Primarily, the term “digital asset” referred to any intangible object that had value and had been computerized ― a song, a piece of digital art, contracts, videos, and other things like that. However, by this day, the primary understanding of this notion switched: the mere word asset implies the aspect of an appreciated value. The “digital assets” lexical construction stopped standing for the computerized files and started being used in the blockchain and decentralized finance context.
Today, the term “digital assets” describes assets on the blockchain, which can be a company’s stock, an ownership right, or even a tangible asset like real estate. Such a way of preserving assets offers numerous benefits like eased management, liquidity, and possibility to attract many small investors. Read the article further to discover those benefits and find out how your business can apply them.
What are digital assets, and how do they function?
The notion of a digital asset stands for any asset existing on blockchain: an NFT containing a piece of digital art, a security token representing a company’s share, a utility token inside a particular company’s ecosystem, a stablecoin or CBDC, just like all the other types of tokens. Many physical assets, like commodities, art, farmland, or real estate, may be tokenized to form a digital asset that can be traded, expanding the potential of digital asset marketplaces.
Most frequently, a digital asset represents an intangible (patents, trademarks, copyrights) or tangible asset (existing in physical form or possible to use in real life: a piece of art, a barrel of oil, property ownership, security, et cetera). The process of transferring such an asset to the blockchain is called tokenization.
How to make physical assets digital?
Financial services companies now have access to investable digital assets, opening up new investment opportunities in a rapidly expanding field. Combined with what the decentralized finance industry has to offer, digital assets as its main product are the direct gateways to growing the business and making it even more profitable and recognizable. Tokenization can breathe life into assets that earlier used to have low liquidity, such as private companies’ stock, real estate, or even precious collectibles. Along with commodities, these assets are most frequently transferred to the blockchain. There are two ways these physical assets are made digital: via security token and NFT.
Security token represents real securities such as shares in the firm, collectible items or real estate ownership, etc. Security tokens are most often created for actual securities or corporate equity (which is where their name comes from). Still, they are also used to transfer commodities, valuables, and different properties to the blockchain. Simply put, security tokens are blockchain-based representations of physical assets by which they are backed.
Non-fungible token (NFT) is a collectible token of a different standard that can’t be interchanged or duplicated. Thanks to this function, it’s most frequently used as a medium for digital art. The non-fungible token contains information about the owner of such an object. Thus, if a token’s copy is created, the information about copying will remain in the code as well. It’ll be clear that the second token is a counterfeit; therefore, the chances of selling it at the original price tend to be zero. Such NFTs properties incentivize its use as a proof of authenticity and in the tracking area: for instance, if used as a ticket to the event, if attached to a medication’s certificate, or representing a limited edition of an e-book.
The right choice of a tokenization partner and digital asset management consultant makes up 70% of a successful digital assets launch. More than 30 clients have already trusted Stobox with issuing their digital assets for their projects. Altogether, they are raising more than $300 million. A professional team will guide you through the process and minimize risks. Book a consultation with a Stobox expert now for free.
Benefits and case studies
There are several most popular kinds of digital assets services. Let’s start with tokenized securities.
Company’s stock tokenization is primarily associated with conducting a security token offering (STO). This is a blockchain-based analog of IPO, which a company can run without actually becoming public. As an initial public offering is hugely exhaustive for the company’s resources, and its preparation may sometimes lead to bankruptcy, STO is much cheaper and quicker.
Conducting an STO brings numerous benefits for the company, its investors, and generally for the financial market. First and foremost, it means that the company’s shares can be traded, and therefore they are liquid. Tokenized securities can be issued and managed on platforms like DS Dashboard and swapped for other digital securities on platforms like DS Swap.
Tokenizing the company’s stock also gives more privilege to the issuing company as it preserves its bargaining power in terms of selling the token. It’s possible thanks to selling the token not to one big investor (who held the negotiating power earlier) but to a more extensive range of smaller investors. Investors, in turn, will enjoy extended investment opportunities, simplified exit, and lowered investment threshold thanks to fractional ownership.
Let’s look at several examples of successful digital assets implementation in various sectors.
Tokenized luxury villas
Earlier this year, Stobox conducted a security token offering for Candela Project, a luxury villas complex in Tulum, Mexico. Candela hired Stobox to create real estate-backed tokens that would be offered to investors. Buying a token enables the investors to achieve returns from the actual villas realization when they are rented out or sold. The tokenization solution helped the project with raising funds quickly and a lot easier than the means the traditional financial system could offer (like going for IPO). Moreover, the Candela team got a convenient solution to manage their tokenized securities ― a Digital Securities Dashboard developed by Stobox.
Tokenizing real estate is often more profitable than monetizing real estate via REITs or searching for a single buyer. With decentralized finance, real estate becomes more liquid (thanks to fractional ownership) and easier to trade.
Natural resources businesses and the agricultural sector are among the first on the list of those who can greatly benefit from what decentralized finance has to offer. With the challenge of buying costly equipment, conducting expensive and risky research, and waiting long for profit, these spheres are becoming increasingly familiar with the benefits digital assets and tokenization have to offer.
It’s no wonder an agricultural firm Farmland Assets used Stobox tokenization services to raise capital. The company’s goal was to purchase large blocks of rural farmland in agrarian states. Involved in the purchase of high-quality agricultural land in the USA for the production and sale of lucrative specialty crops, Farmland Assets set two goals for their security token offering: expand the business by purchasing more agricultural land at attractive prices and set up farm operations on some of the most productive farmland globally. Right now, their offering is live on DS Dashboard, with a total goal of raising $15 to $30 million.
Having led a profitable business for over 70 years, this spring, an athletic footwear brand Asics partnered with a move-to-earn Web3 running app StepN to design an unusual collection of sneakers. The sneakers in question are, in fact, the NFTs, and their edition is limited.
Wearing sneakers suggests downloading an application, buying an NFT, and moving inside the app. The app’s dynamic is rewarding users with crypto for moving: this is how Web3 lifestyle applications work.
Asics’s head of development, Joe Pace, positions such a step as a “commitment to inspire people to have a sound mind in a sound body, and the brand aspires to apply technology in thoughtful ways to advance that mission.”
Creating a collection of digital footwear kills two birds with one stone as Asics becomes more recognizable thanks to an unusual integration and tapping into digital asset services, promoting the brand, and setting a progressive image.
Today, more and more companies unrelated to blockchain are leveraging the power of digital assets. Decentralized finance opens a gateway to fantastic means of fundraising and managing the businesses’ assets. If you’d like to know more about the given topic, feel free to book a free 30-minute consultation with Stobox specialists. We offer digital asset management consulting services and turn-key tokenization solutions for businesses or individuals.