When someone talks about tokenization, it immediately brings to mind creating tokens, but the concept goes beyond simply creating digital assets. It is a profound transformation in the way assets are represented and traded, opening new possibilities for liquidity and accessibility in the financial market. Thus, creating tokens is just the simplest product of tokenization, since all the transformation it promotes comes much earlier and is much more important than the digital asset itself.
Tokenization, at its core, is the representation and conversion of rights over an asset into a digital token on the blockchain. These tokens can represent any asset, from areas for development, collateralized credit such as guarantees, equity, and commodities. The major innovation of tokenization lies in its ability to decentralize supply and bring liquidity in ways that were previously impossible without the intermediation of traditional financial institutions such as banks and brokerages.
While some market players see tokenization as a way to provide liquidity by decentralizing supply or even using the opportunity to serve banks, others see the chance to play new roles in the market. An example of this is an autonomous agents office that aspires to be a brokerage or a structurer. Traditionally, becoming a broker is an expensive and exhausting process, involving high hiring costs, risk and operational analyses, as well as heavy taxes. Becoming a structurer brings with it a responsibility previously reserved only for those with the know-how.
With tokenization infrastructure, these offices can become token issuers, operating in a similar and complete manner, but in a much simpler and more cost-effective way. This eliminates the need for them to become traditional brokers, allowing them to sit at the table with the borrower and directly offer investment products and financial services.
The tokenization infrastructure enables market agents to perform functions that were previously out of reach due to regulatory and cost barriers. By becoming token issuers, they can create an environment where asset trading becomes more accessible and scalable. This process involves paving so that management and the token serve only as a vehicle for the transaction, replacing or complementing traditional methods of financing and investment.
Thus, tokenization does for autonomous agents whatBank as a Service(BaaS) made for fintechs and small to medium-sized companies: creates a range of opportunities for them to leverage their customer base, expand their services and businesses in a simple, fast, cost-effective way, with the security of a robust technological infrastructure ready to scale.
Tokenization attracts new players to the market, providing autonomy and decentralization. Companies that previously only consumed the financial products they produced can now become active participants in the issuance and offering of these products. This creates a more dynamic and competitive ecosystem, where innovation is encouraged and entry barriers are reduced.
For example, a company that previously relied on brokers to distribute its credit products can now use tokens to offer them directly to the market. This not only reduces costs but also increases the efficiency and transparency of transactions. Tokenization allows these companies to become market makers, creating and managing their own financial products with greater control and flexibility.
Tokenization and liquidity
Although liquidity is one of the great promises of tokenization, it is not the only benefit. The possibility of decentralizing asset offerings and democratizing access to investments is equally important. Tokens can be easily traded on digital platforms, increasing the liquidity of assets that were previously difficult to transact.
Furthermore, tokenization offers an operational solution even before bringing liquidity. Tokens can be used to manage assets, track ownership, and execute contracts automatically, reducing the need for intermediaries and increasing operational efficiency.
Tokenization is changing the financial landscape by allowing new players to enter the market and occupy previously inaccessible positions. As more players adopt this technology, we will see a continuous transformation and an increase in opportunities for all market participants.
