When someone talks about tokenization, they immediately think of creating tokens, but the concept goes beyond the simple creation of digital assets. It is a profound transformation in the way assets are represented and traded, opening up new possibilities for liquidity and accessibility in the financial market.
Thus, creating tokens is only 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, in essence, 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, credit with collateral as guarantees, equity and commodities.
The great innovation of tokenization lies in its ability to decentralize supply and bring liquidity in ways that were previously not possible without the intermediation of traditional financial institutions such as banks and brokers.
While some market players see tokenization as a way of providing liquidity by decentralizing the supply or even using the opportunity to serve banks, others see the opportunity to play new roles in the market.
An example of this is a self-employed agent’s office that aspires to be a broker or a structurer. Traditionally, becoming a brokerage firm is an expensive and exhausting process, involving high levels of hiring, risk and operational analysis, as well as heavy taxes. And becoming a structurer brings with it a responsibility previously left only to those with the know-how.
With the tokenization infrastructure, these offices can become token issuers, acting in a similar and complete way, but in a much more simplified and cost-effective manner. This eliminates the need for them to become traditional brokers, allowing them to sit at the table with the borrower and offer investment products and financial services directly.
The tokenization infrastructure allows market agents to perform functions that were previously out of their 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 the way for management and the token to serve only as a vehicle for the transaction, replacing or complementing traditional methods of financing and investment.
Thus, tokenization does for autonomous agents what Bank as a Service (BaaS) did for fintechs and small and medium-sized companies: it creates a range of opportunities for them to leverage their base, expand their services and businesses simply, quickly, cheaply and 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 issuing and offering these products. This creates a more dynamic and competitive ecosystem, where innovation is stimulated and barriers to entry 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 structurers, creating and managing their own financial products with greater control and flexibility.
Tokenization and liquidity to democratize access to investments
Although liquidity is one of the great promises of tokenization, it is not the only benefit. The possibility of decentralizing the supply of assets 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 trade.
Moreover, tokenization offers an operational solution even before it brings liquidity. Tokens can be used to manage assets, track property and execute contracts in an automated way, reducing the need for intermediaries and increasing the efficiency of operations.
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.
Source: Money Times
