How much does tokenization cost?

Maciej Zieliński

05 Apr 2022
How much does tokenization cost?

Tokenization is a form of business digitization that is based on blockchain technology. It allows for the creation of tokens or coins and is used to assign their values to a given project. Due to the growth of the cryptocurrency sector and the adoption of blockchain technology, the potential for tokenizing business has increased. Smart contracts enabled full payment automation, which significantly accelerated the process of collecting funds and handling all types of ICO. Why is business tokenization worthwhile? What are the benefits and costs of tokenization? We're writing about it all below!

Tokenization of business

Many business entities are planning to proceed with the tokenization of their business activities. Unfortunately, few people know what the costs associated with this type of action are. In addition, the resulting tokens are often confused with cryptocurrencies. Although both forms are intangible, they use blockchain technology in different ways. Cryptocurrencies have their blokchain, and tokens use out-of-the-box solutions and classic technologies. In addition, it should be noted that tokens can be divided into 3 categories:

  • utility tokens
  • security tokens
  • payment tokens

Many companies use these forms to recapitalize their current business or to start a new business. This brings with it some benefits, but also costs.

What are the benefits and costs of tokenization?

The following is a list of the tangible and intangible benefits of implementing tokenization.

Tangible benefits and potential costs:

  • Legal aspects - Can legal costs save you money on the first day? No, but will it save the issuer and investors many millions of dollars in the event of a large collection? Definitely yes. Tokenization does not need lawyers to assign and link ownership in a project. Tokenization occurs automatically with smart contracts. However, you need to take into account that good tokenization needs to have a meaningful white paper, which often requires technical and legal knowledge. The potential cost of preparing a good white paper starts at $5 000.
  • Blockchain technology — using new technologies to implement your tokenization. We must remember that, depending on the law of the country concerned, additional costs related to the implementation of Know Your Customer (KYC) and AML procedures (prevention of money laundering) may arise. Other costs includes the potential requirements and licenses that are required for trading and collection of digital securities. Such costs are not schematic and may range from a few to several thousand dollars.
  • Automated compatibility — thanks to blockchain technology and smart contracts, we have a wealth of information that cannot be forged. Thus, we save money that we would otherwise have to spend on keeping financial accounting records. Lock-up periods, number of investors, and other policies and regulations may be embedded in or next to digital securities, allowing them to automatically track and enforce the law depending on the jurisdiction. Smart contracts and blockchain technology can save around $150.000 - $200.000 over the span of 5 years of running a business.
  • Time — this is an element which concerns the management’s focus on the tokenization process. Each member managing the project and working in it sacrifices his time and receives remuneration for it. The rates for an hour of a Blockchain Specialist‘s work start at $50. Smart contracts help us save a lot of money, but we need to be aware that implementing tokenization will cost between a few and several thousand dollars in employee remuneration.
  • Administration costs — these are office costs, customer service costs and documentation workflow costs, as well as costs related with any and all formalities. To conduct an ICO, you will need a service that involves organizing financial documents and collecting required licenses. The costs in this case can be between a few and several thousand dollars.
  • Distributions and payments — At the moment, in the case of traditional securities, if a company has to issue a dividend, it passes through transfer agents who usually send checks to investors. The process can be slow and inefficient. The use of blockchain technology allows a registered transfer agent to issue dividends to shareholders immediately with a single click. Additionally, tokenization occurs automatically thanks to smart contacts.
  • The main cost for business tokenization is IT. IT services are the most expensive issue in ICO. The software itself can cost tens of thousands of PLN. On top of that, there are also the costs related to expertise in IT, blockchain and payments. Each project must be individually designed graphically. That is why IT costs are so high.

Intangible benefits and associated costs

Intangible benefits of ICO will mentally help us manage financial collections more efficiently.

