1. Define the legal structure
Define what your token represents and obtain the corresponding legal classification and documentation. Often, the simplest approach is to encapsulate the asset in a Special Purpose Vehicle (SPV) and tokenize the legal structure. This is the best way to protect investors and benefit from established co-ownership rules.
2. Derisk with a proven token standard
Choose between permissionless tokens like ERC-20 or permissioned tokens like ERC-3643. Permissionless tokens are suitable for utility tokens and, in some cases, for cash coins. However, for financial products and any tokenized asset where you need to track ownership for legal reasons (such as KYC and AML), permissioned tokens are the mandatory choice. The ERC-3643 token protocol is the market standard for this.
3. Accelerate with a tokenization platform
Working with a proven turnkey tokenization platform will help you accelerate your issuance thanks to established best practices and security measures. Ensure that you tokenize on a decentralized blockchain and that you control and own the smart contracts, not the platform you use.
1. Permissions and Service providers
With ERC-3643 tokens, you can identify stakeholders and apply permissions on the blockchain. As the token issuer, you own the smart contracts and may grant some management rights to your agents. These service providers are typically fund administrators or financial institutions authorized to manage your financial products. You benefit from their operations, and they handle all compliance aspects for you.
2. Token data and Oracles
Each ERC-3643 token includes an asset ID smart contract, which serves as the on-chain identity for your tokenized assets and enable distribution. This feature allows you to enrich your token with additional data and documents. This data can be certified using verifiable credentials on the blockchain. Typically, this includes information such as the ISIN code, the asset's price (NAV), ESG certifications, and more.
3. Corporate actions and revenue distributions
Throughout the lifecycle of your tokenized asset, you will need to perform various operations such as revenue distributions, cap table management, transfers, authorizing new services and administrators, and more. To execute these operations, you, as the token issuer, or your authorized agents must be able to trigger controlled functions on the token smart contracts. These functions include minting, burning, transferring, force transferring, and recovering tokens.
1. Reach Investors
With your token deployed on the blockchain, you can now activate distribution channels in an open and global manner. First, you can directly invite investors to purchase tokens from you in a direct distribution model. Additionally, you can collaborate with exchanges, broker dealers, financial advisors and DeFi applications to gather investors' investment intentions.All these investments will be recorded on your tokens cap table.
2. Primary and secondary markets
Initiate primary sales where investors purchase tokens directly from you and facilitate secondary market opportunities where investors can trade tokens among themselves. For the primary market, various models are possible, including on-chain investments and payments, or off-chain order management with positions created on the blockchain after validation. Investment orders can be placed directly with your token or through connected distributors. Secondary market trading can be conducted in full compliance between investors or via regulated and authorized third parties such as exchanges and OTC platforms.
3. Interoperability with DeFi and with banking rails
Thanks to proven and audited token smart contracts like ERC-3643, a large ecosystem of distributors - both blockchain-based and traditional financial instituions - are compatible and ready to distribute your tokenized assets to their investor audience.
Bringing the next trillion USD of assets onchain, thanks to a proven compliance framework and the largest interoperable ecosystem.
