What is tokenization? Best projects with asset tokenization concept
Tokenization is the process of converting securities, precious metals, real estate, goods and other assets into digital tokens that can be bought, sold and exchanged. At the same time, the value of such digital tokens is provided by an asset from the real world — in the market, tokenized assets are considered to be relatively stable and protected from volatility.
Tokenization of assets is based on the use of the blockchain technology, which provides security and transparency. The blockchain network is decentralized, so it ensures that once you buy tokens backed by a real-world asset, no person or organization can affect your ownership.
Recently, we have been hearing more and more about tokenization, and for good reason: the mechanic is beneficial both for investors and business— Tokenization opens several new opportunities:
One of the main benefits of asset tokenization for business is the ability to raise capital without having to go through traditional IPO or private fund raising processes. Companies can tokenize their business or assets to attract investment in their project without issuing stocks or bonds, which tends to dilute the ownership of the company.
On the other hand, through the tokenization process, investors gain access to previously inaccessible markets, a low entry threshold for investing and the ability to diversify their portfolio. At the same time, the investor receives all the advantages of using the blockchain technology: transparent settlement model, irreversible transactions and secured ownership of the asset.
Why is tokenization trending?
One of the main reasons why asset tokenization mechanic is gaining popularity is the ability to create a decentralized field for asset trading. This means that participants can buy and sell assets directly, bypassing intermediaries such as brokers and exchanges. This concept allows for lower commissions and faster execution of transactions.
The second reason for tokenized assets’ popularity is their reliability and low volatility. Unlike the vast majority of cryptocurrencies, the trading price of which is constantly bouncing up and down, digital tokens pegged to a business or valuable asset are more stable.
Tokenization has the potential to revolutionize the way we invest and transfer assets, making it easier and more accessible to individuals and institutional investors. According to a Deloitte study, 29% of financial services companies already use some form of tokenization, and that number is expected to grow in the coming years. According to a PwC report, the market for tokenized assets could reach $2 trillion by 2030.
In this piece, we have collected 3 best projects specializing in asset tokenization — let’s look at their advantages and features.
GDIT Token
GDIT is the first digital token fully backed by gold. By tokenizing physical gold assets and gold mines, the GDIT token has a direct link to the precious metal. This type of collateral best fits “asset tokenization” standards.
The token was created based on the infrastructure of IWI Global, which operates more than 15 mines in different regions — Africa, Asia and South America. The company’s largest mines are located in Congo, Nigeria, Venezuela, Brazil and Mongolia.
By implementing tokenization mechanics, the GDIT team has successfully digitized its operations, saving information about its business processes to a decentralized registry. Now the company’s physical gold, as well as a number of deposits, have received an equivalent digital counterpart — the GDIT token.
GDIT is currently on the 8th stage of presale and is trading at 14 euros per coin, but after going into open sale later this year, the team predicts a price of 60 euros per token. The advantage of the project is that once it goes public, one GDIT token can be exchanged for 1 gram of physical gold.
Polymath
Polymath is a blockchain platform designed to simplify the asset tokenization process. It allows the creation and issuance of security tokens, which provide ownership for real assets. The platform works with real estate assets — they are sold either as a whole or divided into many parts, each of which corresponds to a token.
The platform offers different usage scenarios. For example, you can issue tokens that are backed by a commercial property. And they, in turn, can be purchased by other users, for a share of the rental income. There is also the possibility of acquiring properties under construction, and the purchase of properties by mono-investors.
The goal of Polymath is to make the process of creating and issuing tokens more accessible and efficient by providing users with a convenient platform and a set of tools to manage the tokens. One of the key features of Polymath is its focus on compliance. The platform ensures that all tokens created on its network comply with securities laws. Polymath’s native token, POLY, is used to pay commissions on the platform and is steadily increasing in value.
Agrivirtus
Agrivirtus is a decentralized autonomous community (DAO) whose mission is to grow agriculture. The company started by tokenizing greenhouse tomato farming in Latin America, and today scales farming operations in 10+ developing countries.
Agrivirtus has been in the farming industry for over 20 years and the company understands the industry’s process optimization model perfectly. By using blockchain technology, the project team has been able to digitize farming operations, which has resulted in a number of benefits. Agrivirtus transforms the traditional closed model of agricultural business into an open-source model that is partially controlled by the end consumer,
The company connects investors, farmers and final consumers of products by offering a transparent system of interaction. Farmers get land to manage, Agrivirtus provides efficient operations model, consumers get better products and investors get a portion of the company’s operating profits.
The project has a goal to create a farming ecosystem focused on global prosperity. However, investors will also profit from each farming enterprise.
Memo
Asset tokenization is an interesting trend in the cryptocurrency industry, but you should always be aware of the risks inherent to the crypto market.
