once all's clear, your digital asset goes live for the world to see and trade.
The Investment: Turning assets digital does have its cost - ranging between $30,000 and $100,000. The process? A few months, say 3–6 on average.
After the transformation: Once tokenised, any benefits from the asset come to you as cryptocurrency or traditional currency. But remember, with great assets come great responsibilities, like managing accounts and handling taxes.
Challenges
Regulatory Hurdles: The rapidly evolving nature of digital assets means that regulatory frameworks are still in development, posing uncertainties for investors.
Security Issues: While blockchain is inherently secure, associated platforms or wallets can still be vulnerable to breaches.
Potential Market Fragmentation: The rise of multiple platforms can lead to varying standards and interoperability issues.
Dependency on Technology: Entire systems are reliant on technology, making them susceptible to systemic failures or outages.
Complexity for New Users: Traditional investors may find the shift to digital assets challenging due to unfamiliar terminologies and mechanisms.
As they quoted
“The next generation for markets, the next generation for securities, will be tokenisation of securities.”
The world’s leading blockchain academic, Prof. Jason Potts
“Now that we can tokenise all the world’s physical products and services into a common, interoperable format; list them within a single, public ledger; and enable market transactions with low cost of trust, which are governed by rules encoded within and enforced by the underlying substrate, what then? Then, computable capital enables ‘programmable commerce,’ but more than that – it enables what we might call a ‘turning-complete economy’.”
Some Tokenised Real-World Asset Projects
Niche: Luxury and collectible cars.
Tech: Ethereum-based tokens.
Impact: Opens up the collectible car market to average investors.
Niche: Securities.
Tech: Custom blockchain for security tokens.
Impact: Streamlines the creation, issuance, and management of security tokens.
Niche: Tokenising securities and assets.
Tech: DS Protocol for issuing and managing digital securities.
Impact: Provides full lifecycle management of blockchain-based securities
Niche: Artworks.
Features: Decentralised marketplace, advanced art verification, and digital certificates of authenticity.
Impact: Secures art trading and broadens art investment accessibility.
Niche: U.S. real estate properties.
Tech: Ethereum-based ERC-20 (ownership) and ERC-721 (leasing).
Impact: Democratises real estate investment.
Niche: Fine wine.
Tech: NFTs.
Impact: Makes fine wine investment more accessible and verifiable.
Niche: Luxury resort real estate.
Tech: SEC-compliant security tokens.
Impact: High-profile example of tokenised luxury real estate.
Niche: Fine art.
Tech: Ethereum-based tokens.
Impact: Democratises art investment and trading.
Niche: Security token services for enterprises.
Tech: Custom solutions for tokenising various assets.
Impact: Offers enterprises a secure and compliant way to tokenise assets
Niche: Real estate tokenisation infrastructure.
Location: Slovenia (EU).
Unique Selling Point: Proficient understanding of regulations.
L.A.B.S. (Liquid Assets Brokerage System)
Niche: Comprehensive real estate tokenisation.
Mission: Boost liquidity and encourage global real-estate portfolio building.
Unique Selling Point: All-encompassing real estate tokenisation.
. Future Prospects of Tokenised Assets:
Institutional Integration: with the growing interest from big players like BlackRock, Fidelity, and Invesco, there's potential for more institutional involvement in the tokenised asset sector.
Increasing Relevance of Tokenisation Platforms: With companies like Blocksquare offering services to other startups and L.A.B.S. providing comprehensive solutions, the infrastructure for tokenised assets is becoming more robust.
Broader Range of Tokenisable Assets: While currently centred on luxury items, real estate, and art, the scope for tokenisable assets could expand further into other sectors.
SWIFT x Chainlink
The Society for Worldwide Interbank Financial Telecommunications (SWIFT) has successfully conducted experiments with Chainlink, demonstrating that its infrastructure can facilitate the transfer of tokenised assets across multiple blockchain networks.
These experiments, the results of which were unveiled in a recent press release from Swift, unveil a promising future for tokenised assets. According to Swift, this breakthrough has the potential to eliminate significant obstacles that have hindered the growth of tokenised asset markets.
Matrixdock x Chainlink
Matrixdock and Chainlink are bringing some much-needed clarity to the table: Transparency.
Matrixdock, a digital assets platform, is utilising Chainlink's Proof of Reserve (PoR) to provide concrete proof of the authenticity of their tokenised real-world assets. This partnership acts as a beacon, offering a crystal-clear view into the often murky waters of digital assets.
With Chainlink PoR, Matrixdock's STBT token remains dynamically updated, drawing data directly from their trusted auditor's access to daily bank statements. The result? Anyone can verify the number of STBT tokens and the corresponding assets in the bank account at any given moment, erasing the opacity that often clouds the crypto sphere.
Entheos x Plural Energy
Entheos, a renewable energy storage trailblazer, has teamed up with Plural Energy's tokenisation platform, aiming to revolutionise the financing of smart battery assets. Spearheaded by Teej Ragsdale, previously of MakerDAO, Entheos's vision is to tackle the unpredictability of renewable energy by leveraging software-embedded smart batteries. These batteries are designed to optimally store and release energy, akin to an iPhone’s intelligent battery but on a grander scale.
Ragsdale highlights current inefficiencies in battery technology and envisions a battery system responsive to energy pricing – recharging at low rates and discharging during peak times. With Plural Energy's partnership, Entheos is democratising investment in this domain. Plural's platform will facilitate the sale of Entheos's compliant security tokens, granting investors insights into their asset performance.
TTD Week That Was 📆
The week of crypto finding a win in the court room and all about friends with benefits and the case of buyers and short sellers.
Saturday: Buy backs 😳 Short sellers 🤔 Bitcoin sellers 🧐
Friday: Still waiting ⏳
Thursday: Hey, Robinhood 🪶
Wednesday: Grayscale gets a 🙌🏻 BTC ⬆️ COIN 🚀
TTD Week in Funding 💰
Stroom. $3.5 million. A liquid staking project for Bitcoin's Lightning Network.
DeForm. $4.6 million. Token-gated forms for sign-ups, allowlists, voting, brand loyalty, and other web3 marketing activities.
FirstMate. $3.75 million. A startup aiming to equip NFT creators with digital storefronts
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