Tokenization: The Frontier of Innovation in Global Investments
The Untapped Potential of Tokenization
The tokenization market has been experiencing rapid growth, with significant projections from leading financial entities. Larry Fink, CEO of BlackRock, has described tokenization as “the next generation of securities.” A report from Citi Bank anticipates that the market will expand 80-fold in the private sectors, potentially reaching nearly $4 trillion by 2030. Furthermore, the Boston Consulting Group predicts that the market could reach $16 trillion, while Roland Berger forecasts a growth of at least $10 trillion in the same period.
The Rise of Tokenization in the Art Market A testament to this is the fact that tokenization is driving the art market. The “Tokenized Art Funds with Verifiable Data” report highlights that about $1.5 billion in art has gone through the blockchain, with 44 million transaction records for art and collectibles. This advancement represents a significant shift, unlocking accessibility and liquidity in a historically inaccessible and illiquid market.
With tokenization, art funds become programmable, interoperable financial assets enriched with data, all on a shared blockchain infrastructure.
Why is Tokenization Promising?
Tokenization offers extraordinary potential to reshape markets and democratize access to investments. Let’s explore some use cases and the market size that illustrate this potential:
Increased Liquidity: Tokenization allows assets like art and real estate to be easily traded on secondary markets, enhancing the liquidity of these traditionally illiquid assets.
Democratization of Access: Through tokenization, high-value assets can be fractionated, allowing investors with less capital to participate in previously inaccessible investments.
Transparency and Security: Blockchain provides an immutable and transparent record of token ownership and transactions, enhancing security and trust in the system.
Market Size: The tokenization market is estimated to reach trillions of dollars in the coming decade, highlighting its vast applicability and growing interest from institutional and retail investors.
Innovating in Tokenization of the Agricultural Sector
Currently, there is a demand for over $100 billion in credit in the Brazilian agribusiness with average returns of 9–12% per year. The domestic market cannot absorb this demand. Thus, the smartest path to consider is the internationalization of this agricultural credit.
How to scale and operationalize the process of internationalizing funds? The creation of exclusive and tokenized funds for the Brazilian agricultural sector allows global investors to participate efficiently and securely in this market. This movement represents a significant step in merging blockchain technology with the robustness of the agricultural sector, promoting a more inclusive and open financial ecosystem.
Essentially, an investor could purchase tokens representing rights to the agricultural fund, thereby holding global token rights without encountering the specifics of regulatory barriers. It is possible to create smart contracts to create funds and distribute them into DeFi protocols.
This is the work we are developing at Rivool Finance. Tokenizing the agricultural sector is highly promising. Innovating in this market means breaking through challenges such as inefficient processes and information asymmetry. We are creating exclusive tokenized funds for the Brazilian agricultural sector, improving efficiency, transparency, and democratizing access to this vital market.
The Rise of Tokenization and Its Impact on the Financial World
Tokenization is rapidly moving from prediction to reality, with an increasing number of major institutions launching their tokenization projects. Significant developments include the use of tokenization of funds by J.P. Morgan and Apollo on Avalanche, the launch of the tokenized Money Market Fund by Franklin Templeton, and the issuance of digital securities by ABN AMRO Bank, both utilizing Polygon’s public blockchain. Additionally, UBS has advanced in this domain by tokenizing a money market fund on Ethereum.
The New Era of Investments
Tokenization is redefining the rules of the game in the investment world. With its potential to increase liquidity, democratize access to high-value assets, and ensure transparency and security, it represents a revolution in the financial sector. Similarly, there is a significant opportunity to bring tokenization to agricultural credit. As we move forward, we will continue to explore and lead innovations that not only benefit our investors but also contribute to a more open and accessible financial ecosystem.
Authored by: Tiago Piassum Theodoro
CEO and Founder of Rivool Finance
