MCB Insights
Tokenizing Real-World Assets: What You Need To Know about
MCB vs. MakerDAO vs. Centrifuge
As blockchain technology continues to revolutionize traditional finance, tokenization emerges as the single greatest opportunity to modernize the outdated frameworks currently in operation. Fundamentally, tokenization involves transferring Real World Assets (RWAs), whether tangible or intangible, onto the blockchain. However, the influence of tokenization on financial markets extends far beyond just “things on chain.”
In this article, we will learn more about the concept of tokenizing real-world assets, explore its benefits, and uncover why MCB stands out in this burgeoning field.
In brief
The tokenization of real-world assets (RWA) stands as one of the most significant market prospects within the blockchain sector, potentially reaching a market size in the hundreds of trillions of dollars
Via tokenization, these tokens facilitate more transparent and efficient buying and selling of the underlying assets.
The potential of Real World Assets, when coupled with the efficacy of Decentralized Physical Infrastructure, is monumental.
Tokenizing RWAs - What is this?
Real-world assets (RWAs) on the blockchain refer to digital representations of physical and traditional financial assets, such as commodities, currencies, equities, and bonds. The tokenization of real-world assets (RWA) stands as one of the most significant market prospects within the blockchain sector, potentially reaching a market size in the hundreds of trillions of dollars. Theoretically, any valuable asset can undergo tokenization and be incorporated onto blockchain networks.
Asset tokenization offers a significant opportunity for both traditional financial institutions and the burgeoning DeFi ecosystem to foster a more transparent and efficient global financial infrastructure. Forecasts from a report by Boston Consulting Group and ADDX project that the tokenization market could evolve into a $16 trillion business venture by 2030, indicating a significant transformation in global economies driven by blockchain technology and cryptographic validation.
>> How to Tokenize Real-World Assets
Asset selection:
Identifying the real-world asset eligible for tokenization. This could include stocks, currencies, commodities, intellectual property, securities, fine art, carbon credits, or another asset class.
Token specifications
Deciding whether the token will be fungible or non-fungible, selecting the appropriate token standard such as ERC20 or ERC721, and addressing other fundamental aspects of the token.
Blockchain selection
Selecting between a public or private blockchain network for token issuance.
Off-Chain Assets Verification by Third-Party Auditor
To ensure that tokens are backed by an equivalent amount of collateral assets, there's a need to relay information from off-chain bank accounts or vaults onto the blockchain. In these scenarios, a third party is typically required to validate that the off-chain value is being securely held, providing users with assurance that the issued tokens align with the value of the underlying assets.
Issuance
Deploying the smart contracts on the selected blockchain network, initiating the minting process for the tokens, and making them accessible for usage.
*Learn more about Chainlink Here
>> Benefits of Asset Tokenization
In DeFi, tokenization involves generating digital tokens that represent real-world assets like goods, properties, or artworks. Through decentralized exchanges, these tokens facilitate more transparent and efficient buying and selling of the underlying assets.
Tokenization revolutionizes both borrowing and lending. Borrowers gain access to cost-effective capital directly from DeFi markets without intermediaries. Lenders, including institutions and DeFi protocols, benefit from a broader range of yield opportunities supported by real-world assets.
Moreover, tokenization enhances transparency in the credit market by shifting securitization and debt servicing onto the blockchain. This advancement also reduces the cost of capital for small and medium-sized enterprises (SMEs), presenting a powerful mechanism for businesses to grow and thrive.
Businesses are adopting tokenization for corporate securities and real estate to enhance security, promote crowdfunding, and offer investors improved returns by eliminating transactional inefficiencies. Previously inaccessible real-world assets can now participate in the DeFi ecosystem, enriching DeFi lending through increased institutional adoption and expanded access to lending opportunities.
RWA Study Case
>> MakerDAO
The Maker Protocol has gathered more than $600 million in collateral from real-world assets. Observing MakerDAO's significant access to liquidity within the DeFi space, Huntingdon Valley Bank (HVB) expressed interest in forming a partnership. Both parties reached an agreement to provide funding amounting to 100 million DAI.
The partnership operates as follows:
MakerDAO establishes a trust named 'Ankura', while HVB gathers loan requests (including construction, commercial and industrial, and capital call line) and forwards them to Ankura.
Ankura proceeds to examine and either approve or reject the requests.
If Ankura approves, HVB becomes eligible to utilize funds from the RWA Master Participation Trust (custody).
The interest earned from the loans will be evenly distributed, with half allocated to HVB and the other half to MakerDAO.
>> Centrifuge
The Centrifuge Protocol stands among the pioneers in incorporating real-world assets onto the blockchain. It offers a comprehensive platform encompassing essential functionalities for financing real-world assets on a blockchain, ranging from tokenization and securitization to liquidity integrations. These components are interconnected and governed transparently by token holders. (see diagram above).
*Credit to Polkastarter. Learn more here
>> MCB Ventures DAO for Mega RWA and DePIN
A Multifaceted Platform for Transformational Change
MCB is poised to introduce a comprehensive ecosystem that will serve as the backbone for facilitating and managing RWA through DePIN. Our approach is multifaceted, for example:
● Public Private Partnerships: MCB facilitates public-private partnerships by leveraging its extensive network and expertise to bridge the gap between governmental entities and private enterprises, ensuring mutually beneficial collaborations that drive sustainable development and economic growth.
● Fuel Renewable Projects: With a focus on green energy, we aim to streamline the path from investment through RWA model to implementation, fostering clean power solutions that align with global sustainability targets.
● AI Data Centers: Through DePIN, our Decenter project is poised to redefine data center operations, offering next-gen solutions for the AI-driven future.
● Elevate Agri-Business: Through DePIN, we are setting a new standard for asset management in agriculture, enhancing efficiency and creating a transparent, traceable, and productive value chain.
What is
MCB
MCB stands as a beacon of innovation in the intersection of blockchain technology and real-world applications. As a ventures DAO, MCB is dedicated to investing in and facilitating projects that embody the principles of Real World Assets (RWA) and Decentralized Physical Infrastructure (DePIN). Our vision is to revolutionize the global infrastructure landscape by harnessing the power of blockchain technology, creating a decentralized ecosystem that empowers communities, enhances transparency, and fosters sustainable development across borders.