Tokenization 2.0: How smart financial contracts are revolutionizing financial products Smartfinancialcontracts Casper CSPR
- Institutional investment into digital assets is once again on the rise – thanks in part to the filing of an application for a spot Bitcoin exchange-traded fund by BlackRock, the world’s largest asset manager – and it's not just specific cryptocurrencies that are garnering attention as blockchain technology is also being used to launch regulated investment products around the world.
According to Kubli, “Current tokenization methods simply digitize the asset, not the liabilities or cash flows. In other words, an asset-backed token gets created and appended to a blockchain with a PDF of the Terms and Conditions attached. This means that tokenized assets, designed to be more efficient and automated, still require human intervention, which can introduce errors and discrepancies.”
Referring back to the digital bond released by TASE, Kubli said, “a bond pays interest over time, so you need to define how this is calculated. If you don’t actually have this logic in the token you basically only have a dumb token. So you just have a token that says, ‘Hey, I’m a bond, but if you want to know how much money that you’re owed, please go and read the PDF, which is hashed inside my contract.
The TaaS solution is an open-source standard that any business can use. It enables the creation of native financial digital assets that are machine-readable and executable, allowing for faster trading and settlement. Algorithmic logic is also tied to the underlying digital asset, which makes it possible to analyze, organize and automate information about any aspect of the financial instrument.
One company that has already implemented a similar solution in the precious metals market is aXedras, a Swiss-based distributed ledger technology infrastructure and application provider digitizing the precious metal value chain, from miner to investor. “They are really far ahead in the bullion market,” Kubli said.The main idea behind what Kubli is helping to develop is a way to provide a clear definition of an asset's cash flows on-chain.
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