Tokenization Trends in 2023 – The Future of Tokenization

Karolina

27 Jun 2023
Tokenization Trends in 2023 – The Future of Tokenization

Through digital tokens on a blockchain, tokenization represents real-world assets or rights, and its rapid adoption is anticipated to influence the future of multiple industries. This groundbreaking technology has the capacity to transform how we invest, conduct transactions, and engage with assets.

It is vital to examine current trends in tokenization for 2023 and beyond as these advances unfold. Grasping the market size and possible financial implications, as well as the challenges and opportunities that come with tokenization will aid businesses and individuals in successfully navigating this transformative environment.

Key Aspects Shaping the Future of Tokenization

Traditional Asset Tokenization

Fractional Ownership Possibilities: The ability to divide assets into smaller units through tokenization permits fractional ownership. This broadens investment opportunities and makes them more accessible to a wider range of investors.

Liquidity Enhancement. By tokenizing traditional assets such as real estate, artworks, and intellectual property, liquidity can be unlocked, allowing for fractional trading. This leads to increased market efficiency and provides investors with expanded liquidity options.

Securities Tokens and Regulatory Compliance

Fundraising Approach Disruption: Compliant security tokens (STOs) serve as alternatives to conventional fundraising methods like initial public offerings (IPOs), leading to increased transparency, reduced intermediaries, and automated compliance – ultimately making capital markets more efficient and accessible.

Regulatory Compliance and Safeguarding Investors: To guarantee investor protection and legal compliance, tokenization calls for solid regulatory frameworks. Adoption of clear guidelines and standards for security tokens and their issuance will promote trust in tokenized assets.

Applications of Decentralized Finance (DeFi)

Innovations in Financial Products. The growth of decentralized finance (DeFi) applications is propelled by tokenization, which leverages blockchain technology and smart contracts to create new financial products and services. DeFi platforms facilitate lending, borrowing, and trading with improved efficiency, accessibility, and programmability.

Financial Services Democratization: By eliminating intermediaries, DeFi applications offer access to financial services for underserved communities, promoting financial inclusion while giving individuals more control over their financial assets and transactions.

Data Privacy Enhancement & Self-Sovereign Identities

Data Privacy Improvement. Individual data privacy can be improved through tokenization, enabling individuals to tokenize their personal information and have more control over data sharing decisions.

Self-Sovereign Identity Development: Tokenization contributes to the creation of self-sovereign identity solutions. Tokenized identity attributes allow for secure authentication and streamlined identity verification processes while maintaining control over personal data.

Interoperability & Standardization

Effortless Token Transfer: With the expansion of tokenization, interoperability between various blockchains and tokenization protocols will be essential. Implementing these interoperability standards will facilitate the seamless transfer and exchange of tokens among different platforms, ultimately promoting an efficient, connected tokenized ecosystem.

Tokenization Protocol Standardization: Industry standardization of tokenization protocols enhances compatibility, boosts efficiency, and encourages wider adoption. Standardized protocols foster interoperability, allowing various platforms to recognize and utilize tokens.

These essential factors will guide the development of tokenization in the future, propelling its expansion and transforming industries by increasing liquidity, assisting with regulatory compliance, encouraging decentralized finance innovation, improving data privacy, and fostering interoperability.

Market Size and Projections

As the tokenization market undergoes considerable growth, it is anticipated to continue expanding in the next few years. Numerous reports and analyses reveal the present market size and future projections, which are based on tokenization adoption and potential.

Growth of the Tokenization Market

Markets & Markets' report discloses that in 2021, the tokenization market was worth approximately $2.3 billion. With an average annual growth rate of 19%, it is predicted to attain a value of $5.6 billion by 2025.

Positive Projections

  • Tokenized Assets Possibly in Trillions by 2030:

Analysts and experts in the industry have an optimistic outlook on tokenized assets' potential. By 2030, they anticipate that the volume of tokenized assets could be within the trillion-dollar range.

  • Security Token Trading Volumes:

In 2021, security tokens reached trading volumes of around $4.1 trillion. Forecasts suggest that by 2030, these volumes could skyrocket to $162.7 trillion. The significant growth can be ascribed to the rising adoption of tokens across various sectors, such as music, fashion, retail, sports, film, etc.

  • Predicted Global NFT Market Value:

Considerable growth is expected in the non-fungible token (NFT) market, a specific type of tokenization for unique digital assets. The global NFT market value projected to reach $231 billion by 2030.

