Tokenization technology has been actively developing in the real estate sector for over five years. The process of converting property ownership rights into digital assets proved its usefulness back in 2019 when the first European real estate was sold in the form of tokens. We’re talking about the luxurious AnnA Villa building in Paris, which was sold for €6.5 million. The deal was closed by transferring ownership rights to a joint-stock company that tokenized ownership rights on the Ethereum blockchain, dividing them into 100 tokens. Each of the tokens was further divided into smaller parts and sold to investors, who received not only dividend rights but also a share in the company owning the real estate.

A year earlier, owners of the five-star St. Regis Aspen Resort in the United States used tokenization in a slightly different way. The company issued AspenCoin tokens backed by 19% of the company’s property. Each token represented fractional ownership of the hotel but didn’t grant rights to a stake in the issuing company. In total, $18.9 million was raised this way.

Tokenization technology is actively used for financing construction and renovation of commercial real estate. For instance, Red Frog Beach Resort & Spa, an eco-resort in the Caribbean, was fully financed through tokens. Investors were offered digital assets representing discounts on real estate purchase after construction or free visits to the resort after its opening. More than $37 million was raised, which was used to build 190 ecosystem facilities.

Tokenization allows investors to buy a portion of a real estate asset. InPOOL offers to purchase tokens representing a specific portion of the recently built Sobha Waves skyscraper in Dubai. Each token will not only generate passive rental income but also provide profit from the subsequent sale of the property since the tokens grant rights to a share in the real estate asset.

Tokenization has revolutionized ownership and investment in precious metals, works of art, and other luxury items. Thanks to tokenization, collectibles have become more accessible to a wider range of investors.

The traditional precious metals market has evolved into one of the most sought-after ones due to tokenization. Cryptocurrencies pegged to the value of gold, such as Pax Gold (PAXG) or Tether Gold (XAUt), are highly popular. Additionally, the government of Zimbabwe even uses tokenized gold — Zimbabwe Gold (ZiG) tokens — as its national currency.

Tokenization has made it possible to invest in high-value gemstones without having to buy and store them. For instance, Icecap has created an entire marketplace that allows investment in tokenized diamonds and trading of exclusive jewelry items in the form of NFTs. InPOOL offers investment in uncut diamonds with an annual return of 30%.

Luxury items have also become more accessible to various classes of investors through tokenization. Wilderness Trail Distillery, in collaboration with financial company Wave Financial, launched Wave Digital Fund — a project that tokenizes barrels of premium Kentucky bourbon whiskey and other elite alcoholic beverages. Luxury cars have also been tokenized, allowing anyone to own a fraction of them. CurioInvest tokenized a collectible Ferrari F12 TDF worth $1.1 million.

Moreover, tokenization has opened up the art market to retail investors. Well-known works such as Andy Warhol’s 14 Small Electric Chairs and Pablo Picasso’s Fillette au béret were divided into digital shares and sold. Notably, tokenizing artworks increased their market value, as seen with Warhol’s painting, which sold for $5.6 million after being tokenized from its original $1.7 million value.

Tokenization technology has brought a series of positive changes to the agricultural sector. Farmers have gained access to extra financing by using their future harvests as collateral. This allows investments to be attracted, for example, to producers of:

• Hot peppers in Mexico. Amar Hidroponia, specializing in habanero pepper cultivation, issued Agrocoin tokens backed by acres of land for hydroponic production. Annual dividends from the tokens amount to approximately 30%.
• Organic bananas in Laos. Each Banana Coin token represents a tokenized kilogram of bananas at the export price.
• Grains in Argentina. The Agrotoken blockchain platform allows farmers growing soybeans, corn, or wheat to receive loans secured by future harvests, as well as to exchange tokens for consumables, equipment, or fuel needed for crop cultivation.

An interesting fact is that in 2022, the Nigerian government decided to tokenize the agricultural lands of an entire state to provide farmers with new opportunities for conducting business, obtaining loans secured by tokenized lands.

Tokenization is also used in compliance with environmental regulations and to promote the use of sustainable production and cultivation methods. Tokenization of carbon credits is gaining popularity, as digitizing them facilitates their tracking, management, and trading. Blockchain platforms such as Moss, ClimateTrade, or Toucan allow for quick and easy tokenization of carbon market credits.

Of course, a huge volume of assets consists of financial obligations. According to RWA.xyz, as of May 6, 2024, a record $1.28 billion is locked in tokenized U.S. treasury obligations and bonds. Since January, the figure has increased by 80%, primarily due to protocols like Securitize and Ondo.

The active growth of the sector is primarily due to the success of BlackRock’s investment fund, which, within its first six weeks of existence, reached a cap of $375 million. According to Dune Analytics, BUIDL grew by over 37% in a month, surpassing BENJI from Franklin Templeton, which had long been the market leader. All in all, BlackRock and Franklin Templeton’s assets account for over 60% of the tokenized treasury bond market.

In addition to tokenizing financial assets, the technology allows for increased liquidity of certain types of private loans. In Germany, thanks to a collaboration between tech company Teylor and FinTech firm Taurus, small and medium-sized business owners can tokenize their debt obligations. Selling them as tokens makes SME private debts more liquid, opening up new opportunities for professional investors in the private credit market.

Logistics company ConsolFreight has created Trade Forward, a specialized solution that allows owners of transportation and freight forwarding companies to use tokenized accounts receivable to improve working capital.

In Italy, at the initiative of the Credit Agricole bank, after proof-of-concept, non-performing loans (NPL) will be tokenized. The technology will be tested primarily on overdue Italian mortgage loans, which will be tokenized on the Polygon network through the BlockInvest blockchain platform.

It’s clear that tokenization technology extends far beyond financial assets, allowing companies from various industries and manufacturers of different goods to find secure, transparent, and efficient solutions for asset tracking and management.

The application of this technology is practically limitless, and with each passing year, it’s being increasingly utilized in entirely unpredictable sectors. Just recently, the president of UFC announced that the organization will be collaborating with VeChain to tokenize physical fighting gloves, which, after tournaments, will become collectibles, digitized, and sold. UFC plans to donate the proceeds to charity.