RWA Tokenization Applications

Check out this article published by Securities.io ⏩ ⏩ ⏩ "DIGITAL SECURITIES: Latest Developments in Digital Securities: Tokenization of Real-World Assets Continues Gaining Momentum 1. **Rapid Growth in RWA Tokenization:** 📈 The #tokenization of real-world assets (RWAs) like art, real estate, and bonds has become a major trend in 2023, with a market cap reaching $342 billion in September. This growth is driven by the benefits of #blockchaintechnology, offering cheaper operation, increased transparency, and faster settlements. 🌍💼 2. **Institutional Investment and Regulatory Environment:** 🏦 The majority of RWA tokenization investors are institutional, holding around 29.1% of #tokens in multi-signature addresses. Regulatory environments vary, with countries like Switzerland, Singapore, and Hong Kong providing favorable conditions, while the US maintains strict securities laws. Global regulators are increasingly interested in exploring #tokenization for various financial products. 🌐 3. **Notable Developments and Savings:** 💡 Significant advancements include Hamilton Lane's $700 million in on-chain capital for private equity share classes and JPMorgan's Onyx #Digitalassets platform, which is expected to save $20 million on $1 trillion of tokenized repo volume. Goldman Sachs also achieved savings on its digital bond issuance through its Digital Asset Platform. 💰 4. **Emerging Technologies and Partnerships:** 🤝 Ant Group Digital Technologies launched ZAN for compliant #assettokenization management, and Kakao's blockchain Klaytn partnered with Tokeny to facilitate #RWA #tokenization. The Depository Trust & Clearing Corp. (DTCC) expanded its digital asset capabilities, and the Iota Foundation is catering to institutional demand for asset tokenization. 🚀🌍 5. **Future of RWA Tokenization and Challenges:** 🔮 The sector is expected to grow to $10 trillion by the end of the decade, integrating more deeply with traditional finance (TradFi) systems and creating dynamic, accessible investment products. Challenges remain in liquidity, interoperability, and the regulatory landscape, but the future of RWA tokenization remains promising with ongoing developments and increasing institutional interest. 🌟🚧 [https://lnkd.in/e3JwpwQ5 Gregory Stone , Ken Chapman, Nadine Chakar, Venugopal PSV, Hena Venugopal, Jennifer Peve, Eric T., Subhankar Sinha, AFME (Association for Financial Markets in Europe), Aaron Schneider, MBA Ateeqhur Rehman Khan

👀Exploring Tokeny's Real World Asset (RWA) Tokenization Ecosystem👀 Tokeny's RWA Tokenization Ecosystem is a fascinating convergence of traditional finance and blockchain technology. This innovative approach has enabled the digitization of tangible assets such as real estate, securities, and commodities, creating new opportunities for trading, management, and security. 🔑 Key Players in the Ecosystem: 1️⃣ Distributors: Vital for the issuance and trading of tokenized assets, connecting traditional finance with blockchain. 2️⃣ DeFi: Introducing efficiency and transparency in financial transactions through blockchain technology. 3️⃣ Custodians & Wallets: Ensuring the security and management of both digital and physical assets. 4️⃣ Tokenization Platforms: Providing the technology for issuing and managing digital tokens. 5️⃣ Data & Ecosystem: Offering crucial data aggregation and structuring within the industry. 6️⃣ Blockchain Networks & Protocols: Forming the backbone of this ecosystem with secure and transparent technology. Each segment plays a significant role in developing a robust foundation for the RWA tokenization market. Distributors like ADDX, Ownera, and Oasis Pro are pioneering the efficient distribution and trading of tokenized assets. DeFi platforms such as Maple and Centrifuge are reshaping peer-to-peer transactions. Custodians like Fireblocks and Metaco are guarding the assets' security. Tokenization platforms including T-REX and Tokeny are leading the way in asset digitization. This ecosystem is not just a theoretical construct; it's a growing, dynamic network that's paving the way for a more inclusive and fluid financial market. It exemplifies how blockchain can bring liquidity to traditionally non-liquid assets, breaking down barriers in asset trading and investment. For those interested in understanding or participating in this space, Tokeny's ecosystem map offers a comprehensive view of the players and technologies shaping the future of RWA tokenization. As we observe and engage with these developments, it becomes clear that RWA Tokenization is more than a trend; it's a fundamental shift in how we perceive and interact with financial assets. It's a testament to the innovative spirit at the intersection of finance and technology. For further insights and updates on this evolving landscape, you can check out Tokeny's RWA Ecosystem Map here 👉 https://lnkd.in/gxSbGGPV