  • Tokenized Security Assets Comprising 10% of Global GDP:

By 2030, Boston Consulting Group anticipates that around 10% of global Gross Domestic Product (GDP) could be represented by tokenized security assets. This prediction underscores the potential influence of tokenization on the conventional securities market.

It is crucial to recognize that these estimates are dependent on various factors and market forces. Actual growth and market size might differ depending on adoption rates, regulatory changes, technological innovations, and market trends.

The Evolution of Assets

The anticipated impact of asset tokenization is a transformation in asset management, investment, and transactions. The future of assets lies in the development of inventive business models enabled by the decentralized nature of Distributed Ledger Technology (DLT) and blockchain.

Liquidity and Accessibility Enhancement

Capital Unlocked. Significant amounts of capital, currently trapped in illiquid assets within conventional systems, have the potential to be unlocked through tokenization. The process enhances liquidity by fractionating assets and enabling easy transferability, thus expanding investment possibilities for more participants.

Barrier Reduction: Tokenization reduces entry barriers for traditionally hard-to-reach assets. Retail investors now have access to assets such as real estate, artworks, or intellectual property with smaller investments, fostering financial inclusivity and democratizing investment opportunities.

Transactions with Efficiency and Security

Simplified Transaction Processes: Tokenization leads to faster, more efficient transaction processes. By utilizing decentralized networks, participants can complete asset transactions within minutes, decreasing dependence on intermediaries and eliminating manual paperwork.

Cost Efficiency: Tokenization reduces transaction costs in terms of both time and money. Distributed architecture-facilitated automated processes decrease administrative overheads and optimize asset transfers and ownership, resulting in cost savings for all involved parties.

Ownership Fractionalization and Diversification

Opportunities for Diversification: Tokenization offers investors more chances to diversify their holdings. They can effortlessly invest in fractions of numerous assets, effectively diversifying their portfolios and managing risk.

Fractionalized Ownership: Tokenization allows multiple investors to obtain fractional ownership of an asset. This model promotes inclusivity and enables smaller investors to participate in markets that were previously inaccessible.

Verification of Transparency and Provenance

Improved Transparency. Asset transaction transparency bolstered by tokenization. Blockchain technology guarantees that transaction records are unalterable and easily auditable, which increases trust and minimizes fraud potential.

Provenance Tracking: Tokenization permits the monitoring of an asset's provenance throughout its existence. This capability is especially significant for assets like artworks and luxury items, where verifying authenticity and ownership history is essential.

Novel Investment Possibilities

Groundbreaking Business Models: Tokenization lays the groundwork for cutting-edge business models that capitalize on the advantages of blockchain technology. These models encompass peer-to-peer lending platforms, decentralized marketplaces, and innovative investment instruments, giving investors a wider array of investment opportunities.

New Asset Classes: Tokenization goes beyond traditional assets to spawn new asset classes. Digital assets, such as virtual real estate, digital art, and in-game items, could become valuable investment opportunities in the future.

It is worth noting that adapting and evolving regulatory frameworks will be necessary for the future of assets to accommodate technological advancements. Policymakers and regulators hold a critical role in developing suitable safeguards and ensuring investor protection as well as overall economic stability in this changing tokenized environment.

Challenges and Solutions for the Future

Tokenization shows immense potential for revolutionizing a variety of industries. However, it faces hurdles that must be addressed to allow for widespread adoption and success. Some future challenges and their possible resolutions include:

Frameworks for Regulation

Challenge: A continually developing regulatory landscape exists for tokenization, necessitating well-defined and all-encompassing regulations to guarantee investor safety and maintain market integrity.

Solution: To develop regulatory frameworks that balance innovation with risk reduction, policymakers should cooperate with industry experts. These frameworks ought to offer clarity on compliance prerequisites, security benchmarks, and legal responsibilities.

Standards and Interoperability

Challenge: Hindered by the absence of universally accepted tokenization standards and a lack of interoperability between blockchains, the smooth transfer and exchange of tokens is inhibited.

Solution: Establishing interoperability protocols and tokenization standards through industry collaborations and standardization endeavors can enable compatibility and connectivity across diverse platforms, nurturing a more effective and interconnected tokenized environment.

Privacy and Security

Challenge: Tokenization's decentralized nature presents new risks to security and privacy, such as unauthorized access to personal data, data breaches, and hacking.