By paying the above mentioned ICO costs, we will achieve the following advantages:

  • Saving time – in the case of traditional securities, shares, bonds, etc. the time, money and energy invested in a business system that (in classic business) is slow and bureaucratic are a major problem. Running an ICO in combination with blockchain technology digitizes the whole process, eliminates paperwork and technical problems, and implements automated tools by using smart contracts.
  • Liquidity — The liquidity potential increases in the case of trading on the secondary market after a year, as opposed to waiting for a multi-annual exit, which is typical of traditional private offers. The entire process depends on specific legislation. Moreover, thanks to the market, crypto investors have the ability to trade all around the world 24 hours a day, 7 days a week, with settlements being conducted in a much more efficient and transparent process.
  • Transparency — thanks to public blockchain technology, the investment process becomes much more transparent. All transaction information can be stored on a blockchain. These records protect both the investor and the issuer. Investors can be certain that their data is not compromised at any stage of the ICO. In the case of issuers, shareholder management and non-variable reporting of transactions are available as part of internal control or in the case of any regulatory supervision that may occur.
  • Security — blockchain technology blocks the possibility of counterfeiting and stealing funds. In addition, each transaction is unchangeable and provides decentralized protection of personal data, making the whole process extremely secure.
  • Fractionalisation — While real funds can already be divided into fractions, the current method may be inefficient. Digital securities offer an opportunity to streamline the process of fractionalising assets and revenues generated by them.


The fixed costs associated with the execution of ICO are significant and can range from tens to more than $100 000. If the project is exceptionally robust, then “sky is the limit” as far as financing the project is concerned. Although initially ICO may seem an expensive solution, over the span of 5 years the costs of running a business may be 40% lower than those generated by using traditional solutions. Since tokenization is still the driving force for generating capital, we believe that the cost and additional benefits will replace the current methods. Blockchain technology has the significant ability to improve the way securities are issued, traded, and managed. As the market matures, the benefits will certainly increase over time. This does not mean that we must or should completely abandon the older processes that exist in today's capital markets. Instead, we can combine these two systems to create effective, efficient and user-friendly solutions for the next generation of securities. ICO can be expensive, but the benefits resulting from it certainly outweigh a simple factor like “finance”.

Tokens are a great solution for many customers. Using blockchain technology ensures increased security. In addition, modern tools, payment technologies and the overal payments industry, as well as solutions such as google pay, apple pay, digital wallets, credit cards and the overall payment network aid with conducting payment tokenization of every project. The payment process itself is incredibly simple and safe. Payment data, sensitive data and recurring payments require the token service provider to conduct payment processing in a professional manner.

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Token Engineering Process

Kajetan Olas

13 Apr 2024
Token Engineering Process

Token Engineering is an emerging field that addresses the systematic design and engineering of blockchain-based tokens. It applies rigorous mathematical methods from the Complex Systems Engineering discipline to tokenomics design.

In this article, we will walk through the Token Engineering Process and break it down into three key stages. Discovery Phase, Design Phase, and Deployment Phase.

Discovery Phase of Token Engineering Process

The first stage of the token engineering process is the Discovery Phase. It focuses on constructing high-level business plans, defining objectives, and identifying problems to be solved. That phase is also the time when token engineers first define key stakeholders in the project.

Defining the Problem

This may seem counterintuitive. Why would we start with the problem when designing tokenomics? Shouldn’t we start with more down-to-earth matters like token supply? The answer is No. Tokens are a medium for creating and exchanging value within a project’s ecosystem. Since crypto projects draw their value from solving problems that can’t be solved through TradFi mechanisms, their tokenomics should reflect that. 

The industry standard, developed by McKinsey & Co. and adapted to token engineering purposes by Outlier Ventures, is structuring the problem through a logic tree, following MECE.
MECE stands for Mutually Exclusive, Collectively Exhaustive. Mutually Exclusive means that problems in the tree should not overlap. Collectively Exhaustive means that the tree should cover all issues.

In practice, the “Problem” should be replaced by a whole problem statement worksheet. The same will hold for some of the boxes.
A commonly used tool for designing these kinds of diagrams is the Miro whiteboard.

Identifying Stakeholders and Value Flows in Token Engineering

This part is about identifying all relevant actors in the ecosystem and how value flows between them. To illustrate what we mean let’s consider an example of NFT marketplace. In its case, relevant actors might be sellers, buyers, NFT creators, and a marketplace owner. Possible value flow when conducting a transaction might be: buyer gets rid of his tokens, seller gets some of them, marketplace owner gets some of them as fees, and NFT creators get some of them as royalties.

Incentive Mechanisms Canvas

The last part of what we consider to be in the Discovery Phase is filling the Incentive Mechanisms Canvas. After successfully identifying value flows in the previous stage, token engineers search for frictions to desired behaviors and point out the undesired behaviors. For example, friction to activity on an NFT marketplace might be respecting royalty fees by marketplace owners since it reduces value flowing to the seller.


