@Dusk #dusk $DUSK How blockchain can transform financial markets by making assets truly digital
The rise of tokenization has been heralded as one of the most transformative developments in finance. By leveraging distributed ledger technology (DLT), tokenization creates digital tokens that represent ownership of real assets — from bonds and equity to real estate and commodities. These tokens can be traded and settled on blockchain networks, bringing advantages over traditional systems such as faster settlement, lower costs, and fractional ownership. However, experts increasingly argue that native issuance — where assets are created directly on a blockchain from inception — offers even stronger benefits than simple tokenization of off-chain assets.
Tokenization: A Valuable First Step
Tokenization involves representing an existing asset or right as a digital token on a blockchain. This process enhances market efficiency in several ways:
Increased liquidity and accessibility: By dividing assets into fractional units and allowing 24/7 trading on digital markets, tokenization expands who can invest and trade. Smaller investors can own fractions of high-value assets like property or alternative investments that were previously out of reach.
Lower costs and faster settlement: Smart contracts automate issuance and settlement, reducing reliance on intermediaries such as custodians and shortening settlement cycles compared to the traditional T+2 model.
Improved transparency and security: Blockchain’s immutable ledger offers real-time records of ownership and transactions, which enhances trust and reduces fraud risk.
The potential for tokenized securities has even drawn major financial institutions into experimentation. For example, Italian bank UniCredit issued a tokenized structured note on a public blockchain, streamlining the issuance process and adapting to modern digital standards.
Despite these advantages, not all benefits that blockchain promises are fully realized through basic tokenization.
Native Issuance: Going Beyond Representation
While tokenization represents an off-chain asset on a blockchain, native issuance creates the asset on the blockchain itself without an off-chain counterpart. In this model, the asset’s lifecycle — issuance, compliance, transfer, and settlement — is governed entirely on-chain. This distinction matters because native issuance eliminates inefficiencies tied to legacy financial infrastructure.
According to industry analyses, the key advantages of native issuance include:
True disintermediation: Native tokens do not rely on custodians or separate record-keeping systems. Everything from ownership records to transfers occurs within the blockchain’s consensus layer.
Faster and cheaper execution: Because there is no need to reconcile records between off-chain and on-chain systems, transactions can settle instantly with minimal friction.
Better regulatory compliance: When designed with compliance in mind, native issuance can embed regulatory requirements (like KYC/AML) directly into the token’s logic, reducing the legal and operational risks tied to off-chain dependencies.
Enhanced liquidity and market integration: Native tokens are not constrained by the operational limitations of legacy systems, potentially enabling deeper, more continuous markets.
In contrast, traditional tokenized assets often require ongoing reliance on existing central securities depositories and infrastructure. These intermediaries still need to reconcile blockchain records with their own ledgers, which can negate some efficiency gains and maintain fragmentation between systems.
Why Native Issuance Matters for Financial Markets
For institutional markets to fully embrace blockchain innovation, simply wrapping existing assets into tokens is not enough. Native issuance represents a more radical re-architecture of financial markets, where assets are born digital and managed entirely within decentralized systems. This shift promises lower operational costs, stronger regulatory alignment, and more dynamic markets — especially as demand for programmable and automated financial products grows.
Yet challenges remain: native issuance requires robust legal frameworks, integration with regulated venues, and significant infrastructure development to meet institutional standards.
Despite these hurdles, the potential advantages suggest that native issuance could be the cornerstone of next-generation financial markets — not just an incremental improvement on tokenization.
In sum, while tokenization has played a critical role in demonstrating blockchain’s promise for tradable assets, native issuance stands to deliver deeper, more systemic improvements by making assets inherently digital rather than merely representations of old-world financial instruments.
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