Tokenized funds are traditional investment funds, such as mutual funds, ETFs, or private equity funds, whose shares or interests are represented as digital tokens on a blockchain. Their purpose is to enhance liquidity, transparency, and accessibility for investors by leveraging blockchain technology to fractionalize ownership and streamline fund administration processes.
Mechanism
This mechanism involves issuing digital tokens, each representing a proportionate ownership claim in the underlying fund’s assets, which are held by a regulated entity. These tokens are recorded on a distributed ledger, providing an immutable record of ownership and enabling peer-to-peer transfer, potential real-time settlement, and programmable features via smart contracts, all while maintaining the fund’s established regulatory structure.
Methodology
The strategic framework behind tokenized funds aims to modernize investment vehicle management by reducing operational friction and opening access to a broader investor base. This methodology combines the legal and financial structures of traditional funds with the technological advantages of blockchain, offering enhanced traceability, lower administrative costs, and the potential for secondary market trading of fund units on decentralized exchanges.
This integration of a real-time, interest-bearing settlement network enhances institutional liquidity and operational efficiency within the digital asset ecosystem.
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