What is Tangible?
Tangible is a tokenization protocol that facilitates the on-chain representation of valuable real-world assets (RWAs). By leveraging blockchain technology, Tangible enables the seamless conversion of physical assets into digital tokens, making them more accessible, tradeable, and manageable within the decentralized finance (DeFi) ecosystem.
- Key Features of Tangible:
- Tokenization of Real-World Assets (RWAs): Tangible focuses on bringing tangible assets, such as real estate, commodities, or collectibles, onto the blockchain. These assets are converted into digital tokens, which can then be traded, transferred, or used as collateral within DeFi platforms.
- L2 Blockchain Integration: Tangible operates on re.al, a Layer 2 (L2) blockchain specifically dedicated to RWAs. This L2 blockchain provides enhanced scalability, reduced transaction costs, and faster processing times, making it ideal for handling the high volume and complexity of real-world asset transactions.
- Enhanced Accessibility and Liquidity: By tokenizing physical assets, Tangible increases their accessibility to a broader range of investors. It also enhances liquidity by allowing these assets to be traded in fractional shares, enabling more fluid and efficient markets.
- Decentralized Finance (DeFi) Integration: Tangible integrates with DeFi platforms, allowing tokenized RWAs to be used in various financial activities, such as lending, borrowing, or staking. This opens up new avenues for generating yield and managing risk within the digital asset space.
How does Tangible work?
Tangible operates by converting Real-World Assets (RWAs) into Tangible Non-Fungible Tokens (TNFTs). These TNFTs are digital representations of physical assets, which can be used as backing for various financial products like baskets.
- Minting TNFTs: Real-World Assets (RWAs) are first identified and assessed for tokenization. These assets could include anything from gold bars to real estate. Once verified, these assets are converted into TNFTs (Tangible Non-Fungible Tokens) on the blockchain. Users can mint TNFTs using cryptocurrencies, including Tangible’s stablecoin, USTB, which is backed by tokenized U.S. treasury bills. The process requires users to be KYC (Know Your Customer) compliant to ensure regulatory adherence.
- Trading and Farming TNFTs: TNFTs are designed to be liquid and easily tradable. Once minted, they can be freely transferred to other wallets, sold on decentralized exchanges (DEXs), or traded within Tangible’s marketplace. TNFT holders can also farm their assets within Tangible’s ecosystem to earn yield, providing an additional revenue stream from their tokenized real-world assets.
- Redemption: TNFT holders who have passed KYC checks have the option to redeem their TNFTs for the underlying physical assets at any time. This means that the digital representation of the asset (the TNFT) can be exchanged back into the physical item it represents, such as gold bars, luxury goods, or even entire properties.
- Custody and Compliance: Tangible ensures that the physical assets backing TNFTs are securely stored and managed. This includes custody services that guarantee the physical item’s existence and safety until it is redeemed by the TNFT holder. The entire process is underpinned by strict compliance protocols, including KYC checks, to ensure that all transactions and holdings are legal and in line with regulatory requirements.
What role does Tangible play in the RWA Tokenization ecosystem?
Tangible plays a transformative role in the Real-World Asset (RWA) tokenization ecosystem by enabling the tokenization and liquidity of traditionally illiquid assets such as art, wine, and antiques.
- Addressing Market Challenges: Many alternative asset classes like fine art, wine, and collectibles are difficult to trade due to their illiquidity and fragmented markets. Tangible solves this by tokenizing these assets into TNFTs (Tangible Non-Fungible Tokens), making them more accessible and liquid. While cryptocurrencies offer an alternative store of value, they are highly volatile. Tangible allows crypto investors to diversify into tangible assets without leaving the crypto ecosystem, providing a stable and reliable investment option.
- Tokenization Process: Tangible converts real-world assets into TNFTs, which are digital representations of these physical assets. This process involves minting TNFTs on the blockchain, backed by assets such as gold, real estate, or collectibles. To ensure regulatory compliance and security, only KYC-verified users can mint, trade, and redeem TNFTs. This adds a layer of trust and security to the ecosystem.
- Trading and Liquidity: Tangible creates a liquid market for these tokenized assets, allowing them to be freely traded on decentralized exchanges (DEXs) or within Tangible’s own marketplace. This enables investors to easily buy, sell, and trade traditionally illiquid assets. TNFT holders can farm their assets within the Tangible ecosystem, earning yield from their investments, thus providing an additional income stream.
