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I hope you all are having a great 2024!

Some cool stuff is coming to BorgoAcademy – and as usual, members of The Wild West of Web3 will be the first ones to get a heads-up.

Web3 for real. In the real world.

Many times, the mention of “Web3” triggers thoughts of the Metaverse, gaming, or Bitcoin’s price.

It’s true, these are important pieces of the Web3 environment, but the picture is MUCH broader.

I said this last week, but I think it’s worth repeating: Over the 20 editions we have published so far, many different things within the Web3 space have been covered. To name a few:

– Open loyalty
– Smart Tokens
– DeFi
– Social Media
– Gaming
– Industrial Metaverse
– Sports
– Immersive experiences

Following my personal mission to help you become a Marketing Leader in the next internet evolution, I’ll keep bringing you real-world applications for Web3, so you can take your businesses and ideas to the next level.

And what better way to achieve this than exploring applications with tangible impact?

So, buckle up! Today, we’re diving deep into Real-World Assets Tokenization.

In my latest post on LinkedIn, I said:

RWAs Teardown: This complete guide will delve into my thoughts, explore various opportunities and applications, and most importantly, show how your business can profit from them.”

An overview on RWA Tokenization:
The new era of Ownership and Trading

First things first: Real World Asset (RWA) Tokenization is not a new boring tech buzzword for you to memorize now and change for a new one in 3 months.

It is a movement transforming how we perceive ownership and trading. Imagine a world where tangible assets like real estate, art, commodities, in-game assets, or even intellectual property are as easily tradable as stocks (in fact, it can be EASIER than stocks).

That’s RWA Tokenization in a nutshell.

“But Mr. Pink Beanie, it will take decades for this market to have any relevant value”

Many people way smarter than me are projecting that by 2030, the total market value of tokenized assets will skyrocket beyond $10 trillion.

Again for the ones in the back:

$10 trillion – US Dollars

And if you think this movement hasn’t started, I must say it’s happening right now. And in MANY different sectors:

The tokenization process

It begins with identifying and valuing the asset, followed by ensuring legal compliance and creating blockchain-based smart contracts.

The choice of the blockchain platform (Ethereum for instance – but there are a bunch of other options, each with different pros and cons), and the creation of digital tokens are critical steps. These tokens represent ownership or rights over the physical asset, with each token embodying a fragment of the asset’s value.

This process not only makes assets more accessible but also enhances their liquidity. Unlike traditional markets, tokenized assets can be traded 24/7 on cryptocurrency exchanges (including decentralized ones).

This flexibility, coupled with the transparency of blockchain technology, builds investor confidence and reduces the risk of fraud and ownership disputes.

Get ready for the challenges ahead…

Navigating the complex regulatory environment stands as a primary hurdle – who doesn’t love dealing with bureaucracy, right?

Different jurisdictions have varied regulations, making compliance a tricky affair. Ensuring alignment with securities laws and other relevant regulations is vital to avoid legal pitfalls that could derail tokenization efforts.

If you ask me – this (the regulatory part) is an area where start-ups and smaller companies may have an advantage over big ones.

While the titans can afford huge legal and compliance teams, they tend to be slower to adapt. Meanwhile, businesses with flatter structures are more likely to make quick turns and change faster.

Custody of assets and market acceptance also can bring significant challenges. Securing the underlying assets (so the actual “thing” the tokens are linked to) is crucial to prevent fraud or mismanagement, and sustaining liquidity and price stability depends on active marketplaces or exchanges.

Furthermore, the appraisal of tokenized assets and the technology underpinning them carry inherent risks. Valuing and dividing real-world assets into tradeable tokens is complex and prone to disputes.

Technological risks, including software faults, along with concerns around privacy, data security, and the legal aspects of smart contracts, add layers of complexity to RWA Tokenization, necessitating a thorough understanding among all stakeholders for its successful integration into the financial market.

As usual, all these challenges can be interpreted as opportunities. So, if you are a builder, certainly there’s room for you.

So you can leverage the benefits brought by RWA Tokenization

Tokenizing real-world assets brings different benefits. It enables fractional ownership, making high-value assets attainable to a wider audience.

