Case Study
How WisdomTree Makes Tokenized Assets Mainstream Via Stellar
About
This is Wisdomtree
WisdomTree is a global financial innovator, offering a well-diversified suite of exchange-traded products and other financial services with over $100B in assets under management. WisdomTree is launching a new platform leveraging blockchain-enabled technology to create products that provide enhanced access, transparency, and a digital-first user experience. By integrating digital assets, including cryptocurrency and tokenization of real-world assets (RWA), WisdomTree is setting a new standard for investment opportunities and operational efficiency. Their new platform empowers investors and customers to shape their future and better supports financial professionals to serve their clients and grow their businesses.
Challenge
Siloed Payments and Investment Platforms
The market opportunity for real-world asset (RWA) tokenization and blockchain-based investments continues to grow. A recent report from Northern Trust and HSBC highlights the latest tokenization trends in finance, estimating that 5-10% of the global asset market (estimated to reach ~$145 trillion by 2025) will be digitized by 2030.1
While this growth introduces a variety of tokenized payment and investment assets to the market, fragmented payment platforms pose significant challenges. These platforms complicate the process for customers to seamlessly store, track, and trade these tokenized assets, all in one place. Even further, end-users find difficulty connecting their blockchain-based assets to their existing traditional fiat currencies and equities in one consolidated environment, underscoring the need for improved interoperability and digital wallet solutions.
Solution
A Unified Payments Platform
WisdomTree saw an opportunity to provide customers with a unified platform to seamlessly integrate their fiat and digital payments, savings, and investment assets into one application in seeking to allow customers to better manage their daily financial lives.
As innovators in the financial sector and advocates for digital transformation in finance, WisdomTree determined blockchain technology could help offer products and services to consumers in a fast, affordable, and accessible way while also improving internal operations. After research of tokenization platforms, WisdomTree selected the Stellar network because of Stellar’s native asset controls, relatively low cost, and operational performance.
Currently, WisdomTree has 13 digital funds and a Gold token available to transact through WisdomTree Prime™, a retail financial app that utilizes Stellar-enabled wallets. With this app, consumers can buy digital assets, specifically bitcoin and ether, and invest in traditional assets through digital funds and a gold token, all in one platform. Moreover, it facilitates a seamless investor experience of having both digital assets and traditional assets in one app, eliminating the necessity for on and off-ramping and reinforcing the bridge between traditional finance and blockchain-based financial services.
Institutional Benefits
By issuing their funds on the Stellar network, WisdomTree is able to take advantage of a variety of operational and administrative benefits made possible by blockchain technology.
Controls
Native asset controls on the Stellar network enables WisdomTree to customize its tokenized assets to meet internal business needs. Specifically, they leveraged the Stellar network standard for Regulated Assets to create assets that require an issuer’s approval to transact with.
Distribution Channels
The Stellar network features a global ecosystem of businesses, including on and off-ramps and digital wallets, that WisdomTree leverage to enhance the overall availability of its tokenized assets in the future.
Security
The immutable nature of the Stellar blockchain seeks to ensure that transfers are secure and auditable.
Potential Consumer Benefits
By using this solution, powered by the Stellar network, WisdomTree’s customers gain a variety of benefits made possible by blockchain technology:
On and Off-Ramps
Customers can near-instantly convert between a variety of tokenized assets and real-world fiat assets. This capability offers users an on-ramp into novel blockchain-powered financial services for spending, saving, and investing.
Ownership
WisdomTree’s Gold token is backed 1:1 to physical gold, meaning customers can purchase gold tokens from the comfort of their owns homes with each gold token representing an ownership interest in physical gold stored in a secure vault.
How it Works
Asset tokenization on the Stellar network is a four-step process that does not require a smart contract.
Financial institutions can take advantage of a variety of service providers in the Stellar ecosystem, to help issue assets on the network. WisdomTree leveraged support from DTCC Digital Assets and Fireblocks, to tokenize their digital funds and Gold token on the Stellar network.
1Beyond asset tokenisation. (2023). In https://www.northerntrust.com/. Retrieved March 4, 2024, from https://www.northerntrust.com/content/dam/northerntrust/pws/nt/documents/asset-servicing/beyond-asset-tokenisation.pdf
Connect
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Discover how your business can contribute to the digital asset ecosystem. To learn more about issuing an asset on Stellar, review the developer documentation.
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