Design Phase of Token Engineering Process

The second stage of the Token Engineering Process is the Design Phase in which you make use of high-level descriptions from the previous step to come up with a specific design of the project. This will include everything that can be usually found in crypto whitepapers (e.g. governance mechanisms, incentive mechanisms, token supply, etc). After finishing the design, token engineers should represent the whole value flow and transactional logic on detailed visual diagrams. These diagrams will be a basis for creating mathematical models in the Deployment Phase. 

Token Engineering Artonomous Design Diagram
Artonomous design diagram, source: Artonomous GitHub

Objective Function

Every crypto project has some objective. The objective can consist of many goals, such as decentralization or token price. The objective function is a mathematical function assigning weights to different factors that influence the main objective in the order of their importance. This function will be a reference for machine learning algorithms in the next steps. They will try to find quantitative parameters (e.g. network fees) that maximize the output of this function.
Modified Metcalfe’s Law can serve as an inspiration during that step. It’s a framework for valuing crypto projects, but we believe that after adjustments it can also be used in this context.

Deployment Phase of Token Engineering Process

The Deployment Phase is final, but also the most demanding step in the process. It involves the implementation of machine learning algorithms that test our assumptions and optimize quantitative parameters. Token Engineering draws from Nassim Taleb’s concept of Antifragility and extensively uses feedback loops to make a system that gains from arising shocks.

Agent-based Modelling 

In agent-based modeling, we describe a set of behaviors and goals displayed by each agent participating in the system (this is why previous steps focused so much on describing stakeholders). Each agent is controlled by an autonomous AI and continuously optimizes his strategy. He learns from his experience and can mimic the behavior of other agents if he finds it effective (Reinforced Learning). This approach allows for mimicking real users, who adapt their strategies with time. An example adaptive agent would be a cryptocurrency trader, who changes his trading strategy in response to experiencing a loss of money.

Monte Carlo Simulations

Token Engineers use the Monte Carlo method to simulate the consequences of various possible interactions while taking into account the probability of their occurrence. By running a large number of simulations it’s possible to stress-test the project in multiple scenarios and identify emergent risks.

Testnet Deployment

If possible, it's highly beneficial for projects to extend the testing phase even further by letting real users use the network. Idea is the same as in agent-based testing - continuous optimization based on provided metrics. Furthermore, in case the project considers airdropping its tokens, giving them to early users is a great strategy. Even though part of the activity will be disingenuine and airdrop-oriented, such strategy still works better than most.

Time Duration

Token engineering process may take from as little as 2 weeks to as much as 5 months. It depends on the project category (Layer 1 protocol will require more time, than a simple DApp), and security requirements. For example, a bank issuing its digital token will have a very low risk tolerance.

Required Skills for Token Engineering

Token engineering is a multidisciplinary field and requires a great amount of specialized knowledge. Key knowledge areas are:

  • Systems Engineering
  • Machine Learning
  • Market Research
  • Capital Markets
  • Current trends in Web3
  • Blockchain Engineering
  • Statistics


The token engineering process consists of 3 steps: Discovery Phase, Design Phase, and Deployment Phase. It’s utilized mostly by established blockchain projects, and financial institutions like the International Monetary Fund. Even though it’s a very resource-consuming process, we believe it’s worth it. Projects that went through scrupulous design and testing before launch are much more likely to receive VC funding and be in the 10% of crypto projects that survive the bear market. Going through that process also has a symbolic meaning - it shows that the project is long-term oriented.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.


What does token engineering process look like?

  • Token engineering process is conducted in a 3-step methodical fashion. This includes Discovery Phase, Design Phase, and Deployment Phase. Each of these stages should be tailored to the specific needs of a project.

Is token engineering meant only for big projects?

  • We recommend that even small projects go through a simplified design and optimization process. This increases community's trust and makes sure that the tokenomics doesn't have any obvious flaws.

How long does the token engineering process take?

  • It depends on the project and may range from 2 weeks to 5 months.

What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained


18 Mar 2024
What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained

Enter Berachain: a high-performance, EVM-compatible blockchain that is set to redefine the landscape of decentralized applications (dApps) and blockchain services. Built on the innovative Proof-of-Liquidity consensus and leveraging the robust Polaris framework alongside the CometBFT consensus engine, Berachain is poised to offer an unprecedented blend of efficiency, security, and user-centric benefits. Let's dive into what makes it a groundbreaking development in the blockchain ecosystem.

