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Top Platforms to Tokenize Your Investment Assetsby@ugo
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Top Platforms to Tokenize Your Investment Assets

by ugo ogwuJuly 23rd, 2022
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Investment tokens are tokens that serve as means of investment to the token holder. They could either represent financial instruments such as equity, derivatives, debts, and units in a fund, or ownership interest in tangible assets like real estate, intellectual property, and revenue streams. Some benefits of tokenizing investment instruments include: Accessibility to investment opportunities for small investors, fractionalization of assets to reach more investors. Tokenizing funds is an alternative way to finance early-stage start-ups by tokenizing multiple startups at once.

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Types of Investment Tokens and Some of the Players in the Investment Token Space

Investment tokens are tokens that serve as means of investment to the token holder. They could either represent financial instruments such as equity, derivatives, debts, and units in a fund, or ownership interest in tangible assets like real estate, intellectual property, and revenue streams. They are tokens that can be used for funding and are issued in compliance with traditional regulatory requirements/investors' protection.


Some benefits of tokenizing investment instruments include:

  • Accessibility to investment opportunities for small investors.

  • Allow for fractionalizing assets.

  • improves the liquidity of assets, as blockchain technology improves the ease of buying or selling tokenized assets.

  • Automate control for compliance with security laws since tokens allow for building compliance requirements into the token.


Types of Investment Tokens

  1. Equity Token: These are tokens that represent ownership of an asset, very much like stock or shares.


  2. Entitlement Right Token: Right entitlement is a fundraising method that companies use to offer their shareholders the right to purchase shares at a discount on a predetermined date known as the record date. Tokenizing rights entitlement enables these rights to be traded on accredited exchanges.


  3. Debt Tokens: These are tokenized assets that represent debt instruments. Tokenizing a debt contract automates the interest rate and keeps track of the payments made by the debtor.


  4. Fund Token: Shares or units of a fund are represented in tokens on a blockchain, and they can be easily traded on accredited exchanges.


Platforms That Enable the Tokenization of Financial Instruments

  1. Tokenization of Financial Assets: Tokney, using the ERC-3463 security token standard, tokney is out to address the lack of structure in the private markets. For instance, investments made in private companies. Tokney enables such companies to tokenize their securities. It promises to offer improved asset liquidity for investors, a cross-chain platform and protocol, disintermediation by enabling all necessary legal and regulatory compliance built into tokens, fast and secure investor validation, and the platform also allows the token issuer to maintain some level of control.


  2. Tokenization of Real Estate: Digishares is a platform that allows real estate developers to issue and sell real-estate-backed tokens to investors. The platform doesn’t force investors to use crypto and so investors can use fiat [dollars] while enjoying the benefits offered by blockchain and tokens. Digishare takes away all the difficulties associated with traditional real-estate sales such as tedious paperwork processes, lack of liquidity for investors, and limited market access. The platform does this by offering automated processes including KYC/AML verification of investors, improved liquidity of assets by permitting secondary market trading, and fractional ownership which enables real estate owners to sell to a broader group of investors


  3. Tokenizing Debt: FQX uses eNotes, a blockchain-based tokenized debt instrument. An eNote is an unconditional promise to pay a specific sum to another party at a specific future date. eNotes are essentially NFTs stored on a blockchain and are basically tokenized versions of a promissory note. They can be modularly structured to fit any financing purpose. For example, companies can use them to obtain financing by offering multiple eNotes. Due to their blockchain-based nature, they can easily be transferred to a third party by trading on a regulated exchange for trading digital assets.


  4. Tokenized Fund: Through its new funding structure called vertical funds, Next Gen Capital is offering tokenization as an alternative way to finance early-stage start-ups by tokenizing multiple startups at once and offering a theme-based basket of ventures as one bundled investment proposition. The vertical or basket will consist of 30 start-ups in a particular sector, for example, AI or Robotics. Every start-up that gets added to a vertical is made to pass through a startup accelerator program, after which they are selected to be in the vertical.


    Investors are offered 31 tokens in total. 30 tokens will represent each start-up in the vertical and the 31st token will represent the basket of all the tokens. Holders can trade their tokens individually or collectively through an accredited security token exchange.



Conclusion

Investment tokens will open up new asset classes, new markets, and give more investment opportunities to small investors. For issuers of investment tokens, it will open up their reach worldwide, and increase the liquidity of their assets since token holders can make transactions without interference from intermediaries.