Applications
The public-permissioned architecture creates the a good investor protection oriented environment to deploy tokenized assets and related applications. Rizenet categorize applications as "core applications" or "peripheral applications".
Core Applications: The set of applications focusing on assets, On/Off ramp and user onboarding.
Peripheral Applications: The applications which will leverage the tokenized asset to create more advanced financial instruments.
Standards
While no specific standard is enforced, it is important for an ecosystem to use consistent standards to improve composability and interoperability between the various applications within the ecosystem.
Token Standards
ERC-20 is one of the most recognized standards, but it can be insufficient when dealing with tokenized securities. The T-RIZE Platform currently supports the ERC-3643 standard, which is ERC-20 compliant but extends functionality to support more complex requirements, such as compliance rules necessary for regulated assets.
Identity Verification
This remains an early-stage use case, but we are actively monitoring the industry to see which solutions emerge as dominant standards for identity verification and how they will shape KYC/KYB requirements across the ecosystem.
Examples of Core Applications
Asset Tokenization
Asset tokenization is the process of representing physical or digital assets on the blockchain as tokens. This enables fractional ownership, increased liquidity, and streamlined transferability. Examples include tokenizing real estate, commodities, intellectual property, or other financial instruments. The T-RIZE platform provides a seamless approach to tokenize assets using the ERC-3643 standard. The platform ensures compliance with securities regulations for the primary market while the ERC-3643 enables the issuer along with its transfer agent to maintain compliance over the lifetime of the asset.
On/Off Ramp
Onboarding users into the ecosystem involves seamless fiat-to-crypto (on-ramp) and crypto-to-fiat (off-ramp) conversion. These applications are critical to enable users to interact with tokenized assets, invest in projects, and ultimately exit their position in their preferred currencies. A robust on/off-ramp system ensures fluid participation, broadening access to both retail and institutional investors.
Identity Verification (KYC/KYB)
Applications built for identity verification provide the essential infrastructure for Know Your Customer (KYC) and Know Your Business (KYB) compliance. These systems ensure that users and businesses interacting with the platform meet legal and regulatory requirements for anti-money laundering (AML) and counter-terrorist financing (CTF). Identity verification solutions in the T-RIZE ecosystem integrate with token standards to ensure compliance across financial transactions.
ATS Integrations
Alternative Trading Systems (ATS) facilitate the trading of tokenized assets by creating a secondary market where buyers and sellers can trade regulated securities in a secure and compliant manner. Integrating ATS platforms with Rizenet's tokenized assets ensures liquidity and regulatory compliance, providing a seamless experience for users to trade tokenized securities like stocks, bonds, and derivatives.
Examples of Peripheral Applications
Funds
Tokenized investment funds allow asset managers to create funds where investors can pool their capital to invest in a diversified portfolio of tokenized assets. These funds can range from traditional investment vehicles, such as mutual funds or ETFs, to more innovative strategies like DeFi yield farming funds or real estate-backed portfolios. Tokenization provides transparency, liquidity, and easy entry/exit for investors. Smart contracts automate fund management, including rebalancing and distribution of profits.
Lending Market
A decentralized lending market enables users to use their tokenized assets as collateral to borrow other assets or stablecoins. In this application, tokenized real estate, commodities, or securities can be used to secure loans. Borrowers and lenders can interact directly through smart contracts that enforce collateral requirements, interest rates, and loan terms. This creates a transparent and efficient marketplace for borrowing and lending while minimizing the need for intermediaries.
Yield Tokenization
Yield tokenization involves representing future cash flows or yield from tokenized assets as distinct tokens. These yield tokens allow investors to trade rights to future earnings, such as rental income from real estate, staking rewards, or interest from tokenized bonds. This application enables investors to separate ownership from income generation and trade yield-based instruments on secondary markets.
Interest Rate Swaps
Tokenized interest rate swaps (IRS) allow two parties to exchange fixed and floating interest payments on tokenized loans or bonds. This application helps investors hedge against interest rate volatility or lock in favorable borrowing terms. For example, a party with a tokenized bond paying a fixed interest rate can swap it for a floating rate to benefit from expected interest rate changes. These swaps can be standardized and traded in decentralized markets, adding liquidity and risk management tools to the ecosystem.
Insurance and Yield Protection
Peripheral applications can include tokenized insurance products, which allow users to insure tokenized assets or financial positions. For instance, investors could purchase insurance to protect against default risks in tokenized loans or yield volatility in DeFi farming. Yield protection products allow investors to lock in a guaranteed rate of return, providing stability in volatile markets.
Derivatives and Options
Tokenized derivatives allow investors to create sophisticated financial products, such as futures and options, based on the value of tokenized assets. For example, token holders could issue call or put options on real estate, commodities, or other assets, allowing participants to speculate or hedge against future price movements. These financial instruments add depth to the ecosystem by enabling risk management and speculative strategies.