Three steps to tokenizing physical assets

Tokenomics may be well on its way to overthrow the traditional financial landscape, by providing fast, smooth cross-border transactions, less administration and investment opportunities for people without huge amounts of money. Tokenized real-world assets also present a way for investors to expand their portfolios and for individuals to fund local or global initiatives that they care about.

While the first steps of the token-based economy were taken based on tokens within a purely digital realm, we are now seeing more and more examples of tokens backed by physical assets, where the token is a digital proof of ownership of an actual real-world resource.

An increasing number of businesses now create asset-backed tokens based on entities within fields such as:

• real estate and land registry
• sustainable energy  and carbon offset
• agriculture and supply chain

Businesses in these fields usually require very large investment sums and finding those funds is often a difficult and time-consuming undertaking.

Tokenized real estate is a brilliant example of how fractional ownership by means of asset-backed tokens can help add liquidity to businesses, while the owners of the parts of buildings in a very direct way earn an income from the rents paid by the tenants. Florida-based RealT have done just that, creating a marketplace where property units can be traded, and the holders of the units get paid in relation to the size of their investment based on the rents paid for that space.

Dividing a building into units that are tokenized can easily be imagined, as apartments and offices are already numbered, so, in that respect, useful units already exist. But the possibilities for physical resources that can be tokenized are virtually endless, as long as there is some tangible asset that can be identified and that value can be attached to, as a token.    

This fact has been one of the sources of inspiration for the patented token technologies developed by Trust Anchor Group, assembled in a suite of components that an increasing number of customers employ to turn their physical and digital assets into digital tokens.

Paiwise tools are used for trading the asset of weight in decentralized logistics, for trading emission rights, which Creturner does with the very tangible result of returning carbon to the ground in exchange for an NFT. In Chile, Paiwise technology is used for democratizing investment, by dividing a large-scale salmon farming project into smaller units. That way, investors of different means can all contribute to an important cause, according to the size of their wallet.

How to create tokens from your own physical assets

If you consider turning you own real-world assets into tradable tokens, Trust Anchor Group have the tools you need, plus a tried-and-tested process for realizing your token project.

Our approach to creating asset-backed tokens based on physical resources is a three-step process. It can be outlines as follows:

1. Proof of Concept

The first step in tokenizing your physical assets is installing and preparing the required infrastructure. The domains in which the tokens are going to be used, as well as key roles and responsibilities must be identified. Mock smart contracts are created as a part of this step, as they are needed to create and trade sample tokens to prove the feasibility of the project. This is all carried out on a demo website, using demo eDaler tokens for trading.

2. Minimum Viable Product

When the tokenization concept has been proven feasible, the next step is to prepare the concept for real-world use. This entails creating a legal framework for the smart contracts that will be used in the real-world application. This step emphasizes the development of the legal framework and financial infrastructure that will be the foundation of the asset tokenization process.

3. Final product

When the Minimum Viable Product has been established and approved, the final step towards a complete tokenization infrastructure focuses on design and usability, customizing user interfaces, writing user guides for end users and technicians. Here, the technically valid and conceptually accepted solution is developed into a commercially viable and user-friendly final product.

Do you want to know more about how to tokenize your physical assets? Contact us for an initial discussion on how to get started creating your token-based business!