It’s been more than 10 years since the blockchain technology started to evolve. And during this time it has taken different shapes and forms, that have allowed companies and individuals to create unique solutions for their needs. Just recently, the security token ecosystem Vertalo announced that it plans to tokenize over $200M of securities on the Tezos blockchain, and this is just the beginning. More companies are turning to tokenization of assets, because it allows easy management, cost reduction and higher control over the assets.
The Future of Tokenized Assets
Asset tokenization by itself represents a process when a particular asset or security is issued on blockchain in the form of a token, that is considered as a tradable asset. These tokens are traded on the secondary market and can represent a share in a company, ownership of a property or participation in the investment fund that allow their owners to receive dividends as usual, while having corresponding rights on the official level.
The only difference that makes these tokens so unique is the ability to remove middlemen that exist in traditional markets while allowing individuals to conduct almost peer-to-peer transactions performed via smart-contracts on blockchain. By using this technology, companies can dramatically cut overheads related to transactions, different service fees, and increase the processing speed in all ways.
These changes will allow low-to-mid cap securities and other assets to gain the following advantages:
- Greater Liquidity — decentralized ecosystems will allow higher liquidity on the blockchain over different assets. In turn, it should help traders or ordinary users to buy or sell a particular commodity on the secondary market.
- Higher Accessibility — while different secondary markets may exist without a close relationship, the blockchain technology may unite different assets under the same umbrella. It’s important to emphasize that higher accessibility will make many ‘hidden’ assets available for trading, for example, defaulted mortgages or loans, pieces of art, and other commodities that can be traded.
- Transparency — security tokens allow holders to have a variety of different rights as well as responsibilities that are bounded to the token. Transparency will be reached through blockchain, allowing market players to see with whom they are dealing and what history a particular user has.
Great Examples
There are numerous companies on the market that deal with different types of securities, and all of them would like to cut overheads while making assets more flexible. Recently, the security token ecosystem Vertalo has announced that it plans to tokenize 22 different assets worth of $220 million US dollars on the Tezos blockchain. Another real-estate company Elevated Returns declared in October 2019 that it plans to move its already tokenized assets worth $1 billion to Tezos due to ‘superior’ ecosystem functionality.
Other big enterprises such as tZERO, Alliance Investments, BTG Pactual, and Dalma Capital have also acknowledged Tezos benefits and decided to tokenize $2.643 billion in assets on Tezos. It indicates that Tezos ecosystem perfectly fits the needs of different institutions, making their requirements in financial operations completely covered.
How Companies Can Fuel Ecosystem Growth
As it was mentioned earlier, institutions are primarily interested in the functionality of the Tezos ecosystem, that allows conducting unique operations not available on many blockchain platforms, and those are:
- Advanced smart contracts that can perform formal verification, which helps to formally check workability to avoid certain functionality errors.
- The formally-verified multi-signature smart contract, which allows secure functionality such as cryptocurrency cold-storage and smart-contract management
- The flexibility of the protocol allows network updates to be performed via a formal amendment process, which can be conducted smoothly.
Technological companies and teams can help the Tezos ecosystem by developing and implementing different solutions that may be valuable for the needs of financial institutions. By making the ecosystem both flexible in terms of needs of institutions and secure at the same time, Tezos may attract many more companies, serving as a great infrastructure for different financial operations.
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