A Brief History of Tokenization and the Rise of NFTs
– Tokenization started in the 2000s to protect sensitive data.
– The US government tokenized dollars with physical gold until 1971.
– Companies now store tokens on the cloud to protect sensitive data.
– Ethereum blockchain and NFTs have transformed tokenization.
– NFTs grant holders custody of digital or physical assets.
Banks Lead Commercial Applications of Tokenization
– Traditional finance firms have tested tokenization for quick settlements.
– Citigroup and JPMorgan have tokenized assets for client payments.
– Goldman Sachs and Singapore’s central bank focus on tokenization.
– South Korea’s oldest bank is testing remittances with tokenized currencies.
Swarm Says Tokenization is the Path to Regulated DeFi
– Swarm links TradFi regulation with decentralized finance (DeFi).
– Swarm offers DeFi access to tokenized bonds and securities.
– Customer assets are protected by institutions like Gemini or Coinbase.
– Asset withdrawal process from custodian to customer wallet.
– The right mix of regulation and decentralization is crucial for crypto’s survival.
Liquidations in DeFi Applications Challenge Swarm Tokenization Promise
– The fragility of the DeFi industry and the need for better code audits.
– Implications of losing a digital asset in a borrowing smart contract not discussed.
– Process of liquidations and undercollateralized DeFi loans not detailed.
– Few countries’ laws fully address DeFi risks.
– US SEC could crack down on DeFi services breaking exchange rules.
Hot Take:
Swarm believes that regulation is the key to the future of crypto. By linking TradFi regulation with decentralized finance, they offer a platform for tokenizing real-world assets. However, the industry still faces challenges, such as code audits and addressing the risks in DeFi applications. It remains to be seen if tokenization will truly revolutionize the DeFi market as Swarm hopes.
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