Tokenization is a fast-growing field in the financial industry which enables investment in the form of digital tokens backed by real world securities or assets. It describes the process of changing traditional non-digital securities to a digital form using blockchain technology, a type of distributed ledger which secures identical copies of data across a network of authorized stakeholders. For SME crowdfunding platforms the blockchain technology provides new and revolutionary opportunities in the way bonds are issued and traded. The advantages are manifold: faster processes through digitization, fewer intermediaries, reduced costs and higher efficiency as well as global transferability.
The most important advantages in detail:
Cost and Efficiency
Smart contracts streamline crowdfunding by automating tasks such as investor verification and token issuance, reducing administrative complexities and costs associated with traditional fundraising.
Global Investor Base
Tkoenization breaks down geographical barriers and enables SME crowdfunding platforms to attract a global investor base especially across the EU, since the new ECSP allows for multinational issuances.
Transparency and Security
With immutability and transparency of blockchain technology, providing a verifiable and auditable record of bond ownership and transactions.
Secondary Market Opportunities
Tokenized bonds can be easily traded on secondary markets, generating additional revenue streams for your business and creating liquidity for your investors.
Dynamic Inscribable Data on Chain
Incorporate dynamic inscribable data on-chain allowing investors to access real-time information, facilitating informed investment decisions.
But how does it work?
Tokenization Use Case: Invesdor platform
Invesdor offered tokenized bonds to over 3,000 Investors with NYALA
Invesdor, an European crowdfunding platform operating across Germany, Austria, the Netherlands and Finland, needed to decrease the costs associated with the issuance of securities listed on platform — in this case corporate bonds. Considering tokenization as a solution, they turned to NYALA. With NYALA’s tokenization solution, Invesdor successfully enabled the issuance, distribution, and custody of tokenized bonds, following a fast setup process.
Issuing traditional corporate bonds is an expensive and complex process. It involves submitting lengthy prospectuses to financial authorities and relying on centralized custodians that charge high fees. Invesdor identified that tokenization on the blockchain would be a great way to reduce their costs and increase transparency. They then sought a technology provider that could seamlessly integrate into their existing infrastructure while ensuring a smooth user experience and robust security. Additionally, they required a comprehensive suite of features to facilitate token issuance, regulatory compliance, and token management.
The NYALA solution
Invesdor integrated its user-facing platform with NYALA’s engine via API in less than 2 weeks, while requiring work from only one engineer. The tokenization engine seamlessly integrated into the Invesdor platform, enhancing the user interface and providing a smooth onboarding flow. Through NYALA’s technology, Invesdor gained access to a wide range of features tailored to their specific requirements. These features include:
Automated Wallet Opening Requests
NYALA automates the process of requesting and opening investor wallets, streamlining the onboarding experience and reducing manual efforts.
KYC workflow
NYALA’s proprietary platform allows issuers and custodians to access a list of investors at any point of time, track their tokenized securities balance and audit trail transactions.
Tokenn Issuance and Distribution
NYALA takes care of issuing and distributing the tokens to investors, reducing Invedor´s manual efforts and expediting the investment process.
Turnkey Tokens Custoday
NYALA´s integrated solution provided secure custody services for the tokenized securities.
Token Burn Mechanism
NYALA implemented a token burn mechanism, automatically retiring tokens upon the expiry date of the associated loans.
More than 18 million Euros worth of tokens issued!
Already, Invesdor has conducted more than 15 issuances to over 3,000 individual investors. These issuances represent a total value of over €18M. The process of tokenization has also led to time-savings, as the entire process is now digital and automated. It dramatically reduced the amount of manual work required compared to a traditional issuance.
