Tokenization of Real-World Assets: Bringing Value to Fractional Ownership

Tokenization is solving issues by introducing data transparency and operational efficiencies with the benefits of fractionalized ownership and liquidity to real estate investing. As per recent reports, the market value of all real-world assets is ~$256T globally.

Real estate is one of the most illiquid assets requiring last capital investment and cost transaction. The previous year global estate investment reached a hike of $930 billion.  Tokenization has taken a new wave of technology by innovating real estate solutions for the digital era, bringing greater efficiency and stronger security to the financial industry. However, the process of trading real assets is still primitive due to increasing transaction time and costs. Subdivision of such assets is limited and hence constraining liquidity. Tokenization of real-world assets has been playing a major role in asset management for many years to come. It holds the potential to streamline countless markets while making them secure.

Blockchain and Its Impact on Asset Tokenization

As such, asset tokenization is the most prominent use case of the blockchain industry and the growth encompassing nearly all human economic activity. In the past few years, big enterprises such as Deloitte, BNY Mellon and more have analyzed the tokenization of real-world assets and given the report. Accordingly, it says, real assets possess the ability to disrupt multiple industries, including global securities and the real estate industry.

Microsoft, Vanguard, and Sotheby’s are now tokenizing industrial assets, securities, and real estate, respectively. As a result, tokenizing assets are among the most important innovative applications of blockchain.

Tokenizing Real-World Assets Is The Future Of Capital Markets!

For investors, blockchain networks ensure information encryption and transaction traceability. This combination of blockchain technology and asset tokenization have resulted in secure, transparent, and progressive asset management in numerous industries.

Why Tokenize "Real World" Assets?

We are surrounded by assets classes like stocks, real estate, gold, oil, etc. They are hard to transfer physically, so buyers and sellers trade certificates. But all the complexity of legal agreements is cumbersome, expensive and time consuming.

Tokenizing physical assets not only creates significant efficiencies but transfers the ownership of the asset when the token itself is transferred.

Asset Tokenization: A Buzzword or An Opportunity?

The process of issuing tokens digitally represents tradeable assets which are issued through security token offerings (STO) and can be traded on a cryptocurrency exchange. Commercial estate companies are known to tokenize their illiquid property assets for more liquidity and appreciation. Asset tokenization is not just a buzzword; it clearly gives a great opportunity for companies to unlock their asset value in illiquid assets to raise funds for their projects.

Solving the Case by Issuing a Security Token On RedMatter

A company can easily issue a security token for an asset registered on RedMatter and enable smart contracts trading of asset backed tokens. Asset classes can include:

  • Real estate
  • Media and digital content
  • Stocks inventory
  • Shares in a Pre-IPO company
  • Digital content
  • Metal commodities
  • Collectibles

Listing a project is based on the type of asset-backed security to be issued. So, first of all, register a project by creating an investment offer. Here are the steps involved:

Step 1- The company needs to fill out the information about the project, upload content and provide a list of team members.

Step 2- Provide the details and legal data of a company, investment offers and its type, asset, asset valuation, and amount of funding that needs to be raised.

Step 3- After registering as a company looking for funds, you have to create a project by logging in to the dashboard and clicking on "Add Project".

Step 4- Now, obtain the project approval. Again, the information is reviewed, and the status shows ‘Waiting for Approval’. After approval, you will receive the ‘Create Investment Offer’ button.

Step 5- Proceed by providing details of the offer and issue tokenization of real-world assets. The Invest Offer status is ‘Waiting for Approval’ while it's under review. You can edit the offer meanwhile. When approved, the company can issue its token for investors to purchase.

Trading Securities

You can also list your tokens on Red Matter’s centralized exchange by navigating the ‘List on RMC’ button. Also, you can choose ‘List on DEX’ for listing a token on a decentralized exchange (Pancake Swap). Digital securities are issued on Blockchain smart contract backed by a tokenized asset. The securities are held one to one against the asset, which allows it to trade easily on decentralized exchanges or investors in the crypto community. RedMatter accepts LTC coins as a fast booking medium unless the investor proceeds to fund in advance with fiat. Transactions on Blockchain smart contracts are credited in seconds with crypto, while fiat may take days to be received.  When Red Matter receives an LTC transfer, it is converted to fiat and funds are transferred to the RedMatter broker account.