Another significant thought piece on tokenization. This is from late last year from Coinbase Institutional https://lnkd.in/gcD8g6Qs - These are some highlights and comments: 💡 Coinbase believes [tokenization] could be a vital use case for traditional financial players - the ability to run operations 24/7, automate intermediary functions and maintain transparent audit records can make simple onchain payments and settlements very powerful 💡 Most institutions rely on private blockchains, for example, due to their concerns around smart contract exploits, oracle manipulation and network outages 💡 Highlights the opportunity and appetite for tokenized US Treasuries in light of Fed rates - as opposed to old RWA use cases like real estate, commodities, art and other collectibles 💡 Many of the traditional market players involved in tokenization today have teams dedicated to both (1) understanding existing regulations and (2) developing the technology to the point where it can meet those regulations 💡 Projections on the size of the tokenization opportunity vary but estimates range from Citigroup’s $5T to Boston Consulting Group’s $16T by 2030. 💡 Stablecoins have yet to receive legal clarity in the US with regards to their status as bearer assets. But even outside the US, most tokenization efforts face large legal and regulatory hurdles 💭 I agree with much of this in terms of interest, adoption and the whys. 💭 I think everyone's eyes roll when you see trillion dollar TAMs thrown around - but Citi's TAM is just based on private assets, which is infinitely doable. BCG's TAM, includes listed equities from 2026 (albeit not a huge percentage of TAM) - long term I see the argument, but it is definitely further away and a much heavier lift. 💭 Where I do differ is that I don't personally see the regulatory concerns as a big issue. Ondo, Franklin Templeton and Blackrock/BUIDL all manage that with a variety of US approaches and flexibility depending on the path taken. 💭 Even if the topco is BVI doesn't mean you can't sell into US private markets with a public solicitation under 506(c). It would be nice to have specific legislation and a bit more flex around the Investment Companies Act but it is not a must have. If I had to point at a difficult must-have it would be #custody. In the meantime other jurisdictions such as Hong Kong are racing to offer a more competitive environment, and while I think that is hugely innovative and important, not likely to change US dominance in private markets. 💭 Finally a lot is made of interoperability and secondary markets. Again I think interoperability is useful and interesting, but secondary markets are not a reason alone to tokenize and have many issues. See Liquidity Wednesdays for more on this. #digitalassets #tokenization #rwa #capitalmarkets #financialservices #institutions

Over the past year, we’ve seen overwhelming demand among institutions for onchain financial products and tokenized real-world assets (RWAs) due to the greater liquidity and accessibility they offer. Chainlink is at the center of this mega-trend, providing a growing collection of major financial institutions and market infrastructures access to the services they require to enrich RWAs with data, transfer RWAs cross-chain, and keep RWAs updated even as they move cross-chain. An example of this, ARTA TechFin—a leading Hong Kong-based financial institution—is developing cross-chain tokenized funds using multiple Chainlink services: CCIP for secure token transfers across public and private blockchains; Data Feeds for Net Asset Value (NAV) reporting; and Proof of Reserve for verifying the collateral backing on chain fund tokens. This collaboration is both a strong indicator of the growing institutional demand for onchain finance and Chainlink’s role as the foundation for the Internet of Contracts.

Real World Asset (RWA) tokenization continues to be talked about as a key use case for bringing financial services, and investors, onto the blockchain. But why and why now? 💸 Yield. The current rate environment has shifted investor focus back to US Treasuries and yield bearing assets which are now offered onchain (and totaling over $600M!). 👥 Access. Mobile apps like WisdomTree Prime enable retail investors to easily access tokenized products and makes the blockchain more accessible to the public. 💧 Liquidity. Faster settlement times, including atomic settlement, is possible with smart contracts that self-execute based on a set of written rules. With higher rates, every day (and hour!) is important for capital efficiency. 🔍 Transparency and standardization. Transaction reporting and auditing onchain provides clarity and trust harnessing the immutable nature of blockchains. Our partners at Coinbase (with data from RWA.xyz) put together this report detailing the current market cycle and trends: https://lnkd.in/eH6a_ix4

