With the world of crypto finance continuing to mature at a rapid pace, the concept of tokenization is one that has piqued the interest of many individuals across the globe. In essence, the tokenization of real-world assets (RWAs) entails the creation of a virtual investment vehicle that is linked to physical stores of value, such as precious metals, real estate, artwork, or even cars.
Alternatively, tokenization provides a pathway for the legal ownership of any physical item by putting its legal validity on the blockchain rather than a paper-based document (such as a deed). This on-chain information can then be exchanged/traded between different parties or even broken down into smaller financial entities (i.e. fractionalized), thus making it available to investors with limited budgets.
Thanks to wide-ranging benefits, the concept has garnered a lot of mainstream interest, so much so that a recent study by the Boston Consulting Group states that the total market capitalization of tokenized assets will reach $16 trillion by the end of this decade.
Here’s why tokenized assets are changing the game
As pointed out earlier, tokenization offers several advantages in terms of owning real-world items. For starters, it mitigates/bypasses the need for involving any intermediaries — such as lawyers, brokers, banks, etc. — in terms of facilitating deals of all scales. Not only that, it enables the fast, efficient exchange of items around the clock while lowering the barriers to entry into different investment domains by allowing assets to be fractionalized.
As a result, a number of quality platforms have emerged in recent years, allowing users to harness the power of this revolutionary concept. Arkefi, for example, is an AllianceBlock-powered RWA investment and financing platform that supplies liquidity for assets that cannot be quickly or easily converted into cash. In other words, it affords seamless investment in spaces such as top-tier art and exclusive collectibles.
Elaborating on Arkefi’s digital infrastructure, the project provides a tangible pathway to transform valuable assets into a new gateway to funds by allowing RWAs to be used as collateral at 50% of their value. By harnessing the power of AllianceBlock’s Nexera Protocol — a solution for creating mutable and composable NFTs — Arkefi creates Meta Non-Fungible Tokens (Meta NFTs), opening up possibilities for fractional ownership.
In fact, this very idea of fractional ownership is making art-centric investments more available to investors with limited means. Lastly, to ensure the long-term safety of its user’s digital assets, Arkefi holds every physical asset linked to an RWA token in freeports located across Switzerland.
The recent partnership between AllianceBlock and @_Arkefi is set to disrupt the investment landscape for real-world assets (RWAs) ?
Here’s a rundown on the partnership and how it will make RWA investment accessible, transparent, and convenient ? ?https://t.co/MQ8DjdICUU
— AllianceBlock (@allianceblock) August 12, 2023
Constructing the future of digital finance. One Step at a time
In conjunction with Arkefi, AllianceBlock too has been at the precipice of creating novel, future-ready pathways connecting decentralized and traditional finance. To this point, its next-generation financial infrastructure comes replete with a number of tools that allow regulated financial entities to access the realm of decentralized finance (DeFi) with the touch of a button.
Additionally, AllianceBlock offers tools — such as its aforementioned Nexera Protocol-powered MetaNFTs — that are capable of converting collateralized RWAs into fractions. These tools, when used in conjunction with AllianceBlock’s compliance solution, NexeraID, ensure that all digital transactions always adhere to the local regulatory stipulations they are operating.
A future-ready synergistic alliance
The coming together of Arkefi and Allianceblock signifies a major shift in how many investors look at the future of digital investments. With Arkefi’s core ethos being rooted in decentralization and accessibility, the platform is making access to non-bankable assets easier and more streamlined. Moreover, its partnership will AllianceBlock opens up the tokenization market to new frontiers such as secondary market trading, dynamic pricing mechanisms, insurance pools, etc.
Therefore, with the global art market set to keep growing at a year-on-year rate of 29% between 2020 and 2022, it stands to reason that Arkefi’s coming together with AllianceBlock can redefine the RWA industry, especially the art market. Moreover, the partnership can also set new standards and unlock new opportunities for tokenized assets as a whole, and therefore, it will be interesting to see how the future of this yet nascent space continues to play out from here on end.
Source: https://coincodex.com/article/31422/providing-an-optimal-infrastructure-for-tokenized-real-world-assets-rwa-a-peek-into-the-future/