What is Berachain?


Berachain is an EVM-compatible Layer 1 (L1) blockchain that stands out through its adoption of the Proof-of-Liquidity (PoL) consensus mechanism. Designed to address the critical challenges faced by decentralized networks. It introduces a cutting-edge approach to blockchain governance and operations.

Key Features

  • High-performance Capabilities. Berachain is engineered for speed and scalability, catering to the growing demand for efficient blockchain solutions.
  • EVM Compatibility. It supports all Ethereum tooling, operations, and smart contract languages, making it a seamless transition for developers and projects from the Ethereum ecosystem.
  • Proof-of-Liquidity.This novel consensus mechanism focuses on building liquidity, decentralizing stake, and aligning the interests of validators and protocol developers.


EVM-Compatible vs EVM-Equivalent


EVM compatibility means a blockchain can interact with Ethereum's ecosystem to some extent. It can interact supporting its smart contracts and tools but not replicating the entire EVM environment.


An EVM-equivalent blockchain, on the other hand, aims to fully replicate Ethereum's environment. It ensures complete compatibility and a smooth transition for developers and users alike.

Berachain's Position

Berachain can be considered an "EVM-equivalent-plus" blockchain. It supports all Ethereum operations, tooling, and additional functionalities that optimize for its unique Proof-of-Liquidity and abstracted use cases.

Berachain Modular First Approach

At the heart of Berachain's development philosophy is the Polaris EVM framework. It's a testament to the blockchain's commitment to modularity and flexibility. This approach allows for the easy separation of the EVM runtime layer, ensuring that Berachain can adapt and evolve without compromising on performance or security.

Proof Of Liquidity Overview

High-Level Model Objectives

  • Systemically Build Liquidity. By enhancing trading efficiency, price stability, and network growth, Berachain aims to foster a thriving ecosystem of decentralized applications.
  • Solve Stake Centralization. The PoL consensus works to distribute stake more evenly across the network, preventing monopolization and ensuring a decentralized, secure blockchain.
  • Align Protocols and Validators. Berachain encourages a symbiotic relationship between validators and the broader protocol ecosystem.

Proof-of-Liquidity vs Proof-of-Stake

Unlike traditional Proof of Stake (PoS), which often leads to stake centralization and reduced liquidity, Proof of Liquidity (PoL) introduces mechanisms to incentivize liquidity provision and ensure a fairer, more decentralized network. Berachain separates the governance token (BGT) from the chain's gas token (BERA) and incentives liquidity through BEX pools. Berachain's PoL aims to overcome the limitations of PoS, fostering a more secure and user-centric blockchain.

Berachain EVM and Modular Approach

Polaris EVM

Polaris EVM is the cornerstone of Berachain's EVM compatibility, offering developers an enhanced environment for smart contract execution that includes stateful precompiles and custom modules. This framework ensures that Berachain not only meets but exceeds the capabilities of the traditional Ethereum Virtual Machine.


The CometBFT consensus engine underpins Berachain's network, providing a secure and efficient mechanism for transaction verification and block production. By leveraging the principles of Byzantine fault tolerance (BFT), CometBFT ensures the integrity and resilience of the Berachain blockchain.


Berachain represents a significant leap forward in blockchain technology, combining the best of Ethereum's ecosystem with innovative consensus mechanisms and a modular development approach. As the blockchain landscape continues to evolve, Berachain stands out as a promising platform for developers, users, and validators alike, offering a scalable, efficient, and inclusive environment for decentralized applications and services.


For those interested in exploring further, a wealth of resources is available, including the Berachain documentation, GitHub repository, and community forums. It offers a compelling vision for the future of blockchain technology, marked by efficiency, security, and community-driven innovation.


How is Berachain different?

  • It integrates Proof-of-Liquidity to address stake centralization and enhance liquidity, setting it apart from other blockchains.

Is Berachain EVM-compatible?

  • Yes, it supports Ethereum's tooling and smart contract languages, facilitating easy migration of dApps.

Can it handle high transaction volumes?

  • Yes, thanks to the Polaris framework and CometBFT consensus engine, it's built for scalability and high throughput.