The definition of asset tokenization is the process of representing real world assets (RWAs) or financial products as digital assets on a blockchain. Any asset can be tokenized (or minted) on the network and then tracked, held, and traded quickly and cheaply.
Stellar is an open source decentralized network. It’s also a platform for asset tokenization, meaning any developer or business can issue an asset. Any Stellar account can issue an asset, but typically, assets on the Stellar network are issued by banks, investment firms, fintechs and governments who aim to create digital representations of real world backed assets.
By creating digital assets, these products can move 24/7, quickly and at a low cost around the world for consumers and institutions. Additional benefits of tokenization are listed below.
Issuers can reduce the number of internal sources for record keeping by using the blockchain as the primary source of truth for non PII data.
The blockchain maintains an immutable ledger of transactions enabling issuers to monitor non PII data in real-time.
Issuers can expand their addressable markets by offering their assets to on- and off-ramps and wallets building on the Stellar network.
The upcoming launch of Soroban mainnet, will enable expanded tokenization use cases such as savings, lendings, automatic yield calculations and more.
Fiat currencies can be tokenized as stablecoins on the blockchain. This means consumers can exchange their stablecoins for an equivalent amount of fiat currency such as 10 USD stablecoins for $10 USD.
Central Bank Digital Currencies (CBDCs) are digital assets issued and regulated by a country’s central bank. CBDCs differ from stablecoins in that they are a tokenized representation of legal tender instead of tokenized assets pegged to a currency.
Money market funds, ETFs, treasuries and more can all be issued on the blockchain and pegged to the value of the underlying security.
Any asset including commodities and alternative assets can be tokenized and fractionalized on the blockchain. Making access to the underlying asset ideally more accessible, and affordable for investors.
There is no dedicated “mint” or “issue” operation on Stellar. Assets are typically created on Stellar by using a payment operation where an asset is transferred from an issuing account to a recipient account. See the four step tokenization process on the Stellar network below.
Create a primary account to issue your asset.
Create a secondary account to receive the asset.
Ensure your secondary account is approved to hold and trade the asset.
Send a payment from your primary account to the secondary account using your new digital asset.
Find a list of service providers with experience supporting asset tokenization on the Stellar network.