The technology that’s set to change the world, forever.
The age of securitisation is fading — as this faster, safer, and more diverse technology begins to find its place. In this article, I will be explaining what, why, and how Tokenisation can be implemented to the benefit of millions of people around the world.
Recent estimates put the combined value of real-world assets at over $256 trillion. The vast majority of these assets are highly illiquid and bought/sold using outdated methods that are slow, expensive, and bound by red tape. Tokenisation offers an alternative. It refers to the process of producing a digital copy of a real-world asset. Whilst tokenisation itself has long been used in the data security space, its transfer onto blockchain has begun to unlock its true potential.
Tokenisation offers an answer to a lot of what is wrong with the current financial system.
An asset’s value can be split into multiple tokens, allowing for fractional ownership. This ability brings liquidity to previously illiquid assets by introducing a broader base of participating investors. Bringing liquidity to such asset classes makes frictionless trading possible.
Whilst fractional ownership benefits the seller through adding liquidity to their asset, it benefits investors too. People that previously would not have had the means to invest in assets such as fine art or real estate now have the ability to buy tokens that reflect a fraction of the underlying asset. This means more people will be able to benefit from investing in markets previously closed to them.
Blockchain transactions carried out on an automated smart contract removes the administrative burden of traditional asset transactions. Removal of intermediaries not only increases the TPS, but decreases the cost per transaction.
All transactions carried out on the blockchain are fully traceable and transparent. Accountability adds another layer of security for buyers and sellers that were absent from our traditional financial system
Inclusion tokenisation removes geographical barriers. Anyone, from anywhere around the world can conduct transactions on a tokenised platform. The cutting of regulatory red tape as well as lowering entry levels for traditionally higher-value investments opens up opportunities to investors of any means and location.
Pretty much any asset which holds a value can be tokenised and enjoy the benefits of all of the above. Stocks, artwork, commodities, currency pairs & even real-estate are just some of the assets set to be revolutionised by tokenisation.
According to research from the World Economic Forum; a large part of our future economy will be driven by the tokenisation of both digital and physical assets. The business value-add of blockchain will grow to slightly more than $176 billion by 2025 and exceed $3.1 trillion by 2030. With such a rapidly expanding demand for blockchain transactions, how are businesses looking to evolve to keep up with the change?
Here at TradeStrike Ltd, we have realised the potential of the wholesale shift into the era of tokenisation. We will launch an investment platform that offers users the ability to buy and sell tokenised assets of all manors in one secure, easy-to-use space.
Our vision is clear, but how is it possible?
The emergence of distributed ledger technologies has opened the door to platforms looking to leverage blockchain to suit their needs. Pre-existing infrastructure being harnessed in the right way paves the way for tokenisation to reach its full potential.
Below is a simple wireframe of how the interaction between platform, ledger & market combine to allow for our specific use case.
0 AMM — $STRIKE liquidity pool (see diagram)
The utilisation of a liquidity pool has many benefits, none more so than acting as an AMM (AutoMarketMaker.) Without a liquidity pool, all trades require the use of an order book — in turn requiring a seller in order to buy, and a buyer in order to sell. Traditionally, to add liquidity to assets, intermediaries such as market makers were used. Liquidity pools negate this and decentralise the trading experience.
Distributed Ledger Technologies (DLT’s)
DLT’s form the idea of a “decentralised” network as opposed to the conventional “centralised” system currently in place, they are poised to have far-reaching implications on industries that have traditionally relied on intermediaries. The rise of DLT providers has seen the tokenisation of assets become cheaper and more accessible. At TradeStrike we aim to harness this technology and unify it under the blanket of one easy-to-use trading platform. This infrastructure exists and is merely waiting to be moulded to suit our needs.
The regulations that govern tokenisation of assets are underdeveloped and still in their infancy. The application of existing laws to protect customers' capital, keep markets efficient and transparent, and prevent fraudulent activities — can all be applied loosely to the blockchain. The problem is that generally, the existing regulations have been designed with traditional securitisation in mind. To tap into tokenisation’s true potential, new regulations are required. Countries such as Austria and Luxembourg have already begun a full assessment to see if existing EU regulations can be met and applied. Countries such as Germany, Malta, and Liechtenstein have been developing a dedicated framework for token regulation. Andrew Bull, the founding legal partner at Bull Blockchain Law, told Bloomberg that it’s only a matter of time until U.S. regulators approve tokenised stocks.
Use Cases —
The market cap of all Tokenised Stocks currently available sits at $423.47B, and it’s set to continue to rise with ever more companies tokenising their equity. Changpeng Zhao (CEO of Binance.com) has said;
“Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security. Through connecting traditional and crypto markets, we are building another technological bridge for a more inclusive financial future.”
In October 2020, Mr. Leahy (Director of Circle) provided valuable insights into the world of digital assets;
“I believe a few of the major DA (and some that have yet to be created) are the future of finance and will be the assets and platforms that are used by the finance sector in coming years to facilitate frictionless transactions for consumers, and instant settlement of payments between financial firms and their clients.”
The explosion of tokenised artwork has been a standout success story for real-world use for blockchain technologies. More than $2 billion was spent on non-fungible tokens, or NFTs, during the first quarter of 2021 — representing an increase of about 2,100% from Q4 2020
3. Real Estate
Real estate tokenisation is an exciting development that sees the convergence of real estate investing and blockchain technology. Tokenisation helps asset or fund owners raise capital more effectively, whilst giving investors unprecedented access to private real estate investment opportunities. Adding liquidity to this historically illiquid asset class opens up access and lowers entry barriers for millions of would-be real estate investors.
The immeasurable benefits of blockchain technologies across countless sectors are too large to ignore, those companies that do not adapt risk being left behind. TradeStrike is determined to capture this wave and push DLTs to their full potential and deliver a superior, feature-rich investment platform with unrivalled capabilities. The age of tokenisation is dawning, the investment revolution has begun.
— Joe Jowett (CEO of TradeStrike Ltd)
Proof of Liquidity Lock for 1 year (73.4%): https://unicrypt.network/amm/pancake/pair/0x7faf61e7b7495242078b36704767813d451210b1