3.1 RWA Tokenization elements
Last updated
Last updated
The most important key to connecting the traditional financial market and the crypto financial market is the “RWA token”. RWA tokens are tokens that contain information about the underlying real assets, represent their rights, and are legally guaranteed.
For example, RWA tokens may be created based on vouchers for wine, vouchers for accommodation, copyrights for works of art, and ownership of used luxury goods, amongst others.
Tokenization is about connecting real-world assets to the blockchain. It's a necessary step to use RWA tokens in blockchain decentralized apps (Dapps) such as DeFi (Decentralized Finance) or online marketplaces. In Elysia's case, owners of real assets can request RWA tokens through a specialized app. These tokens are then created after a verification process and community voting via the DAO (Decentralized Autonomous Organization). Specifically, Elysia is issuing RWA tokens according to the following procedure:
Here’s ELYSIA's process for issuing RWA tokens:
The asset owner requests to issue RWA tokens, submitting necessary documents to an online DAO platform.
The online DAO reviews and votes on the request.
If approved, the offline DAO (ELYSIA DAO LLC) takes over the asset and generates RWA tokens for it.
These tokens give the holder control over the asset (like earning dividends, selling, or liquidation) and are also seen as governance tokens.
Asset owners who get RWA tokens can trade them or use them as collateral in lending protocols.
A challenge with DAO, being an online entity, is determining who legally owns the real assets. ELYSIA addresses this with RWA tokenization and DAO corporate entities. This setup, recognized in places like Wyoming and Tennessee in the USA, and the Marshall Islands, allows a DAO to legally own real assets and generate RWA tokens, blending ownership legality with decentralized benefits.
Tokenizing assets without a registration system is straightforward. However, for assets with a registration system, like real estate, legal ownership transfer and tax implications are involved. Therefore, Elysia focuses on tokenizing these assets after converting them into financial products, avoiding the need for registration changes. So far, Elysia has targeted “apartment mortgages” and “PF principal and interest” in Korea and the USA.
ELYSIA's approach simplifies connecting real-world assets with blockchain technology, by proposing the standards and providing the appropriate technology. It includes several key components, as illustrated in the figure above.
The protocol ensures that assets in the decentralized system are securely linked to the blockchain, keeping their value intact. This is done by either:
the law from the real world is linked up to the tokenized assets so that the contract remains in effect, or
ensuring the assets maintain their value within the decentralized system. This is achieved by either setting specific rules or meeting one of these two requirements.
Elysia Protocol allows digital assets to retain their value as assets. It does this through a governance structure and well-established rules. These rules legally recognize digital assets.
The protocol divides tokenized real assets into four main parts:
a) creation,
b) distribution,
c) settlement,
d) oracle (a kind of data feed).
These parts are interlinked with the established rules and operate within them, as shown in the figure above.
Moreover, ELYSIA Protocol is designed to work well with different mainnets (the primary networks on which blockchain applications run), considering user convenience. Each mainnet has its pros and cons, and decentralized applications (dApps) usually have to adhere to the rules of their mainnet. By making the protocol compatible with multiple mainnets, Elysia allows users more flexibility and reduces the need to rely on a single mainnet. This also helps the system manage risks associated with any particular mainnet.