Solution: To safeguard user data and tokenized assets, strong cybersecurity measures—including encryption techniques, identity management solutions, and secure smart contract development—must be employed. Privacy-preserving technologies like zero-knowledge proofs can facilitate selective disclosure of personal information while retaining privacy.

Technical Infrastructure and Scalability

Challenge: As tokenization gains popularity, challenges may arise related to handling a high volume of transactions and maintaining efficiency in blockchain networks.

Solution: Research and development on layer 2 protocols, sidechains, sharding, and other blockchain scalability solutions can address these scalability issues. Furthermore, tokenized systems will grow and scale alongside advances in blockchain technology and infrastructure.

Conclusion - Future of Tokenization

Tokenization stands on the brink of revolutionizing various sectors through unlocking liquidity, amplifying accessibility, and simplifying asset transactions. While the future of tokenization brims with potential, it concurrently poses hurdles such as regulatory frameworks, interoperability, security, privacy, and scalability. The partnership among all stakeholders proves crucial in forging a lasting and all-encompassing tokenized ecosystem that enriches individuals, enterprises, and the worldwide economy. Tokenization is clearing the path for an invigorating period of asset administration and investment possibilities.

Nextrope Tokenization Launchpad Platform

Nextrope Launchpad Platform is a White Label solution in a Software-as-a-Service model that helps you launch your project within a month and fundraise with Initial Coin Offering (ICO) or Security Token Offering (STO).

Our platform allows you to participate in the broad financial market of digital assets. Expand your reach and find investors globally. Tokenize your project and start raising capital within a month!

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AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

Gracjan Prusik

11 Mar 2025
AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

AI Revolution in the Frontend Developer's Workshop

In today's world, programming without AI support means giving up a powerful tool that radically increases a developer's productivity and efficiency. For the modern developer, AI in frontend automation is not just a curiosity, but a key tool that enhances productivity. From automatically generating components, to refactoring, and testing – AI tools are fundamentally changing our daily work, allowing us to focus on the creative aspects of programming instead of the tedious task of writing repetitive code. In this article, I will show how these tools are most commonly used to work faster, smarter, and with greater satisfaction.

This post kicks off a series dedicated to the use of AI in frontend automation, where we will analyze and discuss specific tools, techniques, and practical use cases of AI that help developers in their everyday tasks.

AI in Frontend Automation – How It Helps with Code Refactoring

One of the most common uses of AI is improving code quality and finding errors. These tools can analyze code and suggest optimizations. As a result, we will be able to write code much faster and significantly reduce the risk of human error.

How AI Saves Us from Frustrating Bugs

Imagine this situation: you spend hours debugging an application, not understanding why data isn't being fetched. Everything seems correct, the syntax is fine, yet something isn't working. Often, the problem lies in small details that are hard to catch when reviewing the code.

Let’s take a look at an example:

function fetchData() {
    fetch("htts://jsonplaceholder.typicode.com/posts")
      .then((response) => response.json())
      .then((data) => console.log(data))
      .catch((error) => console.error(error));
}

At first glance, the code looks correct. However, upon running it, no data is retrieved. Why? There’s a typo in the URL – "htts" instead of "https." This is a classic example of an error that could cost a developer hours of frustrating debugging.

When we ask AI to refactor this code, not only will we receive a more readable version using newer patterns (async/await), but also – and most importantly – AI will automatically detect and fix the typo in the URL:

async function fetchPosts() {
    try {
      const response = await fetch(
        "https://jsonplaceholder.typicode.com/posts"
      );
      const data = await response.json();
      console.log(data);
    } catch (error) {
      console.error(error);
    }
}

How AI in Frontend Automation Speeds Up UI Creation

One of the most obvious applications of AI in frontend development is generating UI components. Tools like GitHub Copilot, ChatGPT, or Claude can generate component code based on a short description or an image provided to them.

With these tools, we can create complex user interfaces in just a few seconds. Generating a complete, functional UI component often takes less than a minute. Furthermore, the generated code is typically error-free, includes appropriate animations, and is fully responsive, adapting to different screen sizes. It is important to describe exactly what we expect.

Here’s a view generated by Claude after entering the request: “Based on the loaded data, display posts. The page should be responsive. The main colors are: #CCFF89, #151515, and #E4E4E4.”

Generated posts view

AI in Code Analysis and Understanding

AI can analyze existing code and help understand it, which is particularly useful in large, complex projects or code written by someone else.

