00:00 The tokenization of real-world assets like sovereign bonds, bank-issued debt and even
00:09 real estate on the blockchain is reckoned to be a growth sector for 2024.
00:14 Now, joining us in the studio to discuss this exciting new development is Jasper de Mare,
00:19 Research Lead at Outlier Ventures.
00:21 Jasper, welcome to the show.
00:22 Thank you, Brian.
00:23 So Jasper, let's begin.
00:25 What is a real-world asset?
00:26 I think it's a very interesting but critical question to answer at the very beginning.
00:31 Real-world assets are your everyday assets.
00:33 It's assets which we touch in our daily lives.
00:36 These assets can be tangible or intangible.
00:39 Tangible assets can be these chairs, can be anything really we touch in the physical world.
00:43 And the intangible assets are assets which are generally represented in a digital version.
00:48 These real-world assets, we're going to tokenize them.
00:51 What is meant by the word tokenization?
00:52 Yeah, so tokenization is actually a very fancy word of saying we're creating a digital copy
00:57 of these real-world assets.
00:59 So we're taking these real-world assets, we create a digital copy of these and we're putting
01:03 them on the blockchain.
01:05 So you actually have a digital representation of these assets on a database, which is the
01:09 blockchain in this case.
01:10 Okay, so to go to all this sort of bother of doing this, there must be a benefit.
01:14 Yeah, exactly.
01:15 So by having these digital copies or these tokens representing the real-world assets
01:20 on the blockchain, you leverage the benefits of having data stored in a specific way.
01:25 So with a blockchain, you're storing data trustless, immutable, with a high degree of
01:29 transparency and these can all be leveraged into new use cases.
01:33 So when we say trustless and stuff like that, what is meant by that?
01:38 Trustlessness is the idea that there's no central entity which oversees the governance
01:42 of the database.
01:43 So there's no trust that needs to be put into the central entity in order to make sure that
01:47 the data is accurate, timely managed and all that stuff.
01:50 Okay, so for financial markets and things like that, for the shell markets, do you see,
01:55 you know, what are the benefits?
01:57 How is this going to change and make these markets adapt?
02:01 Yeah, financial markets are actually like touted as one of the strongest industries
02:06 which will adopt blockchain tokenization.
02:09 And there's multiple facets of benefits here.
02:12 It depends on like which verticals you look at.
02:15 Generally, we believe at Outlier that there's two big benefits.
02:19 First of all, there's the efficiency gains.
02:22 So by having increasingly like real world assets populated on the blockchain, you'll
02:27 actually unlock efficiency.
02:29 So the financial market itself will become more efficient.
02:31 Okay, so as this sort of progresses, are some of the big incumbent players in the financial
02:36 system recognizing the value in this and are taking this on board?
02:40 Yeah, very much so.
02:41 And we actually see this by the slew of headlines we've seen over the past two, three years
02:45 of big financial players.
02:47 These are banks, asset managers, some of the institutional players, all exploring this
02:52 through pilots.
02:53 And there's multiple ways on how these actually play out.
02:56 You have the likes of Franklin Templeton, for example, they're tokenizing debts and
03:01 treasury and they're putting them on chain for like execution efficiencies and transparency
03:05 gains.
03:06 You have other asset managers like Wisdom Tree and recently Brevin Howard as well, who
03:10 are looking to tokenize their funds.
03:12 So what they are doing, they create a representation of their funds on the blockchain for easy
03:17 distribution and transparency.
03:18 So loads of different examples.
03:20 So there are other kind of intangible financial assets.
03:23 Are there any examples of tangible assets, possibly real estate, being tokenized?
03:29 Real estate is a very interesting example.
03:31 And it's something we've already explored with the space in like 2016, 17.
03:35 Back then the infrastructure was difficult.
03:37 And the idea of real estate, I think there's multiple ways you can increase efficiency
03:43 in real estate.
03:44 But one that excites me a lot is around capital formation.
03:48 By having your assets represented on the blockchain, you can have something which is called fractionalization.
03:54 And you actually split up the asset ownership of your asset, which is a house which usually
03:59 belongs to one person, into multiple pieces, which allows you to sell off specific percentage
04:05 points of your house to other people.
04:07 At Outlier Ventures, what areas are you focusing on when it comes to the tokenization of real
04:12 world assets?
04:13 Yeah, it's actually an area which we've been excited about for many years.
04:17 We have experience accelerating companies like Boson Protocol and Darabase, which we
04:22 still work with very closely.
04:24 And we've identified the tokenization of real world assets as a very exciting trend into
04:28 the next cycle as well.
04:30 So ultimately our job here is to really help grow and accelerate these companies to the
04:34 next stage for them to potentially run pilots with the large incumbents to see what they
04:39 can do.
04:40 Okay, so Jasper, thank you very much for coming on this week's episode of Yahoo Finance Future
04:44 Focus.
04:45 Thank you.
04:45 Thank you, guys.
04:45 (upbeat music)
04:48 (chimes)
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