There are two different kinds of assets in terms of existence with which we interact daily :
- Digital assets
- Real-World Assets
Digital assets: Assets whose existence are digitally represented and validated like Music, arts, digital photographs, identity etc. are called Digital assets. With the pace of digitalisation, it’s effortless to make the trade of digital assets. 2020 was a breakout year for decentralised finance (DeFi) space fueled mainly by using the stable coin in getting lending, borrowing & yield farming. High volume growth of stable coin ( ~40 Billion USD ) shows a clear indication of the rise of digital assets’ use-case in the form of crypto. Few startups did quite a fair amount of work in lending and borrowing crypto assets like Maker, Compound and AAVE. But they are limited only to crypto assets.
Real-world assets: Assets with physical existence like car, land, gemstone etc. are called real-world assets. These assets are always very complicated to trade because of their physical presence.
Trade methodology has evolved from the Barter system to internet-powered e-trade. However, there are still lots of friction like uneven bid-ask price, low liquidity for trade, middleman involvement, unnecessary paperwork, etc. Another big problem with real-world assets is that only selected assets are acceptable for making a trade, like home & car. There are more than trillions of dollars of assets that have value but are in stealth mode, because of lack of a platform that can facilitate the trade.
How to solve this problem?
The smartest way to solve the problem discussed above is by digitalising all the real-world assets. Digitisation is easy, but at the same time, it’s challenging to have the authenticity of that digital asset. So to overcome the challenges faced by digitalisation, tokenization concept was introduced by blockchain technology.
Tokenization means converting an asset, either real or virtual, into a digital token. It enables the digital transfer, ownership and storage without the necessary need of a central third party/ intermediary. At Pandora, we believe that tokenisation has value when it is pegged with an individual asset identity through NFT.
There are no. of benefits in doing that like :
- Trading of tokenized assets can be facilitated globally with just one click.
- More liquidity will promote an asset owner, and the buyer will get the best price of their assets.
- The authenticity and provenance of the assets can easily be verified. Identity can’t be faked.
- It will create an open p2p market for lending and borrowing of real-world assets which will be frictionless.
Why are we building Pandora?
Our mission is to provide a platform where any real-world asset can be traded in the trustless and frictionless way. We are leveraging the existing blockchain infrastructure and building a middle-layer Pandora protocol on top of it. This middle-layer will help any real-world asset get tokenized in NFT, which can be traded globally anywhere. Also, using this middleware protocol, different dapps can be built out like
- Real-World Asset Marketplace
- Digital Asset Marketplace
- Social Token Dapp and many others…
Pandora is getting built to bring real-world assets on-chain. There needs to be some solution which bridges the off-chain assets to on-chain and facilitates the trade.
- Illiquid real-world assets: Globally, more than trillion dollars of real-world assets are illiquid and can be brought on-chain. Bringing them on-chain will bring more liquidity in the real world asset market.
- Negative returns: Finance Institutions in many countries started giving a negative return on deposited money. Money holders are looking for a way to make use of money by deploying in the capital deficit market. This can be achieved via tokenization.
- Inefficient existing finance infrastructure: Current fintech tech stack is decade-old infrastructure. It has many issues like more settlement high, ineffective in cross-checking, data leak and many others. The traditional way of doing finance needs an up-gradation with the Open Finance ecosystem. Pandora is bridging the gap to enable it.