5 Things to Do With Our “Real-World Asset” On The Blockchain
“The blockchain” can feel like a parallel universe, disconnected from “the real world” — where doggos are solid money and JPEGs are high culture.
But increasingly, the blockchain is being knit together with the real world by the tokenization of Real-World Assets (RWAs). This is where the property rights to something from the real world are attached to a digital asset such that control of the digital asset constitutes ownership of something in the real world. Many kinds of RWAs are being tokenized including real estate, cars, and stocks.
But why would someone want to tokenize a real-world asset? I’ll explain through the microcosm of what we do at Jasmine.
At Jasmine, we’re tokenizing climate assets, starting with the “Energy Attribute Certificate” (EAC), to accelerate the green transition. By understanding the uses of a tokenized EAC we hope to make clear why tokenizing RWAs can make them more useful and improve the markets in which they flow.
What is An Energy Attribute Certificate?
When you pull energy off of the power grid, there’s no way to pull only renewable energy. You have to accept whatever mix of fuels your grid is currently offering. Our nation’s government, our local grid operators, and the leaders we’ve chosen to represent our communities have worked together to invent Energy Attribute Certificates (EACs) to track who’s consuming renewable energy. The revenue from EACs goes to fund renewable energy generators, and the buyers get to take credit for the environmental and social benefits of renewable energy.
Until now, EACs have only been accessible to mega-corporations or grid operators. Starting in 2023, we’re tokenizing EACs and bringing them on-chain so that anyone can access the market. Once you’ve got an on-chain EAC, here are 5 things you can do with them.
1) Yield Farm It
Jasmine’s JLTs are ERC-20-compliant tokens that will be listed in trading pairs on a decentralized exchange (DEX) during Phase 3 of our launch. After that, they can be used for yield farming.
DEXs allow users to buy or sell cryptocurrencies directly at a protocol-determined price without needing a buyer and a seller simultaneously. Yield farmers provide the liquidity to facilitate that exchange and in return they earn a yield on their assets.
Yield farming can be an attractive strategy for investors because it allows them to earn passive income from their REC holdings. However, it also carries some risks, such as the risk of impermanent loss (the risk that the value of the liquidity tokens will decrease relative to the value of the underlying assets) and the risk that the DeFi protocol may be hacked or otherwise fail, resulting in the loss of the investor’s funds.
2) Collateralize It
If you buy a REC off-chain, until you sell it or redeem it, it’s just sitting there on your balance sheet taking up capital. Why not use it as collateral for a loan and put that capital to work?
Off-chain, it’s time-consuming to find a willing underwriter and difficult to price the collateral.
DeFi lending protocols solve this problem by reading “oracle feeds” of current asset prices. So any asset with a live price can be used as collateral for a DeFi loan.
However, DeFi collateralization carries risks such as liquidation if the value of the collateral falls below the protocol’s minimum ratio requirement. Also, there’s a risk that the DeFi protocol may be hacked or otherwise fail, resulting in the loss of the investor’s funds.
Currently, protocols like MakerDAO do not accept EACs as collateral, but we are working to educate the crypto community on EACs as a high-integrity real-world asset.
3) Redeem It
Ultimately, the point of an EAC is to be attributed to your energy consumption. When an EAC is held on-chain, this redemption can be done programmatically using a blockchain transaction. That creates an immutable blockchain record and Jasmine files all of the paperwork with regulators based on that record.
Redeemed EACs can be used to show your customers that your company runs on renewable energy. Amazon (the world’s largest buyer of EACs) buys and redeems EACs to attribute the power used by their data centers. With Jasmine’s protocol, these same assets are finally available to everyone including small businesses and individuals.
4) Sell It
EACs are a $12B asset category, expected to be over $100B before 2030, so they already change hands a lot. Tokenized EACs are bringing that activity on-chain.
Energy Attribute Tokens are ERC-1155 compliant NFTs meaning you can sell them on OpenSea or any other NFT marketplace. However, picking the right price for a single NFT can be tricky.
After phase-3 of our v1.0 launch, you’ll have access to always-actionable liquid prices. Learn more here.
5) Program It
Jasmine’s tokens exist on an open protocol. That means that you can build on top of them without our permission. Want to charge your electric car with Nuclear EACs? You can do that and you can even build an app that makes it easier for other people to do that too. Want to make a water mage character whose spells are powered by real tidal energy? You can do that too! We’ve built Jasmine as an open protocol because we know that our community will come up with better uses for EACs than we can imagine today.
How To Get Tokenized RECs?
If you want to be one of the first people to own a tokenized EAC, become a member of our community launch team. Check the #mission-control channel of our Discord to learn more.