- Redemption of Physical Assets: TNFTs can be redeemed for the underlying physical assets at any time by KYC-verified holders. This ensures that the digital tokens have real-world value and can be converted back into tangible items like gold bars, properties, or collectibles.
- Bridging Crypto and Tangible Assets: Tangible effectively bridges the gap between the digital and physical worlds, allowing crypto investors to access and invest in tangible assets without needing to convert their holdings into fiat currency. This integration removes inefficiencies and streamlines the process of investing in alternative assets.
Use cases powered by Tangible
Tangible, as a protocol for tokenizing real-world assets (RWAs), opens up numerous innovative use cases by bringing physical assets onto the blockchain.
- Fractional Ownership of High-Value Assets: Tangible allows investors to purchase fractional ownership of real estate properties. This makes investing in high-value properties more accessible, enabling smaller investors to participate in the real estate market without needing to buy entire properties. Expensive items like luxury watches, fine art, or rare collectibles can be tokenized, allowing multiple investors to own a fraction of these high-value items. This fractionalization increases liquidity and makes it easier to trade or leverage these assets.
- Tokenized Real Estate Investments: Investors can pool funds to collectively invest in tokenized real estate through decentralized platforms. Tangible facilitates the creation of tokenized real estate investment funds, where tokens represent shares in the property portfolio. Token holders can earn a portion of the rental income generated by the tokenized property. Smart contracts automatically distribute the income to token holders based on their ownership share, ensuring transparency and efficiency.
- Commodities Trading and Investment: Tangible enables the tokenization of precious metals like gold, silver, or platinum. These tokens can be traded on decentralized exchanges or used as collateral in DeFi platforms, providing a stable and liquid investment option. Agricultural products, such as grains or livestock, can be tokenized to facilitate easier trading and investment. Farmers and producers can raise capital by selling tokens backed by future harvests or livestock, while investors gain exposure to the commodities market.
- Supply Chain Transparency and Efficiency: Tangible can be used to tokenize goods within a supply chain, allowing each stage of the production and distribution process to be tracked on the blockchain. This enhances transparency and efficiency, as every token represents a specific good at a specific stage in the supply chain. Consumers can verify the origin and authenticity of products by tracing the history of tokenized goods on the blockchain. This is particularly useful for luxury items, art, or any product where authenticity is critical.
- Collateralized Lending and Borrowing: Token holders can use their tokenized real-world assets as collateral to obtain loans on DeFi platforms. This provides liquidity to asset holders without requiring them to sell their physical assets. Borrowers can access secured loans by pledging tokenized assets as collateral. Lenders are assured of the asset’s value and security through blockchain transparency, reducing the risk of default.
- Decentralized Insurance Products: Tangible enables the creation of insurance products for tokenized assets. Owners can purchase insurance coverage for their assets directly through the blockchain, with claims and payouts managed via smart contracts. Smart contracts can automate parametric insurance payouts based on predefined conditions (e.g., natural disasters, commodity price drops). This reduces the need for lengthy claims processes and ensures timely compensation.
- Cross-Border Investments and Trade: Investors from around the world can easily invest in tokenized real estate in different countries without the complexities of traditional cross-border transactions. This democratizes access to global real estate markets. Tangible allows for the seamless trading of tokenized commodities across borders, eliminating the need for intermediaries and reducing transaction costs. This makes it easier for businesses to engage in international trade.
- Decentralized Marketplaces for Physical Assets: Tangible powers decentralized marketplaces where individuals can buy, sell, or trade tokenized real-world assets directly with one another. These marketplaces operate without intermediaries, reducing fees and increasing efficiency. High-value assets can be tokenized and auctioned on decentralized platforms, enabling competitive bidding and ensuring that assets are sold at market value. Smart contracts govern the auction process, ensuring transparency and fairness.
- Fundraising for Real-World Projects: Entrepreneurs and project developers can raise capital by issuing tokens that represent future revenue or ownership in a physical asset. This allows projects to secure funding from a broad base of investors, democratizing access to investment opportunities. Real estate developers can tokenize new projects to raise funds directly from investors, bypassing traditional financing routes. Investors receive tokens representing their stake in the development, which can later be sold or used to claim rental income.
- Integration with Decentralized Finance (DeFi): Tokenized real-world assets can be used in yield farming strategies, where token holders provide liquidity to DeFi protocols and earn rewards. This adds a new layer of financial utility to physical assets. Token holders can stake their assets in governance mechanisms to participate in the decision-making processes of decentralized platforms. This gives them a say in the management and direction of the protocols they are invested in.
