Benefits and Challenges of Tokenization
TerraGreen enables renewable energy producers to raise capital by issuing their own energy tokens. These tokens represent energy they accomplish to produce and deliver. Few benefits and challenges of tokenization are listed below. TerraGreen allows energy tokenization in order to optimize the financing cycle and open access to capital.
Benefits of Tokenization.
Energy producers can do direct:
Energy tokenization simplifies, standardize, and opens globally currently available investment ecosystem. Hence, energy producers can do a direct trade with the green energy buyers (investors and consumers) and boost capital by selling energy upfront, at below market rates.
Access to capital:
• Energy tokenization assures liquidity and enhances access to capital.
contracting mechanism
• Tokenized energy entitles a contracting mechanism amongst an energy producer and energy buyer.
Green Energy:
- Energy tokenization with a platform built on an open decentralized database opens the green energy market across the globe to a wide range of investors. New energy projects do not depend on only local investors in an open platform.
Challenges of Tokenization
• Sometimes there are fluctuations in prices in the renewable energy sectors, they might change as per the demand for the resources in the market which creates disability in tokenization.
• Even though the tokens are stabilized there might be chances that it may get affected due to the fluctuations in the demand and supply of energy production.
• What should not be tokenized? It should be not tokenized when the use of prices hinders the protocol from meeting its objectives. There are some circumstances in the renewable energy sector where we don’t want prices to decide who gets what. Sometimes, it might not be the most decent way to allocate resources.
