How To Tokenize Assets On The Blockchain?
In this era, where things are becoming more decentralized, investors are looking for opportunities to invest in real-world assets without any barriers. Tokenization has many advantages, but liquidity is the foremost. For example, a property is considered more liquid if it can trade less with fewer obstacles. Investors from anywhere holding specific claims can invest in the assets.
What is Exactly Assets tokenization?
There are certain things to look at before we tokenize the asset. First, we should look if the actual asset represents something valuable. It could be digital or physical assets. A real estate property is a great option to select for tokenization.
Some of the assets that cannot be tokenized as fungible should be non-divisible. For example, a painting or any expensive fine art. Such assets should be introduced as NFTs.
While tokenization is a property, one should also consider, What part to tokenize? Every property has some value, but that value might not be distributed homogenously across the piece.
Advantages of Asset Tokenization
- High-value investments are inaccessible to a large percentage of the global population.
- New capital formation techniques using blockchain technology have opened up international capital markets and capital mobility. Because of blockchain technology, people worldwide can access capital anytime, anywhere. However, tokenized assets cannot be fraudulently claimed.
- Disputes can be quickly resolved by looking at the immutable records of ownership. Because anyone can buy and sell the tokens, ownership is transferred.
- Transparent and immutable ownership records ensure that no one can fraudulently claim ownership of assets.
Token economy points out the system that dictates incentive behavior. Tokenomics is a broad perspective for any organization in the blockchain space. Still, generally, it defines the overall flow of tokens among the participants in the primary and secondary markets. It is crucial because investors look for value before investing in any asset. And the value for any crypto token is derived from its supply-demand model.
Any experienced developer will be able to create a sustainable model. The three fundamental decisions are creation, management, and removal of the tokens.
Security asset tokens are something that needs to be compliant. One should look at certain things before opting for a platform. The investor dashboard is a good added utility. It should also include investor verification, KYC, AML, and investor voting rights.
After all this, finally, the token should be listed in Security Token Exchanges, where investors will be able to trade the same in secondary markets.
Smart Contract building is the most crucial part of any platform. A well-engineered set of smart contracts will be able to deal with the prospects and is more reliable. Smart contracts remove the need for every intermediary, whether a loan officer, a lengthy application, or any fee. All the functions inside the smart contracts will be able to handle the ownership or interest rates, etc., with their algorithm.
Many well-audited smart contracts are available on the internet as free software and in libraries. One should always go for a well-audited code because it eliminates all the possibilities of breaching and are also future-proof.
Crypto Wallet Integration
Wallets are the storage for your private key. They are used to sign transactions on the go. The main problem with the non-custodial wallets is controlling the ERC-20 tokens. For holding an asset token on-chain, we need some verification that a user should have (publicly and privately) to own the tokens.
We can implement certain checks before calling the transfer function to solve this problem. That will only be triggered if the user is verified.
The security tokens will have some initial offerings. It will not be in direct tokens, but some exchange will be built to make this trade. Exchanges should be compatible with the wallets.
Token Launch For Trading
While working on the software part of the security token, a venture is responsible for the marketing strategies and the Security Token Offerings (STO). To grab the investor’s interest, they have to believe in the product that we are making. Tokens launched in ICOs (Initial Coin Offerings) are backed by colossal investor support and a good team. But here, we are offering the assets themselves as tokens. So our asset, as well as our token, should hold the utility as well as future trade prospects.
Reveation Labs have been researching blockchains since their commercialization and understand how to tokenize real assets without restrictions. Contact us our blockchain experts to learn more about tokenizing your real asset.
We believe that the tokenization of assets will bring new players, new services, and new roles to the market. Tokenization will provide traditional players with unique opportunities and new demands from the token economy.