Tokenization on blockchain refers to the process of converting physical assets or securities into digital tokens that can be recorded on a blockchain. This process is also known as dematerialization because it involves the conversion of physical assets into digital form. Dematerialization of securities refers to the process of replacing physical certificates of ownership with electronic records, which can be stored and transferred digitally. In this article, we will compare the process of tokenization on blockchain with dematerialization of securities, highlighting the similarities and differences between the two concepts.

One of the main similarities between tokenization on blockchain and dematerialization of securities is that both processes involve the digitization of assets or securities. In both cases, the goal is to create a digital representation of the asset or security that can be stored and transferred electronically. This can be beneficial for a variety of reasons, including reducing the need for physical storage, simplifying the process of transferring ownership, and increasing the speed and efficiency of transactions.

Another similarity between tokenization on blockchain and dematerialization of securities is that both processes involve the use of a digital platform or system to facilitate the recording and transfer of assets or securities. In the case of tokenization on blockchain, this platform is the blockchain itself, which is a distributed ledger technology that allows for the secure and transparent recording of digital transactions. In the case of dematerialization of securities, the digital platform is typically a central securities depository (CSD), which is an electronic system that maintains records of securities ownership and facilitates the transfer of ownership between buyers and sellers.

There are also several differences between tokenization on blockchain and dematerialization of securities. One of the main differences is that tokenization on blockchain involves the creation of a new digital asset, whereas dematerialization of securities involves the conversion of an existing physical asset into a digital form. This means that tokenization on blockchain can be used to create new financial instruments and investment opportunities, such as tokenized real estate, tokenized art, and tokenized venture capital investments. By tokenizing these types of assets, investors can buy and sell small fractions of the underlying asset, which can make it more accessible and convenient for a wider range of investors. In contrast, dematerialization of securities is typically used to digitize existing assets or securities, such as stocks, bonds, and other financial instruments that are already in circulation.

Another difference between tokenization on blockchain and dematerialization of securities is the level of decentralization and control. Tokenization on blockchain relies on a decentralized network of computers to validate and record transactions, which means that there is no central authority or intermediary controlling the process. In contrast, dematerialization of securities typically involves a central authority or intermediary, such as a CSD, that maintains records of ownership and facilitates the transfer of ownership between buyers and sellers.

There are also differences in the level of transparency and security between tokenization on blockchain and dematerialization of securities. Tokenization on blockchain relies on the transparent and immutable nature of the blockchain to ensure the security and integrity of transactions. In contrast, dematerialization of securities typically relies on centralized systems and intermediaries to maintain records and facilitate transactions, which may not offer the same level of transparency and security as the blockchain.

 One of the main benefits of tokenization on blockchain is that it allows for the creation of new, highly liquid financial instruments and assets. By making it easy to buy and sell fractions of an asset, tokenization can increase the liquidity and accessibility of the asset, which can make it more attractive to investors. In contrast, dematerialization of securities can simplify the process of buying and selling existing assets or securities, but it does not necessarily increase the liquidity or accessibility of the asset.

Tokenization on blockchain also has the potential to reduce the cost of transactions, as it can eliminate the need for intermediaries and reduce the overhead associated with traditional financial transactions. By using smart contracts and other blockchain technologies, tokenization can automate many of the manual processes that are involved in buying and selling assets or securities, which can reduce the cost and time required for these transactions. Dematerialization of securities can also reduce the cost of transactions by eliminating the need for physical certificates and other paper-based documentation, but it may still rely on intermediaries to facilitate the transfer of ownership.

Overall, tokenization on blockchain and dematerialization of securities are both important developments that have the potential to revolutionize the way that assets and securities are recorded and transferred. By digitizing assets and securities, these processes can make it easier and more efficient to buy, sell, and transfer ownership, which can have a major impact on the financial industry and beyond. As the use of these technologies continues to grow, it is likely that we will see even more innovative and exciting applications of tokenization and dematerialization in the future.

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Deal structure

Name here and Rooba sign a Master Service agreement for the tokenization of
Rooba performs a preliminary regulatory and financial due-dilligence to ascertain the viability of the issuance. Post the internal due-dilligence, key terms are discussed and the customizable functions of the token are determined.
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Due Dilligence

Independent validators and legal partners on the Rooba validator network - The Guild, would perform legal and commercial due-dillegence of the as per the standard operating procedure in line with global standard practices.

Listing on Rooba Trade

A prospectus is created on the Rooba Trade platform with the current details and future projections of the owned by .
Interested investors would deposit 10% of their total intended investment as an expression of interest into an escrow through bank transfer.

Tokenization and distribution

At the end of the stipulated period for expressions of interest, offchain deal-structuring is completed and the underlying asset is safely custodied. A call for the balance investment is made to the investors. The funds collected are passed on to . Subsequently, the backed tokens are minted and issued to the investor wallets.

Returns for investors

Investors can trade the tokens in a highly liquid private market. Investors also enjoy rental yield and appreciation of the underlying .
Secured exit for investor at the end of investment period.