Tokenized Trading refers to the exchange of assets that have been converted into digital tokens on a blockchain, representing ownership or a claim to an underlying value. This paradigm shift enables fractional ownership, increased liquidity, and programmatic trading of various asset classes, from real estate to traditional securities and cryptocurrencies themselves.
Mechanism
The operational logic involves issuing tokens on a blockchain, where each token corresponds to a specific unit or fraction of an asset. Trading these tokens occurs on decentralized exchanges (DEXs), centralized exchanges (CEXs) supporting tokenized assets, or through OTC desks and RFQ systems, with transactions recorded on the distributed ledger, ensuring verifiable ownership transfer.
Methodology
The strategic approach of tokenized trading aims to enhance market efficiency, broaden investor access, and introduce new forms of financial products by leveraging blockchain’s programmability and immutability. This methodology is key for smart trading and institutional options trading, allowing for automated execution, transparent settlement, and the creation of complex derivative instruments based on real-world assets or digital currencies, thereby transforming traditional financial market structures.
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