A new trend demonstrates that tokenizing real-world assets could be the key to unlocking new opportunities. These pertain to investment and enhancing liquidity in the market. Most importantly, tokenizing real-world assets by backing them with blockchain technology is emerging as a way to expand access worldwide, allowing traders to own a piece through their investments fractionally.
Intermediaries play a role in the industry but also uptick the overall cost. Thereby making the process expensive. However, tokenization eliminates the need to have an intermediary. Hence, this saves costs and gives direct control to participants.
It solves real-life problems, too – for instance, SMEs are known to battle for funding. With RWA, they can put up a piece as collateral and borrow liquidity to advance their projects. Moreover, the asset can be read in DeFi pools or deposited into investment vaults.
RWAs democratize access to investment opportunities by ensuring everyone has access to them. It primarily includes those who have not been banked yet or who have not been banked to the best of their abilities. All they need is the Internet and sufficient details for the KYC process. The self-explanatory registration process takes a few minutes, after which they are ready to proceed.
Fathom protocol, for one, is joining hands with traditional businesses to bring benefits to the ecosystem. It provides market mechanics to help customers and players with yield, trading venues, and borrowing liquidity. As for investors, Fathom’s tokenization helps them make the right choice of investment, self-sovereignty, and cross-collateralization.
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Tokenization is expected to lead to the Internet of Value, which will enable convenient storage and transfer by the user. Moreover, it will do so at a lower cost and in a global infrastructure without compromising access and distribution.
Three elements drive the market – liquidity access, ownership, and yields. SMEs and individual investors will have all the elements via tokenization. Blockchain technology is ideal, for it boosts security and transparency.
The industry has been explaining the gap between asset owners and inventors. Tokenizing real-world assets is better positioned to bridge that gap.
The same has been echoed by Manuel Rensink, the Co-Founder of Fathom Protocol. The emphasis of the discussion was on how the process democratizes access to investment opportunities. Obtaining finance was identified as a key challenge in the interaction – something that can be tackled by efficiently posting RWAs as collateral to borrow liquidity.
They added that FXD by Fathom aims to become the life blood of the native, hybrid network with a core focus on global finance. It is resistant to bank failure because it is over-collateralized by on-chain XDC and RWA.
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Simply put, tokenizing real-world assets brings a lot of opportunities for investors and owners. While one gains access to investment, the other gains access to liquid borrowing.
