6 Tokenisation Use Cases

Tokenisation is transforming finance by converting real-world assets into digital tokens on blockchains. This unlocks opportunities like fractional ownership, 24/7 trading, and automating manual processes. While tokenisation holds immense potential across many sectors, certain assets stand out in their ability to benefit from digitisation.

Bonds, shares, funds, stablecoins, real estate, loyalty programs, and art exemplify prime use cases where tokenisation can overhaul efficiency, accessibility, and transparency. As adoption continues, these assets highlight the countless opportunities that lie ahead.

This article explores how tokenising these assets through blockchain technology promises to revolutionise investing, ownership, and utilisation. We delve into the improvements tokenisation can bring to each specific asset class and why they make ideal early use cases to showcase the advantages.

Tokenisation use cases:

Bonds and shares: 

The assets in question here are corporate bonds and shares which represent debt or equity in a company. Tokenisation transforms these assets into digital tokens on a blockchain, enhancing liquidity and accessibility. It democratises investment by allowing fractional ownership and reducing entry barriers. Tokenising these assets also streamlines the clearing and settlement process, making transactions faster and more efficient.

Example:

ABN AMRO has partnered with Tokeny to innovate in sustainable finance by tokenising a green bond on a public blockchain, a first for a Dutch bank. This initiative utilises the ERC3643 standard on Tokeny's platform, allowing ABN AMRO to enforce regulatory compliance directly on the Polygon blockchain. The project reached a significant milestone with Vesteda securing EUR 5 million from DekaBank.

This pioneering step not only advances sustainable financing but also sets a new standard for financial markets and banking in the Netherlands and possibly worldwide.

Funds

Investment funds, including mutual funds, hedge funds, venture funds, and private equity, can benefit from tokenisation. It allows for fractional ownership of fund units, making it easier for a broader investor base to gain exposure to diversified portfolios. Tokenisation also provides real-time fund unit valuation and ownership transfer, increasing transparency and reducing administrative costs.

Example:

Moreliquid’s Money Market EUR (MMMEUR) fund that tokenises access to a prominent Euro Liquidity Fund. The MMMEUR fund has a substantial size, with assets under management (AUM) totaling EUR 16 billion. The MMMEUR fund strategically allocates its resources into a diversified portfolio of short-term securities, instruments, and obligations. Launching late November here.

Tokenisation of the fund offers enhanced liquidity, accessibility, and transparency. Subscribe to our newsletter here to stay up to date with this investment release.

Stablecoins

Stablecoins are cryptocurrencies designed to minimise volatility by being pegged to stable assets like fiat currencies or gold. Tokenisation here creates a digital representation of these stable assets on the blockchain, facilitating swift global transactions, reducing the costs associated with money transfer, and providing an on-ramp for traditional investors to enter the cryptocurrency market.

Example

USDC, created by Circle, a regulated fintech firm, has emerged as a trusted stablecoin, redefining the financial landscape with $24 billion in circulation as of November 13, 2023. 

With a commitment to accessibility and efficiency, USDC enables fast, global transactions and is held by 1.8 million users worldwide. It supports a substantial 24-hour trading volume of $4 billion and has facilitated a total of $12.67 trillion in on-chain transactions. Available in over 190 countries, USDC stands as a highly liquid digital dollar, integral to both traditional and crypto commerce, and continuously driving innovation in the digital currency space

Real Estate

Real estate assets are often high-value and illiquid. Tokenisation of real estate assets into digital tokens on blockchains enables fractional ownership of properties. Instead of needing to purchase an entire building, investors can buy tokenised shares representing fractional ownership interests. This can help improve liquidity in the traditionally illiquid real estate market

Tokenisation opens up real estate investing to smaller buyers who couldn't afford whole properties. Property transactions and records like titles can be automated through smart contracts for efficiency. Overall, real estate tokenisation provides opportunities to expand access, enable global trading, and streamline processes.

Example

Security Token Market (STM) has successfully tokenised a historic property situated in the heart of Lueneburg Old Town, Germany, first mentioned in records dating back to 1342. This project raised $1,500,000 and began its fundraising efforts on May 1, 2020. The offering attracted broad participation with a minimum investment threshold of just $10 and a token price set at $1.

This successful outcome not only demonstrates the high confidence of the investors but also marks a significant milestone in the digital securities market, specifically in backing properties with historical significance. 

Loyalty Programs 

Most loyalty and rewards programs rely on proprietary centralised databases to track points balances and redemptions. However, tokenising points into digital assets enables exciting new possibilities. It allows customers to transfer points to others or potentially exchange points for non-native rewards like airlines miles. Tokenised points could integrate across loyalty programs, avoiding closed silos. There are also emerging opportunities to exchange points for digital assets or incorporate aspects like gaming and NFTs. Tokenisation could transform stagnant loyalty programs into dynamic ecosystems with greater flexibility and collaboration.

Example

Starbucks

Starbucks Odyssey, a pioneering Web3-based experience, has marked a significant milestone in customer engagement by rapidly selling 2,000 NFTs at $100 each within a mere 20 minutes. This achievement underscores the high demand and enthusiasm for innovative digital collectibles and the unique value they bring to Starbucks Rewards members and partners. As Starbucks integrates NFTs with its industry-leading loyalty programme, it creates a novel way for customers and employees in the U.S. to deepen their connection with the brand.

These digital collectible stamps, which members can earn or purchase, serve as more than just symbols of membership; they are keys to unlocking a suite of exclusive and immersive coffee experiences. Starbucks brought in Forum3 to help them build this innovation.

Art

Tokenisation provides an opportunity to fractionalise ownership of artworks through digitally tradable tokens. This allows investors to purchase shares of expensive bluechip art that would normally be inaccessible to most. Fractionalised ownership enables broader participation. Tokenisation can also help verify provenance and combat forgeries with immutable records. Interesting applications are emerging like virtual galleries of tokenised art. While adoption is still early, tokenisation may make the art market more efficient, transparent, and participatory.

Example:

Particle has made a bold entrance into the art and digital asset world by dividing Banksy's famed 'Love is in the Air' painting into 10,000 unique NFTs. The platform, co-founded by Loïc Gouzer, a former chairman at Christie's, accomplished this after acquiring the piece at a Sotheby’s auction for $12.9 million USD. The artwork was segmented into 10,000 individual 100-by-100 pixel sections, with each digital piece representing a distinct portion of the Banksy painting.

The initial sale, which took place between January 10 and January 14, offered collectors the chance to own a piece of the iconic artwork for approximately $1,500 USD each. In a move to democratise art ownership, the allocation of particles was randomised, ensuring no buyer could select their segment. Following the sale, the NFTs entered secondary markets across various NFT platforms, with values expected to rise due to the artwork's inherent worth and the unique nature of the offering.

Summary:

Tokenisation is more than a buzzword; it's a technological advancement that is reshaping how we interact with and invest in various asset classes. From the increased liquidity and accessibility of bonds and shares to the democratisation of real estate and art markets, tokenisation is breaking down barriers and forging new opportunities. Stablecoins are stabilising the volatile cryptocurrency space, while tokenised funds and loyalty programs are enhancing efficiency and engagement. 

As we've explored, the tokenisation of assets is not just an interesting concept but a practical innovation that is already changing the investment world. As this technology continues to evolve, it promises to unlock even greater potential and opportunities across diverse sectors. 

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