Hi everyone, I recently saw some articles online about how tokenization is the future of finance specifically for bonds, stocks, real estate asset class. I mean I get the point but other than for real estate I don’t understand what’s the big deal for bonds, stocks tokenization? Some of the most touted benefits are:
Convenience- already sorted by new generation stocks trading apps like etoro and Robinhood
Fractionalisation: already sorted by many apps, even for bonds indirectly via etfs etc.
So I wanted to learn from the collective wisdom of this community if I am missing something here. Thanks in advance for sharing your knowledge with me.
4 thoughts on “RWA(Stocks/bonds) Tokenization: is it really a big deal?”
The most widely used tokenized assets right now are stablecoins and they’ve become the #1 use case of blockchains for many people.
some of the benefits of tokenization that you’re missing:
* instant settlement – trades settle in seconds rather than 2 days. Remember the chaos t+2 settlement caused for GME?
* transparency & auditability – you always know what’s happening behind the scenes. No need to pay millions to auditors and other intermediaries when anybody can watch transactions on block explorers. Note: auditors still necessary to make sure the trad-fi entities that create tokenized assets are abiding by regulations
* near 0 clearing fees – trades don’t have to be approved by a central clearing house that charges extra fees like is the case with stocks
* less middlemen – no need to trust apps, brokers, clearing houses for on-chain transactions
* composability – tokenized assets can be as composable as other tokens, meaning you can use them across the 1000s of DeFi apps out there. You can use them as collateral on lending or derivative dapps, you can spot trade them on DEXs, you can automate yield operations with yield aggregators, insurance, asset management… and that’s just the things that already exist
Just imagine it: the (S&P 500 / Dow Jones / Nasdaq Comp / USD) multi-asset, lending, auto-compounding factory pool…
If passive strategies like this were to become easily accessible to the masses, then yes this is an absolute game changer.
Tokenization can revolutionize the way traditional assets like stocks, bonds, and real estate are traded and managed. It allows for fractional ownership, increasing accessibility and liquidity, and reducing the potential for fraud. Digitizing stocks and bonds can make them easier to manage and trade, potentially lowering transaction costs and increasing efficiency. Though there are risks and challenges to address, exploring the benefits of tokenization is worth considering.
This approach is now most likely going to be a thing in DeFI because more innovative concepts and approaches are evolving in DeFI while keeping decentralization in mind. still exploring Mnicorp, they seem to be ahead of the curve based on their dynamic approach. Through the tokenization of RWA, I think we can have a unification between DEFI and the global economy.
Liquidity and accessability are biggest advantages imo.
1. liquidity: all dApps trade tokenized stock A can be inteoperable, currently you cannot trade Tesla across Etoro and Robinhood.
2. accessability: stock A gets tokenized mean its avail on blockchain and ready to be traded by any dApps(of course pending regulation), in theory its put on open database(blockchain) so it can be accessed very widely. Example you can buy stock from Vietnam easier while you locate in US(as long as being allowed by regulation)