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What does the future hold for super-structured tokens?

It is not a movement restricted to another market

Anyone who has ever been impacted by the term tokenization has probably seen it in its full form, with the term tokenization of things. What the vast majority of people have certainly missed is the explanation of what “thing” we are talking about here. The lack of specification is no coincidence. After all, this process is born out of the renewal that blockchain technology brings to the present times. Today it is possible to bring various real-world assets and property into the digital environment. So it is not a movement restricted to another market (or to one thing or another), but literally serves all things. In the near future, everything that has value can be tokenized: houses, cars, and even animals.

Several surveys prove this growing market. Projection by consultancy MarketsandMarkets, for example, shows that tokenization moved $2.3 billion in 2021 and should reach $5.6 billion in 2026, an average annual growth of 19% over the period. Among the reasons listed for this growth are precisely the popularization of contactless payments and transactions and the increased demand for tokens among consumers and businesses. Sectors such as retail are already starting to realize the advantages of this process, while others still have a repressed demand.

Currently, the most common type of tokenization is precisely that of receivables. In other words, the company or person transforms a receivable into tokens to generate liquidity, and the investor benefits from a discount rate of the future receivable, which the asset owner will dispose of as profit from the operation.

This is what you see in the investment market as a whole, where funds tokenize different assets in exchange for a financial amount. Or in the real estate market, with the use of tokens to generate new business modalities within the ecosystem.

However, it is a mistake to think that the tokenization process is limited to this. In fact, it is a small fraction of what is possible to do. The idea is that in the very near future it will be possible to tokenize other things besides receivables – in fact, there are already companies that have gone over this wave with the offering of super-structured tokens. They are nothing more than solutions that allow the asset owner to create his own token in different modalities – which impacts both the primary and secondary markets.

Think, for example, of agribusiness. Today, one of the main financing resources of the sector is the Cédula de Produto Rural (CPR), a kind of future delivery of a certain asset, such as cattle breeding. In the logic of receivables, tokenization would be on top of the issuance of these securities. But why not tokenize the cattle itself? This measure eliminates intermediaries, providing more agility in business.

Of course there are challenges in this model. Tokenizing a security can be something simpler than a bullion, which includes issues such as physical custody, traceability of each unit, control of the sales chain, and legal representation, among other situations. The time the tokenization process takes will also not always keep up with the need of each owner. It takes up to ten times longer to develop an over-structured to ken than a structured token, which is easily released to the market within a few days depending on the asset’s profile. In more complex cases, this can take up to a year, for example.

However, this does not mean that, while this token is being structured (which requires a lot of legal and technological regulation), it cannot operate in the market. Rather, most projects have rapid stages of initial token releases that will later embed the project more broadly. A kind of soft opening, so to speak. In this way, it is possible to continuously build a relationship of interest of the asset with the market and potential users.

In the same way that e-commerce has established itself as a sales channel for all industries, tokenization will achieve the same status quickly. Not only because there are already several projects out there, but precisely because of the possibilities and advantages it offers for both individuals and organizations. The future is already ahead of us. What we do in front of it is what will determine the success, or not, of our adaptation to this new way of doing business and running the world.


Source: Monitor Mercantil

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