#dusk $DUSK @Dusk
Earlier, when I thought about tokenizing a financial asset, I only pictured one side of the trade. The asset gets represented on-chain, someone buys it, done.
But a trade has two sides, and the other one is money.
If the asset settles on-chain instantly and the payment settles through a bank the following day, then the two halves have come apart. One party has given up something before receiving anything, and the risk everyone was trying to remove has quietly come back.
So both sides have to move together, which means the money has to exist on the same system as the asset, in a form the institutions involved are legally permitted to accept.
What I found particularly notable is that this rules out most of what crypto normally uses for payment. It is not enough for a stablecoin to be widely used or deeply liquid. It has to be something a regulated entity can hold and settle in without creating a compliance problem for itself.
That is a much narrower requirement than the market usually acknowledges, and it explains why a project in this space would work with a specific regulated payment provider rather than simply supporting whatever people already hold.
I cannot judge how well this works in practice, since I have not seen a public account of both sides settling together in a live transaction.
But from here I stopped thinking about tokenization as an asset problem. Half of it is a payments problem, and that half gets discussed far less.
Earlier, when I thought about tokenizing a financial asset, I only pictured one side of the trade. The asset gets represented on-chain, someone buys it, done.
But a trade has two sides, and the other one is money.
If the asset settles on-chain instantly and the payment settles through a bank the following day, then the two halves have come apart. One party has given up something before receiving anything, and the risk everyone was trying to remove has quietly come back.
So both sides have to move together, which means the money has to exist on the same system as the asset, in a form the institutions involved are legally permitted to accept.
What I found particularly notable is that this rules out most of what crypto normally uses for payment. It is not enough for a stablecoin to be widely used or deeply liquid. It has to be something a regulated entity can hold and settle in without creating a compliance problem for itself.
That is a much narrower requirement than the market usually acknowledges, and it explains why a project in this space would work with a specific regulated payment provider rather than simply supporting whatever people already hold.
I cannot judge how well this works in practice, since I have not seen a public account of both sides settling together in a live transaction.
But from here I stopped thinking about tokenization as an asset problem. Half of it is a payments problem, and that half gets discussed far less.