More than a technical upgrade, I see this as a financial evolution, creating greater liquidity, transparency, and accessibility. The traditional financial markets, often seen as rigid and exclusive, are being reimagined and democratized.

The summary, these are the main impacts RWA Tokenization causes:

→ Democratizing investment: By making high-value assets more accessible, tokenization opens the investment world to a broader audience.

→ Increasing liquidity: The 24/7 trading capability on exchanges makes these assets more liquid than ever.

→ Enhancing transparency: Blockchain’s inherent transparency reduces fraud risks and boosts investor confidence.

→ Reducing costs: By eliminating many traditional market entry barriers, tokenization cuts down on associated costs like legal fees.

→ Promoting inclusivity: This new wave of investment options is more inclusive, extending opportunities beyond traditional market participants.

So before we start exploring different aspects and applications of RWA Tokenization, by now it should be clear that we are talking about a bridge between the tangible and the digital, which brings a more inclusive, transparent, and efficient financial.

Time to go deeper.

STRAIGHT FROM THE BEANIE

In this space, I’ll share concepts, ideas, and views I have about different topics – in other words, things I believe you, as a leader, innovator, or entrepreneur should pay attention to.

ERC3643 – The Token standard for RWA Tokenization

If you have been exploring blockchain, cryptocurrencies, or tokens in general for a while, you’ve probably heard about different “Token Standards”, including the popular ERC-20, BEP-20, and ERC-1155.

These standards aren’t just about keeping the, well, standards. They help spark innovation.

By providing a common foundation, they free up developers to focus on the cool stuff, pushing the boundaries of what’s possible. Think of it as giving skaters the same skateboards and tracks, and then letting them do their tricks freely. This is where the magic happens, where new ideas come to life, and where the future of blockchain and crypto is constantly being reimagined.

And in this context, when it comes to RWA Tokenization, ERC3643 is a name you can’t ignore.

“Oh, so it’s a brand new thing, right?”

Not exactly, my friend. Previously known as the T-REX protocol, over $28bn worth of assets have already been tokenized through ERC-3643.

Ok, so what’s the “magic”?

Source: erc3643.org

According to the project’s website, “The transfer of ERC3643 tokens can only be triggered when both the investor rules and offering rules are fulfilled, ensuring compliance at the smart contract level”.

In simpler terms, the ERC-3643 allows market participants to enhance trust, compliance, and control in a shared environment, taking transferability to the next level.

 

The summary you were waiting for 😄:

📜 Compliance built-In: Transfer rules are directly embedded into the securities with ERC-3643, ensuring every transaction is compliant right from the start.

📜 Control over tokens: Even when investors directly own the tokens, issuers and agents maintain control, ensuring governance and oversight.

📜 Cost-efficient transactions: ERC-3643 introduces T+0 automated on-chain settlement, significantly reducing transaction fees and speeding up the process.
(And we all know how this can impact a business, right?)

📜 Enhanced transferability: It unlocks higher functionality for assets, improving their liquidity and making them more accessible for trading.

So amongst many terms you may come across while exploring this topic, “ERC3643” is one that is still somewhat under the radar, but will most certainly become more and more common.

Business & RWA Tokenization:
Building in the new era

“Cool, cool… But could you please help me understand how my company (or myself as a professional) leverage RWA Tokenization and make money?”

As you can imagine, this conversation can be VERY LONG, as it depends on each person’s/company’s business model, budget, market, etc.

One thing, however, is crucial regardless of the business that you are building: Ask yourself, “How can we shake things up?, “Is there a chance to disrupt the industry by bringing in tokenization?”

As the Web3 scene matures, just showcasing the tech is not enough anymore. The real deal? Focus on the solution, not just the tech. Dive deep into the real magic of tokenization – that’s where you start building solutions that truly add value and make a difference.

With that in mind, I’m here to show you some of the opportunities you can explore and profit from:

🧠 Intellectual Property:

Yes, you read that right. Tokenization is a great solution for turning ideas into tangible assets.

Here, we are talking about monetizing patents, trademarks, and copyrights in a way that’s never been done before. Companies can now tokenize their intellectual property (IP), making it easier to sell, license, or even crowdsource funding for development.

Imagine small businesses getting a chance to play in the big leagues by leveraging their creative assets!

