Clear DefinitionsTokenized Security
1 min read
Pronunciation
[to‑ken‑ized si‑kyuh‑ri‑tee]
Analogy
Tokenized securities are like converting a real estate deed into digital shares so many investors can own fractions of a building.
Definition
A digital representation of a traditional financial security (equity, bond, real estate) on a blockchain, enabling fractional ownership and programmable compliance.
Key Points Intro
Tokenized securities unlock liquidity and access through:
Key Points
Fractional ownership: Divides high‑value assets into smaller tokens.
Programmable compliance: Enforces regulatory rules on‑chain.
Secondary markets: Enables peer‑to‑peer trading with settlement automation.
Transparency: On‑chain records of ownership and transfers.
Example
A real estate fund issues tokenized shares on Ethereum; investors trade property stakes 24/7 without intermediaries.
Technical Deep Dive
Issuers deploy ERC‑3643 contracts managing partitions for pre‑ and post‑issuance compliance. A controller contract enforces KYC/AML via on‑chain permission lists. Secondary trades invoke `transferByPartition`, checking regulatory constraints and recording settlement in a single atomic transaction.
Security Warning
Smart contract flaws could lock or misallocate investor funds; rigorous audits and legal reviews are essential.
Caveat
Legal enforceability of tokenized claims depends on jurisdictional recognition of digital asset ownership.
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