Tokenization

[Saluki]

No one is talking about NFTs anymore and Crypto is still mentioned, but not as much since the new thing to hype to retail investors is AI. I always remain skeptical of fads, whether it's cannabis stocks or offshore wind. 

 

Two of the areas of Crytpo that are still getting mentioned are perpetuals and Tokenization because the new SEC chairman and CFTC chairman seem a lot more friendly towards it than Gary Gensler. It's hard to tell what's real and what's hype because almost all of these companies are not listed and like OpenAI, you won't see the real numbers until they try to go public. 

 

I did notice that the largest tokenization company went public via a SPAC. So N=1 but it's the biggest player and the numbers were interesting to say the least. They lose money but are profitable on gross basis. They need more business to get to profitability on a net basis. What's even more interesting is that tokenization revenues were down 1% year over year. The less sexy, cookie-cutter back office operations grew 200% YOY though. So if the big dog is not growing, what are second bananas doing? 

 

BUIDL, by Blackrock was responsible for more than half of their AUM. If you take their other $2 billion in AUM and divide it by the 625 assets they claim to have tokenized, it's not a huge amount per customer. 

 

Does anyone know of stocks (not hedge funds or private equity) that tokenized their stocks? If so, why would anyone buy it that way? If you use your broker, you have $600k in SIPC in the US. if you buy a token and self custody it in your wallet, then you don't have SIPC protection and if you lose your password then: not your keys, not your cash.

 

Has anyone here ever bought or sold anything that is tokenized?  

[Fly]

1 hour ago, Saluki said:

No one is talking about NFTs anymore and Crypto is still mentioned, but not as much since the new thing to hype to retail investors is AI. I always remain skeptical of fads, whether it's cannabis stocks or offshore wind. 

 

Two of the areas of Crytpo that are still getting mentioned are perpetuals and Tokenization because the new SEC chairman and CFTC chairman seem a lot more friendly towards it than Gary Gensler. It's hard to tell what's real and what's hype because almost all of these companies are not listed and like OpenAI, you won't see the real numbers until they try to go public. 

 

I did notice that the largest tokenization company went public via a SPAC. So N=1 but it's the biggest player and the numbers were interesting to say the least. They lose money but are profitable on gross basis. They need more business to get to profitability on a net basis. What's even more interesting is that tokenization revenues were down 1% year over year. The less sexy, cookie-cutter back office operations grew 200% YOY though. So if the big dog is not growing, what are second bananas doing? 

 

BUIDL, by Blackrock was responsible for more than half of their AUM. If you take their other $2 billion in AUM and divide it by the 625 assets they claim to have tokenized, it's not a huge amount per customer. 

 

Does anyone know of stocks (not hedge funds or private equity) that tokenized their stocks? If so, why would anyone buy it that way? If you use your broker, you have $600k in SIPC in the US. if you buy a token and self custody it in your wallet, then you don't have SIPC protection and if you lose your password then: not your keys, not your cash.

 

Has anyone here ever bought or sold anything that is tokenized?  

 

As someone who has played in the crypto sandbox for several cycles now, tokenized assets have always been some pie in the sky snake oil idea that never makes sense. 

 

Promoters make the case that tokenized stocks allow 24/7 trading, which is true, but we dont need tokenization on a blockchain for that to happen. 

 

Additionally, the last time I looked into these more recent tokenized stock platforms you can't really self custody the stocks, and if you do then you address has to be whitelisted and transfers back into the platform can only come from that address as well. So no way to really do anything outside the initial platform with the tokenized stock (except lose the keys to your wallet). 

 

In a world where tokenized stocks really could exist in a way where self custody is allowed then sure you could send your AAPL stock to a buddy in China who then trades it to another friend in Russia who happens to be on an OFAC sanction list and eventually makes it's way back into a US account. Try selling that on a regulated exchange and watch the alarm bells go off. 

 

Short story long, I don't think tokenization makes any sense because there are real world rules that apply to these assets. 

 

Perps are a different beast though, and I could see that having real demand. Settled with stablecoins or BTC most likely. I haven't followed them that closely but know hyperliquid has been getting a lot of attention

 

EDIT: https://www.tzero.com These guys have been trying for years to get the tokenized asset theme into mainstream, but the platform has almost no volume. Just another data point to watch

Edited 1 hour ago by Fly