Or, you can launch a tokenized, licensed product/collection/brand, and each “shareholder” gets paid accordingly.

💎 Luxury Goods:

Luxury goods are stepping into the tokenization spotlight, and it’s all about exclusivity meeting accessibility.

High-end items like designer watches, jewelry, or limited-edition products can now be fractionally owned. This opens up a whole new marketplace where luxury brands can tap into a wider customer base, and investors get a slice of the luxury pie.

By the way, in case that’s your niche, have a look at our edition #12 for some extra ideas.

🃏 Collectibles:

The collectibles market, from vintage cars to rare trading cards, is getting a digital transformation.

Tokenization here means turning these coveted items into fractional shares, accessible to more enthusiasts and investors.

This not only broadens the market but also adds a layer of security and authenticity verification to each item. Thanks to Blockchain, anyone can verify if that “100-pieces only” collection has indeed only 100 units.
Google “verifiable scarcity”.

For businesses, it’s a chance to connect with global collectors, and for collectors, it’s about owning a piece of history, without the hassle of physical storage.

🌾 Commodities:

Tokenization is also reshaping the commodities sector.

Yes, things like gold, oil, or agricultural products can (and in many situations SHOULD) be tokenized.

The conversation here is about breaking down these massive, often inaccessible markets into smaller, tradeable tokens. This enables companies to invest in commodities without needing large capital, offering a more flexible and liquid approach to commodity trading.

It’s a groundbreaking shift that could stabilize supply chains and open up new investment strategies.

⚡️ Renewable Energy:

By tokenizing energy assets, companies can attract investment more easily, allowing for greater expansion and innovation.

Investors get to contribute to a greener future while potentially reaping the rewards of the growing renewable energy market. It’s an opportunity for businesses to be at the forefront of the sustainability wave, turning green initiatives into profitable ventures.

Still in this sector, another opportunity comes with carbon credits – once tokenized, it becomes much easier to track every step of a supply chain.

If you are more into images, I got you covered:

Source: Outlier Ventures

Don’t worry, very soon, we’ll explore more ways to embrace opportunities brought by RWAs Tokenization, including actionable guides and more use cases.

BorgoAcademy Community

You help me build this, so I want to give you back.

In this section, I’ll answer questions and discuss ideas sent by you, my fellow Web3 partners.

A couple of days ago I posted my views on a very interesting report titled “Tokenization of Real-World Assets”. You can click here to read the full thing.

First of all, I want to thank you all for the amazing response and engagement. It just confirmed how much interest this topic attracts – and I’ll make sure to keep covering it here.

Second: I do read your replies – and questions. And now I want to take a moment to explore some interesting discussions you started over there. I’ll combine my own experience with what’s going on in the space.

Potential + Early adoption

Even though this topic is becoming popular, it’s still somehow overshadowed by “cooler” things, like Gaming and Cryptocurrency (and I love both, by the way).

However, since it comes with terms like “tokens”, “real estate”, “contracts”, and “fractional ownership”, most people are still afraid to relly dig deeper.

I honestly see this as a chance to position ourselves ahead of the masses and build while others are busy doing something else. On top of that, as Waleed said, “across industries”, and yes, we are talking about something that has the potential to reach EVERY SINGLE INDUSTRY. And I mean it.

Tokenizing art

The fine art market generated nearly 68 billion U.S. dollars in 2022. However, it is often difficult to invest in it because of how illiquid and “““traditional””” it is.

But now, imagine the classics, like Van Gogh’s “The Starry Night”, stepping out of their frames and into the blockchain.

As we have discussed earlier in this edition, if tokenized, these masterpieces become accessible in a way that’s both modern and revolutionary. You could own a slice of art history, digitally, without breaking the bank – nor the real painting 😄.

So yes, it’s about ownership, but it goes beyond: it’s about opening doors. This digital twist brings the “snob-fancy” world of art galleries to everyone’s fingertips.

It becomes more affordable to have a fragment of a Picasso or a snippet of a Rembrandt. It’s for you, me, and anyone who loves art – or even if you solely looking at this from an investment perspective.

