Tokenize all the things

[the_ocs]

I’m sure we’ve heard the argument before, about “tokenizing all the things”. And why not? I can trade the gems I have in Duolingo for points in some game I want to play. Why shouldn’t I be allowed to do this? There’s a clear business use case to both Duolingo and the game developer. If people start trading these tokens they create a market for them. And the owners of the apps/games can mint and sell tokens to fund their development.

It also benefits me, besides the point that I can trade what I don’t want for what I want. It would save us from the ad revenue model. Instead of you being a product, the app/game becomes a product again. The developer is incentivized to focus their efforts on building a game I want to play or an app I want to use, rather than focusing on distracting elements like ads that take away from the core experience and exposes my data to third parties.

But while creating a market for tokens of all types is good as described above, it’s also good as collateral in stablecoins. I’ll take a more real world example: Say I have a flat in London, bought for 500k. Assume I have a mortgage with a loan to value ratio of 50%. That means my equity is 250k. But what can I currently do with this value? There are all sorts of terms and conditions tied to the mortgage, so refinancing is a slow and painful process. Instead, I’d want my flat to be tokenized, with an initial distributions between my bank and myself. As I pay off the mortgage, I do so through a predefined schedule, where the bank would transfer tokens to me in return.

These flat tokens I should be allowed to utilize as I see fit. Maybe I sell them, trade them for something else. I then reduce my ownership in my own flat of course, and that might not be what I’m keen on doing. Instead, why can’t I use them as collateral? Much like you’d do when opening a vault to generate DAI, I should be able to put my flat tokens into a vault of some kind and generate a given amount of stablecoins. And property is a very ideal collateral as it isn’t too volatile.

What can I do with the freshly minted stablecoins? Anything I fancy really, maybe something as boring as putting it in the stock market as part of my pension?

We can see similar opportunities elsewhere. Businesses do this already, through various terms. They sell their invoices to get cash more quickly, or they do other financing deals to release liquidity from their assets. They can do this because the values are large enough to justify the efforts. But even for them they would benefit from a tokenized approach as it could dramatically reduce the complexities and overheads.

Through a tokenization process, a large number of currently unproductive assets could become productive.

[Author]

Posts