Tokenizing Real-World Assets

Most people believe web3 is not connected to the real world.

They believe tokens are created out of thin air, tied to the blockchain, and the rest is just candlesticks on a chart. You read the digital news; another rug-pulled token, another hack, or another scam. This instills beliefs that physical assets can’t be tokenized.

But they are wrong.

Introducing: MakerDAO

In the past year, MakerDAO added the integration where investors can deposit real-world assets as collateral into the protocol. These come in the form of:

  • Real Estate
  • Invoices
  • Receivables

After these assets are deposited into the protocol, you can take out collateralized loans against them in the form of Dai. Dai is MakerDAO’s stablecoin.

Real World Asset Vaults

These vaults are smart contracts that hold your collateral assets in escrow until your Dai is returned. Users have complete control over their assets, even in escrow, as long as their liquidation threshold is not met.

The Pricing Problem

When an asset is digital, and on-chain, previously created pricing oracles will read those asset prices quickly. They can report these prices back to users in milliseconds with high accuracy.

New pricing oracles will need developed to read tokenized off-chain assets.

There are marketplaces, like Tinlake, that have started this development.

Overview

You can expect this space to innovate around short-term bonds, green energy projects, and domestic businesses. Someone has to break the ice, into tokenizing real-world assets.

MakerDAO is leading the way.

Read this post and more on my Typeshare Social Blog

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Nick Conn

Nick Conn

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I analyze web3, DeFi, and tech behind the scenes. Writer & Investor — Software Engineering Manager — Substack: http://theleanletter.com