Tokenization: The driver of Crypto’s next Bull-run
“$ 867 Trillion 💸will be disrupted by Blockchain”…..Yes, it’s ‘T’ rillion.
And, Asset Tokenization stands at the heart of it.
Tokenization: Biggest DeFi Game-Changer OR just another fad 🎈?
First, what’s Asset tokenization, in layman’s terms ?
(e.g.) your house 🛖is an asset to you.
An NFT that has recorded you as the owner of the house gets your house tokenized.
Now, if you sell the house to, say, Alice, then “Alice” will get recorded as the new owner in that NFT contract.
Now, extend this analogy to any physical asset off-chain that you can think of:
🪙Gold
⛴️Ships, Vessels, Containers,
✈️Airplanes,
💎Precious Stones
🏎️Luxury Cars,
⏳Luxury Watches,
Rare Artworks,
And, existing Traditional Financial assets like Equity markets, Debt markets, etc.
Real-time implementation of Tokenization:
History was created on Nov 01, 2022.
when J.P Morgan executed a transaction on the Polygon network
and traded $100,000 💸 worth of tokenized Singapore Dollar deposits
for tokenized Japanese Yen.
But wait….., what’s the point of doing all this 🤔
It will have countless benefits for the general public.
Like what ?
✅Boosts efficiency and decreases overhead costs:
quick trade settlement on-chain especially for illiquid Real World Assets (RWA) like Real Estate
✅More transparency than ever
✅Privacy-preserving compliance:
using Zero Knowledge-based solutions for Identity verification without revealing any identifiable detail about the user
✅Inducing more liquidity in the market
What’s the catch ⛔️
There are still lots of challenges in the wider adoption of tokenization, like:
🔹A True picture of off-chain reserves for the asset, e.g. Gold:
You’d NEVER want to mint an UNcollateralized asset as its face value does not have any actual backing.
🔹Lack of clear regulations
🔹KYC/AML compliance, Identity thefts
But, there have been decent attempts by some projects to address these challenges.
So, Stay tuned…..
as I’ll cover more on how Asset tokenization is being achieved by several first-mover projects,
and the business models built on top of it.
Thus, in my personal opinion, Tokenization of illiquid RWA will make DeFi touch new heights 🪜 ,
And, will be one of the leading drivers in the next Bull Run ⤴️in Crypto.
What’s your take on the next Bull Run ?
Please share in the comments.
Thank you :)