Example: Generating a summary of a function's behavior

Let’s assume we have a function for processing user data, the workings of which we don’t understand at first glance. AI can analyze the code and generate a readable explanation:

function processUserData(users) {
  return users
    .filter(user => user.isActive) // Checks the `isActive` value for each user and keeps only the objects where `isActive` is true
    .map(user => ({ 
      id: user.id, // Retrieves the `id` value from each user object
      name: `${user.firstName} ${user.lastName}`, // Creates a new string by combining `firstName` and `lastName`
      email: user.email.toLowerCase(), // Converts the email address to lowercase
    }));
}

In this case, AI not only summarizes the code's functionality but also breaks down individual operations into easier-to-understand segments.

AI in Frontend Automation – Translations and Error Detection

Every frontend developer knows that programming isn’t just about creatively building interfaces—it also involves many repetitive, tedious tasks. One of these is implementing translations for multilingual applications (i18n). Adding translations for each key in JSON files and then verifying them can be time-consuming and error-prone.

However, AI can significantly speed up this process. Using ChatGPT, DeepSeek, or Claude allows for automatic generation of translations for the user interface, as well as detecting linguistic and stylistic errors.

Example:

We have a translation file in JSON format:

{
  "welcome_message": "Welcome to our application!",
  "logout_button": "Log out",
  "error_message": "Something went wrong. Please try again later."
}

AI can automatically generate its Polish version:

{
  "welcome_message": "Witaj w naszej aplikacji!",
  "logout_button": "Wyloguj się",
  "error_message": "Coś poszło nie tak. Spróbuj ponownie później."
}

Moreover, AI can detect spelling errors or inconsistencies in translations. For example, if one part of the application uses "Log out" and another says "Exit," AI can suggest unifying the terminology.

This type of automation not only saves time but also minimizes the risk of human errors. And this is just one example – AI also assists in generating documentation, writing tests, and optimizing performance, which we will discuss in upcoming articles.

Summary

Artificial intelligence is transforming the way frontend developers work daily. From generating components and refactoring code to detecting errors, automating testing, and documentation—AI significantly accelerates and streamlines the development process. Without these tools, we would lose a lot of valuable time, which we certainly want to avoid.

In the next parts of this series, we will cover topics such as:

Stay tuned to keep up with the latest insights!

The Ultimate Web3 Backend Guide: Supercharge dApps with APIs

Tomasz Dybowski

04 Mar 2025
The Ultimate Web3 Backend Guide: Supercharge dApps with APIs

Introduction

Web3 backend development is essential for building scalable, efficient and decentralized applications (dApps) on EVM-compatible blockchains like Ethereum, Polygon, and Base. A robust Web3 backend enables off-chain computations, efficient data management and better security, ensuring seamless interaction between smart contracts, databases and frontend applications.

Unlike traditional Web2 applications that rely entirely on centralized servers, Web3 applications aim to minimize reliance on centralized entities. However, full decentralization isn't always possible or practical, especially when it comes to high-performance requirements, user authentication or storing large datasets. A well-structured backend in Web3 ensures that these limitations are addressed, allowing for a seamless user experience while maintaining decentralization where it matters most.

Furthermore, dApps require efficient backend solutions to handle real-time data processing, reduce latency, and provide smooth user interactions. Without a well-integrated backend, users may experience delays in transactions, inconsistencies in data retrieval, and inefficiencies in accessing decentralized services. Consequently, Web3 backend development is a crucial component in ensuring a balance between decentralization, security, and functionality.

This article explores:

  • When and why Web3 dApps need a backend
  • Why not all applications should be fully on-chain
  • Architecture examples of hybrid dApps
  • A comparison between APIs and blockchain-based logic

This post kicks off a Web3 backend development series, where we focus on the technical aspects of implementing Web3 backend solutions for decentralized applications.

Why Do Some Web3 Projects Need a Backend?

Web3 applications seek to achieve decentralization, but real-world constraints often necessitate hybrid architectures that include both on-chain and off-chain components. While decentralized smart contracts provide trustless execution, they come with significant limitations, such as high gas fees, slow transaction finality, and the inability to store large amounts of data. A backend helps address these challenges by handling logic and data management more efficiently while still ensuring that core transactions remain secure and verifiable on-chain.

Moreover, Web3 applications must consider user experience. Fully decentralized applications often struggle with slow transaction speeds, which can negatively impact usability. A hybrid backend allows for pre-processing operations off-chain while committing final results to the blockchain. This ensures that users experience fast and responsive interactions without compromising security and transparency.

