Beyond the Contracts: Exploring Advanced Tokenization Models with Smart Tokens

The blockchain ecosystem is rapidly innovating. Among the most recent advancements is the inception of “Smart Tokens.” These tokens are poised to revolutionize the way we tokenize assets, offering a highly customizable and cost-effective solution for a wide range of applications. In this article, we’ll explore what capabilities Smart Tokens bring to the evolving blockchain landscape.

“This surge in interest is not only limited to developers; even government agencies are acknowledging the groundbreaking capabilities that Smart Tokens unlock. The prospect of programmable Wholesale Central Bank Digital Currencies (CBDCs) is becoming increasingly plausible, opening up a new realm of possibilities for the financial landscape.” — Michael McCaffrey Coreum Business Development

As Coreum’s flagship development, this programmable asset solution is designed to tackle some of the critical challenges faced by traditional smart contracts when it comes to tokenizing assets. You can check out the Technical Paper here.

A Solution to Current Smart Contract Challenges

Blockchain technology has opened up new possibilities for decentralized transactions and smart contracts. However, it has become evident that the current infrastructure is not entirely suited for handling complex, real-world use cases, such as those sought after by governments and financial institutions.

One of the primary issues is the non-deterministic nature of transactions within existing smart contracts. This non-determinism leads to inefficiencies, high gas fees, and unpredictable outcomes, especially during network congestion.

Smart Tokens offer a fresh approach to asset tokenization. They are natively issued tokens on the Coreum Blockchain, wrapped around smart contract functionalities. Here’s a closer look at some of the key features and benefits of Smart Tokens:

• Permissioned Minting: This feature ensures that the minting process remains within the control of authorized accounts or entities. By employing an Access Control List (ACL), it becomes possible to manage a list of whitelisted accounts eligible for minting. This feature ensures that minting is restricted to trusted entities, enhancing security.
• Minting Quotas and Limits: Setting individual quotas and limits for each whitelisted account introduces a granular approach to token creation. This level of control safeguards against excessive token minting, ensuring that it adheres to predefined limits and the overall token supply cap. It is especially valuable for regulatory compliance and resource allocation.
• Time-based Minting Restrictions: The implementation of time-based restrictions provides a versatile mechanism for controlling the timing and frequency of minting events. These restrictions can include minting windows, cooldown periods, or any custom-defined temporal rules.
• Role-Based Access Control (RBAC): Role-based access control assigns distinct roles to whitelisted accounts. Each role carries specific permissions and capabilities tied to the minting process. For example, there could be roles such as minter, administrator, or auditor. Authorized entities, such as the contract owner or administrators, can assign, modify, or revoke these roles, ensuring efficient and controlled minting.
• Multi-signature Approval: Security is paramount in tokenization. Requiring multiple signatures from authorized accounts before allowing minting action provides an extra layer of protection. Configuration options for the number of required signatures and the designation of authorized signatories within the smart contract enable secure and tamper-resistant minting.
• Minting Conditions and Triggers: For minting to occur, specific conditions must be met. These conditions can be based on milestones, events, or performance indicators. Smart contracts continuously monitor these criteria, and minting is triggered automatically upon satisfaction. This feature streamlines the minting process and ensures it aligns with predefined objectives.

Advanced Tokenization Models in Action

Advanced tokenization models empowered by smart token technology open up a realm of possibilities for fine-tuning and enhancing the minting process. These features offer a sophisticated level of control and customization, addressing specific needs, regulatory requirements, and business objectives:

Real Estate Tokenization:

• Permissioned Minting: Only accredited investors and authorized entities are allowed to mint tokens representing real estate properties.
• Minting Quotas and Limits: Individual investors have predefined limits on the number of tokens they can mint based on their investment capacity.
• Time-based Minting Restrictions: Tokenizing real estate projects may involve minting tokens during specific time frames aligned with construction milestones.
• Role-Based Access Control (RBAC): Designated administrators can have roles like property manager, auditor, and regulator, each with distinct permissions.
• Multi-signature Approval: A real estate transaction may require multiple parties, such as the buyer, seller, and a notary, to sign off on the token creation process.

Private Equity Tokenization:

• Permissioned Minting: Only accredited investors can mint tokens representing company shares, ensuring regulatory compliance.
• Minting Quotas and Limits: Limits are set for each investor, and total tokens minted align with the company’s authorized share capital.
• Time-based Minting Restrictions: Tokens are minted during financing rounds or upon achieving certain business milestones.
• Role-Based Access Control (RBAC): Roles can include shareholder, administrator, and auditor, each with distinct permissions.
• Multi-signature Approval: Important corporate decisions, such as minting new shares, require multi-signature approval from board members.

Central Bank Digital Currency (CBDC):

• Permissioned Minting: The central bank and authorized financial institutions are granted permission to mint CBDC tokens. This ensures that only reputable entities can create digital currency.
• Minting Quotas and Limits: Financial institutions have predefined quotas for minting CBDC tokens to control the money supply. Limits are set to manage the overall circulation of digital currency.
• Time-based Minting Restrictions: CBDC tokens can be minted during specific time frames in alignment with the central bank’s monetary policy objectives.
• Role-Based Access Control (RBAC): Different roles can be assigned to entities involved in the CBDC ecosystem, such as “CBDC issuer,” “CBDC distributor,” and “CBDC auditor,” each with specific permissions.

Smart Tokens represent a significant leap forward in the world of asset tokenization. They address the limitations of traditional smart contracts, offering a potent combination of customizability, security, and cost-efficiency. As blockchain technology continues to mature, Smart Tokens are set to play a pivotal role in unlocking new possibilities for decentralized applications and real-world use cases. Their role as a pillar of the Coreum Blockchain ensures that they will be at the forefront of innovation and adoption.

About Coreum
Coreum, the world’s first Superledger. A 3rd-generation, layer-1 blockchain architected for enterprises of any size, from startups to large corporations. Providing a remarkable transactional speed of up to 7,000 TPS and ISO20022 compliance ensures expedient and economical transactions across a swift and secure PoS network.

As an Enterprise Graded Blockchain (EGB), Coreum introduces a new layer of programmability with ‘Smart Tokens’, enabling robust use cases through WASM-based smart contracts, including tokenized RWA’s and Neobanking applications.