Hi Crypto Network,
Tokenizing real world assets presents immense opportunities for all types of individual investors. In a world where large investment is a preserve for the rich, asset tokenization opens up investments to everyone.
Tokenizing Digital Assets
Mostly, tokens are mainly cryptocurrencies such as Bitcoin, Ethereum, Ripple e.t.c. Meanwhile, tokenizing assets facilitates liquidity of real world assets by converting them into digital tokens.
Dividing an asset into accessible partitions and then converting those partitions into digital tokens ensures that holders can easily trade them. Afterwards, the digital tokens (or partitions) are stored on the blockchain as decentralized protocols. The end result is increased transparency, exchange potential, liquidity and data integrity.
As you see, storing these tokens on a decentralized blockchain eliminates all barriers for people to invest. For instance, an investor in Los Angeles can invest in tokenized real estate assets of a unit in Barcelona.
How do Tokenized Assets Work?
I will illustrate asset tokenization with the context of a real estate asset. Assuming Peter is a Merchant in the real estate sector. One of Peter’s properties has a valuation of $500,000. Through asset tokenization, we can easily represent Peter’s property in terms of partitions (or tokens). We can equate 1 token of Peter’s real estate property to let’s say = $50. Therefore, each token represents 0.01% shares of the entire asset.
Meanwhile, a quality audit is the first step to tokenizing an asset. Once the tokenization is over, the merchant deploys the tokens to investors through a public blockchain. The value of each token is not set to be constant. It changes with time as the value of the property appreciates. There are several reasons why asset tokenization is a game changer in the world of investment.
Why Asset tokenization
- No geographical barrier to investing — An investor in any part of the world can invest in an asset in a completely different continent, within seconds and without leaving their country.
- Eliminating middlemen -Middlemen brokers usually slow down the process of investing as well as making it expensive.
- Low investment risks — tokenization allows investors to diversify their investments. Hence lowering risks.
- Improved liquidity of high value assets — tokenization allows fractional ownership of massive assets as well as an easy way for cashing out.
Benefits of Tokenized Assets
Asset tokenization on the blockchain represents immense opportunity for capital raising. Here are a couple of benefits investors will reap.
- Divisibility — A large asset is partitioned into convenient divisions to make them easily accessible to small scale investors.
- Immutability — blockchains are immutable and for this reason, a good platform for staking investment contracts.
- Cost effectiveness — elimination of middlemen who sometimes charge high fees and are only limited to investors with accreditation.
- Transparency — ownership of tokens is transparent, straightforward and clear.
Notwithstanding, asset tokenization introduces a new market concept called globalization of capital.
Market globalization will raise the demand for assets, drive growth in the market and eliminate entry restrictions.
The Checklist for Tokenizing an Asset
When generating the smart contract for real world assets that you want to tokenize; a merchant has to determine what number of tokens they will be distributing to investors. An important factor to take into account is the balance of supply. For instance a large amount of token supply might discourage investors for fear of not peaking. On the other hand, low supply could affect the liquidity of the assets.
Other issues in the tokenization process include the following:
- Equity/Cash Flow — Determine whether revenue generation from your token will be on the basis of profit sharing or giving equity.
- Find legal services to guide with compliance
- Build your offering, PR, advertising and all the necessary documentation for a successful token launch.
Introducing Sologenic: A Platform for On Demand Tokenized Assets
Sologenic is the one stop solution for tokenizing the economy. The platform avails a plethora of stocks and Exchange Traded Funds (ETFs) across 25 worldwide stock exchanges. Sologenic is an effortless ecosystem for crypto investors to invest in different traditional financial instruments. The design is intuitive and seamless for easy adaptability with real time transactions, speed, secure and transparency.
Sologenic comprises five major components that work together to deploy on demand tokenization of assets. The assets are not necessarily blockchain based currencies such as Ethereum, but also traditional financial products. All of which are traded against the value of cryptocurrencies.
What are the Five Components of the Sologenic Ecosystem?
- CoinField Platform
- Open SDK Suit
- Brokerage Gateway
- XRP Ledger
- XRP Native DEX (Decentralized Exchange)
It is worth noting that the Sologenic Ecosystem is a product of CoinField. Coinfield is a leading cryptocurrencies exchange operating in 193 countries. The exchange boasts a wide portfolio of digital assets and fiat currency pairs.
Well, the role of Coinfield Platform as a component of Sologenic is to connect other components. In addition to undertaking Know Your Customer(KYC) verifications.
Once done with the above verification, users now create a wallet hosted on CoinField. They can then deposit fiat into the wallets and convert the deposits to Solo Coin.
SOLO coin is the Sologenics native coin and is the only coin that can be converted into tokenized blockchain assets.
To facilitate an easy process of trading different stocks across different stock exchanges, Sologenic partners with leading brokerage firms. The transactions happen immediately when they are executed. Mainly because the brokerage firms provide an instantaneous third party FIX API.
CoinField is encouraging developer communities to contribute to the development of the ecosystem. Hence, the exchange will release an open source software development kit for integrating seamless transfer of tokenized assets across different XRP addresses.
The XRP Ledger offers a scalable solution for Sologenic to deploy a real time platform for trading tokens. Note that the framework integrates Ripple’s native token XRP. Sologenic chose to implement Ripple’s XRP Ledger for a number of reasons.
Why We Choose XRP Ledger
- Fast and Reliable Algorithm — Ripple designed the XRP Ledger algorithm to process transactions within 4–5 seconds. The throughput is a remarkable 1,500 transactions per second.
- Censorship Resistant — No party censors/decides which transactions are to take place first or second. Hence no third party infiltration of transactions.
- Secure and Adaptable Cryptography — The XRP Ledger supports modern standards of cryptography such as the Industry standard digital signature system (ECDSA).
- Responsible Software Governance — Ripple continues to improve the underlying software for its products. Hence, acts as major steward for governing implementation of its software.
- Smart Contract Features — Features such as Checks, Escrow and Payment Channels offer edge support for financial applications.
Sologenic’s mission is to create an influential blockchain ecosystem based on both digital assets and traditional financial instruments. The platform believes this will help drive adoption of cryptocurrencies and tokenize the blockonomy.
Hopefully, you have enjoyed today’s article. Thanks for reading!
Have a fantastic day!
Live from the Platinum Crypto Trading Floor.