There continues to be exciting developments in the DeFi and crypto space, despite the "crypto is dead" headlines you might be used to seeing. The reality is, we're entering a new era of financial innovation. Just this week, Backed Finance leveraged Coinbase's Base blockchain to issue tokenized U.S. Treasuries. This integration represents a milestone in financial technology and signifies growing confidence in digital assets. Here's a distilled version of the news: 1️⃣ New Era of Investment: Coinbase's Base blockchain now has Real World Asset (RWA) tokens representing short-term U.S. Treasuries. This leap marks a significant bridge between traditional finance and the digital asset world, leading to enhanced market access and flexibility. 2️⃣ Simplified Processes: These digital U.S. treasuries streamline the otherwise complex and paperwork-heavy investment process. With the ease of digital transactions, individuals and institutions can directly acquire digital representations of U.S. government bonds, amplifying the ease of investment and portfolio diversification. 3️⃣ Security & Compliance First: Backed's RWA tokens aren't just innovative; they're compliant. Every token fully complies with regulations, offering a pathway into digital investments tied to real-world assets. This ensures user protection remains a top priority alongside technological advancement. https://lnkd.in/gW3nFbtD

The narrative around Real-World Assets (RWAs) in the Web3 space has been gaining momentum. Yet, as interest rates rise and DeFi yields fluctuate, it's crucial to rethink our approach to access and risk. 🔍 Access Isn't Everything: While access to diverse asset classes is appealing, it's essential to consider if universal access is truly beneficial. Complex financial products demand a level of understanding and risk assessment that not all investors possess. 💡 A New Perspective on RWAs: Rather than aiming for universal access, we must strike a balance between access and understanding. That's where tokenized FX forwards come in. 📈 Unlocking the Potential of Tokenized FX Forwards: By tokenizing foreign exchange forwards, we can provide investors access to high-yield, non-dollar currencies while mitigating risk. 🌍 Example: The Case of Brazil: Brazil offers a prime example, with its high-risk-free yields and limited accessibility to non-financial professionals. Tokenized FX forwards could bridge this gap, offering investors exposure to emerging market currencies and yields. ⚖️ Balancing Risk and Reward: Tokenized FX forwards offer a unique risk profile, sitting between stablecoins and cryptocurrencies. They provide a defensive option in bear markets while delivering higher yields than traditional assets. 🚀 Moving Forward: Tokenized FX forwards represent a tangible step forward in the tokenized RWA movement, offering clear benefits and advancing on-chain finance. Let's embrace the potential of tokenized FX forwards and continue pushing the boundaries of on-chain finance together. #tokenization #crypto #forex #defi #finance #web3

Federal Reserve Board published a thoughtful piece of research recently, titled 'Tokenized Assets on Public Blockchains: How Transparent is the Blockchain?'. It indicates an optimistic curiosity that public researchers are engaging with the tokenization industry. It also reminds us that our current implementation of smart contracts is barely scratching the surface of asset issuances & servicing in capital markets. The researchers looked into the smart contracts data and functionality of two tokenized bonds on public Ethereum, Santander in 2019 and European Investment Bank (EIB) in 2021. It focused on two questions below: 1. What kind of information (e.g. securities attributes, lifecycle data, trade data) are available? 2. What kind of bond lifecycle functions are automated via smart contracts? Collin Erickson, Mac Naggar and myself crafted the 'Spectrum of Tokenization' in a research piece published by RWA.xyz a few months ago. It turns out to be a useful framework to understand the Fed's article. First, they found out that the settlement of cash against the bonds were done off-chain via fiat. There was also no public visibility into any coupon payments throughout the bond lifecycle. In other words, 'value exchange' is done off-chain. Second, the functions inside smart contracts do not automate or self-initiate either (e.g. coupon calculation, coupon payments etc.). "Instead, individual functions were manually called by an entity outside the smart contracts." Falling under the Spectrum of Tokenization framework, these bonds would be classified under Model 2: Onchain Representation. I've also included my diagrams that indicate the DvP and the lifecycle processes for such type of tokenization. Lastly, it seems like the Fed's researchers also note that there's an interoperability problem between the legacy infrastructure of the issuers & investors and the new rails that bonds are issued on. - "If the on-chain smart contracts are appropriately integrated with the off-chain application, the issuer can strictly permission the bond token according to the aforementioned controls." - "The entire user interface and layers of software used to access the tokenized bond itself for the end user were not created using smart contracts, either." We have a first-mile origination and last-mile distribution problem in tokenization..... 👀 I strongly commend the researchers of FRB for publishing such an interesting and rather niche article; Cy Watsky, Matthew Liu, Nolan Ly, Kurtis Orr, Amber Seira, Zachary Vida, Lawrence Wu. FYI, I've put the links to all the articles mentioned in the comment below 👇

