Tokenization became a popular concept in 2017, fueled by the growing popularity of smart contracts and ICOs. Many projects raised huge sums of money under the banner of tokenizing a particular industry or sphere.
Tokenization is the process of translating rights to various assets into a token form, which can be used for exchange and value storage. There are different types of tokenization, each with its own features and applications. This can include rights to perform actions, rights to securities or real estate. Researchers have identified eight different archetypes of tokenization. Let’s take a closer look at them:
- Programmable money
Programmable money based on tokenized currencies, such as stablecoins and central bank digital currencies, are an efficient means of exchange and value storage. They eliminate the drawbacks of existing solutions and significantly improve processes by allowing for the automation of many services on decentralized platforms, such as micro payments. However, the implementation of such solutions requires appropriate regulation, which is still in the development stage. Some countries are already working to create conditions for tokenization.
- Smart bankable assets (stocks, bonds, etc.)
Smart assets, such as stocks, bonds and other financial instruments, are designed to optimize processes and simplify the generation of investment income. By using the logic of financial contracts, it is possible to automate cash flow management and voting, which can lead to increased liquidity and real assets. However, this requires appropriate regulation, which is still in the development stage. Some countries are already working to create conditions for the use of smart assets.
- Availability of illiquid assets (Opening of illiquid assets — art, real estate, cars, etc.)
The main function of which is to act as an intermediary between the value of the asset and the asset itself. Thus, tokenized assets can be divided, unlike physical objects (such as a car or paintings).
- Tokenized crowdfunding (Crowd Funding — startup capital, P2P lending, etc.)
Became popular thanks to the introduction of ICOs, which allow for a reduction in participation costs by eliminating intermediaries. Previously, many related business models were inefficient, but with tokens, efficient real-time crowd investments are possible, ranging from private projects to participation in venture capital. However, the main focus is on tradability, which is the basis for increasing liquidity and enabling fast and flexible trading operations.
- Access to services
Access to services where tokens serve as a tool for obtaining rights to a specific service. Various industries use tokenized licenses or memberships to provide easy and efficient access to decentralized platforms. These tokens are classified according to the functions they provide.
- Platform Governance
Platform governance is an abstract area of application of incentive mechanisms, such as tokenization, as a means of coordination and collaboration. For example, users can receive tokens as a reward for performing certain tasks or behaviors (such as mining), which stimulates community building and participation in voting. Tokens can have social value, managing the right to vote and creating a sense of community, and not necessarily based on future monetization.
- Digital Sovereignty (CryptoKitties, etc.)
Digital sovereignty is used to describe applications that require unique authentication and decentralized access control for token owners. To ensure authenticity and non-reproducibility of assets, they are implemented in the form of non-fungible tokens (NFTs). Thus, users can manage their game assets independently of the platform owner, as implemented in CryptoKitties.
- Track & Tracing Tokenization
Track & tracing tokenization is a type that is used to establish a secure record of ownership between interested parties. Such use cases are often associated with logistical processes in various industries and help organizations improve the transparency of the life cycle of various assets, including both material and immaterial ones.
What are some prominent examples of tokenization currently?
Quicktoken is the first blockchain platform for tokenizing financial assets. Banks can sell tokenized credit portfolios on the platform to scale, while investors can earn passive income from their investments.
HOW QUICKTOKEN WORKS
QTK Token — Non-Fungible Token (NFT) representing a share of a credit portfolio.
QTKX Token — Primary payment instrument on the platform.
1. Portfolio Tokenization
Quicktoken platform and the bank agree on the parameters of the issued tokenized portfolio QTK based on the bank’s credit portfolio parameters.
2. Investor Portfolio Acquisition
Initial acquisition of a tokenized portfolio is only possible with the platform’s QTKX token. Already issued portfolios can be acquired on the secondary market with fiat currencies and cryptocurrencies.
3. Credit Portfolio Redemption
At the end of the credit portfolio’s term, the bank buys back the portfolio according to pre-agreed conditions. The tokenized portfolio is burned using QTK, and the investor receives profit in fiat currency.
WHAT MAKES QUICKTOKEN UNIQUE?
Guaranteed profitability
Quicktoken creates balanced portfolios of assets with varying risks and returns. The result is guaranteed with the reliability of bank deposits, while the return is significantly higher.
Collateral
The Quicktoken platform and its tokens are backed by real financial assets. Each token represents a share of a credit portfolio issued by a bank or other organization.
Income in currency
Investor payments are made in fiat currency. Thus, the profit does not depend on the value of the internal token.
What urgent problems does QuickToken solve?
Problem: The market mainly offers high-risk instruments, or the interest rate on them is very low.
Solution: Discounting loans included in the portfolio based on their return and risk.
Problem: The amount of loans issued by banks and businesses is limited by their own funds.
Solution: Tokenization and sale of credit portfolios allow banks to issue new loans without limitation on freed-up funds.
Problem: Trading CDOs on traditional markets has a high entry barrier — bureaucracy, minimum portfolio, centralization.
Solution: Quicktoken makes entry to the platform instantaneous and eliminates bureaucracy and centralization through blockchain technologies.
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