Financial assets

Well said, Said.
When it comes to financial assets, MANY items can be tokenized:

•Public Equity
•Private Equity
•Debt
•Investment
•Funds
•Commodities

As mentioned in edition #20, around 1.5 billion people are disconnected from the traditional banking system. That’s ~1.5 billion individuals without the tools most of us take for granted – no bank accounts, no credit cards, nada. This isn’t just an inconvenience; it’s a barrier that keeps them from financial stability.

As we discussed before, Tokenization democratizes investment opportunities, making them accessible to the unbanked. It’s about breaking down once unattainable assets into bite-sized, manageable pieces, making them available to anyone, anywhere.

Tokenization also revolutionizes the way we view asset liquidity and pricing, making previously stagnant assets move with new life and trading activity.

I’m glad to say that there are many other discussions and questions in the comment section, but I picked some that may help you have a better overall view of what RWA Tokenization can bring to the Web3 table.

SPOILER ALERT: What if there was a better, more direct way for you to interact with other members of our community, exchange ideas, experiences, business opportunities, and more?
Huuuum… soon…

WALKING THE TALK

I’ll share news about projects I am directly involved with and also information that I’m discussing with the suits in meetings with Fortune 500 brands, and where I invest my money and time.

No bullsh*t, no sugar coating. Real talk.

Districts – Everything* is possible

Back in edition #17, I talked about Districts, a decentralized, open-source ecosystem where designers, investors, and content creators can come together to not just imagine but actively shape the future.

In their own words, “The vision is to provide creative professionals and real estate enthusiasts with cutting-edge tools and collaborative spaces to push the boundaries of digital design”.

Districts is intended to host the development of a range of virtual activities, to attract a broader audience of professionals, such as architects and real estate owners/managers/developers, who can leverage open-source 3D environments, and develop new business ventures on virtual land parcels, and enjoy unique augmented reality experiences.

(You have probably noticed that but here’s another opportunity for you and your business to leverage Web3 💰️)

I highly recommend following this project as both the tech and team are killing it!

Districts is a virtual world mirroring Earth, where individual creativity meets collective innovation. It is set to revolutionize the tie between real-world assets (RWAs) and immersive experiences.

The Districts Digest

Subscribe

Spotlight: Realio Network

The company behind Districts is Realio Network – and they are at the forefront when it comes to RWAs Tokenization.

Realio Network is spearheading the RWAs movement. They are bringing a fresh, dynamic approach to digitally native real-world assets.

Launched after thorough testing by over 100 validators, their network is built on the Cosmos SDK Layer-1 multi-chain Web3 ecosystem, combining open-source flexibility with a permissionless framework.

One of the standout features of the Realio Network is its EVM compatibility and dual-token Proof-Of-Stake consensus mechanism, utilizing $RIO (Realio Network Token) and $RST (Realio Security Token). These tokens fuel transactions and security.

Realio positions itself as an ideal venue for digital fundraising and management, particularly for fund managers looking to leverage blockchain technology. Its ability to support the creation and issuance of digital tokens positions it perfectly for managing funds digitally, expanding investor access while simplifying compliance.

(In other words, they facilitate many things we have discussed so far in this edition)

In the grand scheme of RWAs Tokenization, with a market poised for significant growth and big players like BlackRock positioning themselves, networks like Realio are at the forefront, ready to capitalize on this market.

Realio’s end-to-end blockchain-based SaaS platform is breaking down the institutional barriers in the lifecycle management of RWAs, helping set a new age of investment and asset management.

So, in summary, when it comes to RWAs Tokenization, Realio Network has a lot going on – and everything they have been building, including Districts is worth sharing.

AGENDA:
LINKEDIN LIVE → Map2Earn

Click on the image to access the event

Next Wednesday (January 10th), I’ll be chatting with Diego Di Tommaso, Co-Founder and COO of Over, a platform that’s truly innovating in the Web3 and AR space.

Over’s unique approach involves transforming physical spaces with interactive digital content, creating a fusion of the real and the digital.

Their main project, Map2Earn, is all about enabling users to map the physical world with their smartphones and turning these mappings into NFTs.

📅 When: January 10th at 3PM CET

📍 Where: Linkedin Live

I hope you can join us, as it’s a chance to gain a deeper understanding of how Over is shaping the future of digital interaction.

See you soon.

#LFGrow
Diego Borgo

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