06_Tokenization and Real World Assets Flashcards
Swarm
Digitzing securities: Tokens
Evolution
- physical security on paper
- transformed into bits
- transformed into tokes: creating digital twin
Properties of Tokenization
- reinvents finance by creating an accessible fungible and global market
- in a tokenized market assets are fractionalized up to the 18th decimal enhancing tradability against other assets
- tokenization removes need for traditional fiat currencies as medium of exchange between assets
Equities Trading in the future using Blockchain
- remove clearing house / custodian / central counterparty
- Seller, buyer and issuer interact on blockchain
- regulator checks compliance of blockchain
Market Structure of Tokenization
1. Originiation / Securitization
2. Custody / Data Trustees: institutions & auditors
3. Tokenization / Primary Issuance: securitze, cashlink
4. Custody / wallet: Tangany, finoa, copper
5. Liquidity : Swarm
Tokenization of global illiquid assets projections
- estiamted to be $16 trillion market by 2030
- total tokenized market to be 10% of global GDP by 2033
- “tokenization of financial and real-work assets could be the killer use case driving blockchain “
What is most interesting to firms regarding tokenizing asset?
relating to Liquidity
- 53% access to new investors and new capital
- 47% increased liquidity
- 38% ability to offer fractional ownership of funds / assets
- 23% gaining ownership visibility
- 28% instant settlemtn
- 8% gaining pricing visibility
Which asset class or security types are firms interest in tokenizing
- 49% public funds
- 45% private funds
- 38% real estate funds
- 35% securities (stocks, bonds)equity
- 30% loans and mortgages
- 20% real world assets
- ….
DeFi Classification
Flowchart
- Directly mediates the transfer of value? - auxiliary or non-financial services if not
- Settlement on a public Blockchain? - no traditional finance (e.g. banking)
- Assets cannot be unilaterally expropriated / moved by 3rd parties? - no custodial service (e.g. fiatbacked stable coin)
- Open Source code and application programming interface (API) - no Private service or standalone digital asset
= Defi Service
DeFi Pros
by eliminating layers of complexity and inefficiency
Investors < - > Assets without management fees
- low cost: blockchain gas fees
- unrestricted: fractionalized ownership
- open: public transaction methods + history
- Robust: globally maintained network
- Efficient: settlement / transaction time ~ 10s
- Liquid: transferrable 24/7
simply gas fee
Cons of Traditional Finance
several layers of complexity and inefficiency
- high cost: multi layered subject to fees
- restricted: high investment threshold
- closed: centralized controlled ledger
- fragile: sensitive to systemic risks
- inefficient: Settlement / transaction time 1-3 days (vs 10s DeFi)
- illiquid: +5 years investment lock-ups
Layers
Investors, Funds, Banks, Assets (Return - mgmt fee - transaction fee; Investment - txn. fee - txn. fee)
Regulation of DeFi in EU
MiCa in Q3 2023
- DeFI and CEXs
Swarm
Business Modell
- hybrid organization that brings unique tokenization and regulated trading of real world assets to the world of traditional finance
- first organization globally to offer digitized US Treasurr Bond ETFs and public stocks that can be traded on a regulated and decentralized platform
- Web3-native market infrastructure
- regulated / instutional readu
- API + Smart Contract Solution
Real World Assets (RWAs)
- tangible and intangible assets can now be represented digitally on-chain through issuance of tokens
- novel means of transferring ownership, sharing revenue streams, increase liquidity of illiquid asests
Real World asset debt growth on Maker
- short term bonds make up largest allocation of RWA debt