I am in Abu Dhabi for the 2nd time in 3 weeks. We are working with amazing partners here building the next generation of capital markets. The current banking system and the medium of exchange of value (or Store of Value) has developed over the last 650 years to the global benefit of the developed world. The move beyond barter and the creation of relationships of utility where surplus capital was deployed by banks spawned immense creative development in science, technology, industry, and sovereign infrastructure. Bank depositors and debtors pursue different objectives with agreed upon conditions with banks as the oracles in the middle deciding how to deploy capital. This cycle of utility allowed capital to fund innovation, expansion, and creativity, while allowing those with excess capital to fund this when they did not have direct access to these opportunities. The global reach of banks, exchanges, and capital markets expanded those markets, broadened the scope of investment, and spurred greater and greater creativity and economic expansion. The role of DDLT is changing all of this to broaden reach and is the next major step forward in this cycle. We saw this with the Internet. The expansion of the supply chain delivers global goods at the least cost of delivery at speed versus lowest cost of production. This is a masssive evolution, we moved from a centralized lowest price production to lowest cost of delivery using conditions that matter to the end buyer, ie, value, quality, organic, locally sourced, etc... With data, we needed centralized production of Store of Value, the banks, Investment Bankers, and Wall Street were our oracles..Now we moving to a decentralized solution, pulling decentralized data, and watching informed capital be deployed in a manner that matters the end investor, in a manner that matters to them, greatest alpha, widest distribution, democratization of finance, ESG, ethically/morally responsible investing, local re-investment, etc. Tokenization of RWA will change store of value, these RWA assets, with third party marks, scheduled liquidity, data driven correlation to other global RWA will become the basis for Store of Value. Inception We need two things as a precondition: 1) Better Data - sourced directly from the asset, and real time surveillance of the asset - Inveniam, and 2) Third party marks by unconflicted oracles, ie Cushman & Wakefield, Deloitte, Houlihan Lokey, ValuStrat These two items will drive better accounting treatment of RWA, moving them from level 3 to level 2. This will drive better collateralization - With real time pricing, dramatically broader comp sets, and surveillance of the asset, lending will change, where smart/reporting/auditable asset data with provenance will bring lower cost of capital vs dumb buildings with significant data latency... then watch secondary trading take off and finally new & novel forms of digital distribution...It is coming...

I keep hearing people talk about Real World Assets as a key element for the future of Web3...yes...but assets as we know them are just speculative assets. Here's what RWA's need to become to really change the world. Beyond dApps to self-referential tokens For true real-world utility, we must move beyond the app and put utility into the token. We need to be Token Centric - if we do all you need is a wallet; the tokens carry all other utility. The token becomes a dApp itself and carries that utility wherever it goes. This also future-proofs the experience, as token holders can access utility on whichever platform they choose—and app developers don’t need to redesign an application for every new operating system that emerges. Offchain utility Token utility has also been looked at through the lens of on-chain only. While blockchains are great for creating some utility, such as ownership and user rights, they are not great databases for all things. They are slow, public, and immutable. These are not great qualities for applications that require latency, the ability to easily upgrade and fix bugs, and for situations where the token issuers do not wish all of their customer’s data to be public. By enabling tokens to go beyond the limitations of the blockchain and embrace off-chain logic, we can start to explore real-world utility that makes sense to the world beyond just being onchain assets, ironically isolated from the “real world” that they represent. Better Information A simple real-world utility that any token can carry is information, by allowing assets to carry streams of information with them it would greatly simplify price discovery. If it's a RWA it should have a feed of data from the underlying asset that is attested to, and allows for the asset to have real time information and greater value. Evolved digital experiences Beyond token gating and proof of ownership, advanced utilities such as communication channels or tokens being applications themselves can unlock a new era of functionality. For example, there should be no need to download a car app; your token could allow you to access critical functions such as unlocking, finding, or starting your car. This removes all consumer friction from the car-buying experience. No app to download, no registration required, and no setting up of information; it is all conveyed with the token. Real-world utility, such as asset management, could allow you to manage your assets directly from the token. Price discovery on rental and sale rates of your car enables the owner to maximize their asset. With a simple click of the button on the token, the owner could rent out the vehicle at those rates, take out a loan, or sell the car. Real-world utility should, of course, also extend into the actual world. It should enable the owner to do more than just prove they own the asset, it should enable them to go further, do more, have a better experience.