Data storage for tokenized assets

Data storage for tokenized assets

Term DefinitionsTokenizationThe process of creating a unique digital identifier (ID) for an asset that has value. Non-fungible token (NFT)A unique, non-interchangeable digital token that represents ownership of an asset. Fungible token (FT)A fungible digital token, similar to a unit of currency. Smart ContractA piece of code stored on a blockchain that automatically executes when pre-set conditions are met. Distributed ledger technology (DLT)A decentralized database that allows multiple parties to securely access and record transactions. BlockchainA type of DLT where data is stored in blocks and linked together in chronological order. Asset registryA database that stores and tracks information about tokenized assets. WalletA digital container that stores and manages digital tokens. IAsset tokenA token that complies with the IAsset specification and supports asset management capabilities. IAssetFund tokenA token of IAsset designed for managing funds and supports the IAssetManagement interface. The IAssetManagementFungible interface allows NFTs to be linked with FTs to support fractional ownership. Composite Tokens A token that contains or is linked to other tokens, such as a fund token. Fund A financial asset that contains other assets. Elastic Securitization A strategy that allows closed-end funds to expand or shrink in size based on market demand.

Short Answer Questions

Briefly describe the role of tokenization in asset management.

Explain the difference between NFTs and FTs and give an example of how each type can be used for fund management.

How do smart contracts enhance the transparency and efficiency of DLT-based asset management systems?

Explain the role of the IAsset token and its significance in decentralized fund management.

How does the IAssetFund token differ from the IAsset token? What additional functionality does it support?

Describe the purpose of the IAssetManagementFungible interface and how it facilitates fractional ownership.

Explain the concept of a composite token and provide an example of how a composite token can be used in a fund structure.

What is elastic securitization and how does it benefit closed-end funds?

Describe how the system described in the disclosure addresses information transparency and pricing issues associated with traditional RMBS funds.

Explain how the combination of a public, compliance-aware FT can automate dividend payments and corporate governance.

Short Answer Question

Tokenization simplifies asset management by creating digital representations that can be traded on a DLT network. This process increases transparency, reduces the need for intermediaries, and enables more efficient transactions.

NFTs are indivisible tokens that represent unique assets, while FTs are divisible tokens that represent fungible units of value. In fund management, NFTs can be used to represent individual assets in a fund, while FTs can be used to represent fund shares.

Smart contracts enhance transparency and efficiency by automating tasks associated with asset management, such as dividend payments, asset valuations, and compliance verification. These automated functions reduce the risk of human error and create an auditable and tamper-proof record of transactions.

IAsset tokens facilitate asset management in a decentralized environment by providing standardized interfaces for ownership transfers, valuation postings, and asset-specific processing logic. This standardization simplifies the management of different asset types and promotes interoperability.

The IAssetFund token is a specialized IAsset token designed to manage funds. It supports additional functionality such as enumerating fund assets, adding or removing assets, and calculating fund valuations.

The IAssetManagementFungible interface allows NFTs to be linked to FTs, thereby supporting fractional ownership. This linking enables users to own a portion of an NFT by owning an FT, enabling broader market participation and liquidity.

Composite tokens are tokens that contain or are linked to other tokens, such as fund tokens. In a fund structure, composite tokens can be used to represent a fund that contains other assets such as stocks, bonds, or real estate.

Elastic securitization allows closed-end funds to scale up or down based on market demand without the need for authorized participants. This feature benefits closed-end funds by providing a liquidity buffer and allowing fund managers to effectively respond to changing market conditions.

The system described in the disclosure solves the information transparency and pricing issues associated with traditional RMBS funds by providing a transparent, auditable record of all fund assets and transactions. This transparency allows market participants to independently assess the value of the fund and reduces information asymmetry.

By combining the public compliance-aware FT in the IAsset token, dividend payments and corporate governance can be automated through embedded smart contract logic. The asset management capabilities of the IAsset token combined with the automated payment capabilities of the compliance-aware FT create an efficient, secure, and transparent dividend distribution and corporate governance system.