While decentralization is a core principle of blockchain technology, many dApps still rely on a Web2-style backend for practical reasons:

1. Performance & Scalability in Web3 Backend Development

  • Smart contracts are expensive to execute and require gas fees for every interaction.
  • Offloading non-essential computations to a backend reduces costs and improves performance.
  • Caching and load balancing mechanisms in traditional backends ensure smooth dApp performance and improve response times for dApp users.
  • Event-driven architectures using tools like Redis or Kafka can help manage asynchronous data processing efficiently.

2. Web3 APIs for Data Storage and Off-Chain Access

  • Storing large amounts of data on-chain is impractical due to high costs.
  • APIs allow dApps to store & fetch off-chain data (e.g. user profiles, transaction history).
  • Decentralized storage solutions like IPFS, Arweave and Filecoin can be used for storing immutable data (e.g. NFT metadata), but a Web2 backend helps with indexing and querying structured data efficiently.

3. Advanced Logic & Data Aggregation in Web3 Backend

  • Some dApps need complex business logic that is inefficient or impossible to implement in a smart contract.
  • Backend APIs allow for data aggregation from multiple sources, including oracles (e.g. Chainlink) and off-chain databases.
  • Middleware solutions like The Graph help in indexing blockchain data efficiently, reducing the need for on-chain computation.

4. User Authentication & Role Management in Web3 dApps

  • Many applications require user logins, permissions or KYC compliance.
  • Blockchain does not natively support session-based authentication, requiring a backend for handling this logic.
  • Tools like Firebase Auth, Auth0 or Web3Auth can be used to integrate seamless authentication for Web3 applications.

5. Cost Optimization with Web3 APIs

  • Every change in a smart contract requires a new audit, costing tens of thousands of dollars.
  • By handling logic off-chain where possible, projects can minimize expensive redeployments.
  • Using layer 2 solutions like Optimism, Arbitrum and zkSync can significantly reduce gas costs.

Web3 Backend Development: Tools and Technologies

A modern Web3 backend integrates multiple tools to handle smart contract interactions, data storage, and security. Understanding these tools is crucial to developing a scalable and efficient backend for dApps. Without the right stack, developers may face inefficiencies, security risks, and scaling challenges that limit the adoption of their Web3 applications.

Unlike traditional backend development, Web3 requires additional considerations, such as decentralized authentication, smart contract integration, and secure data management across both on-chain and off-chain environments.

Here’s an overview of the essential Web3 backend tech stack:

1. API Development for Web3 Backend Services

  • Node.js is the go-to backend runtime good for Web3 applications due to its asynchronous event-driven architecture.
  • NestJS is a framework built on top of Node.js, providing modular architecture and TypeScript support for structured backend development.

2. Smart Contract Interaction Libraries for Web3 Backend

  • Ethers.js and Web3.js are TypeScript/JavaScript libraries used for interacting with Ethereum-compatible blockchains.

3. Database Solutions for Web3 Backend

  • PostgreSQL: Structured database used for storing off-chain transactional data.
  • MongoDB: NoSQL database for flexible schema data storage.
  • Firebase: A set of tools used, among other things, for user authentication.
  • The Graph: Decentralized indexing protocol used to query blockchain data efficiently.

4. Cloud Services and Hosting for Web3 APIs

When It Doesn't Make Sense to Go Fully On-Chain

Decentralization is valuable, but it comes at a cost. Fully on-chain applications suffer from performance limitations, high costs and slow execution speeds. For many use cases, a hybrid Web3 architecture that utilizes a mix of blockchain-based and off-chain components provides a more scalable and cost-effective solution.

In some cases, forcing full decentralization is unnecessary and inefficient. A hybrid Web3 architecture balances decentralization and practicality by allowing non-essential logic and data storage to be handled off-chain while maintaining trustless and verifiable interactions on-chain.

The key challenge when designing a hybrid Web3 backend is ensuring that off-chain computations remain auditable and transparent. This can be achieved through cryptographic proofs, hash commitments and off-chain data attestations that anchor trust into the blockchain while improving efficiency.

For example, Optimistic Rollups and ZK-Rollups allow computations to happen off-chain while only submitting finalized data to Ethereum, reducing fees and increasing throughput. Similarly, state channels enable fast, low-cost transactions that only require occasional settlement on-chain.

A well-balanced Web3 backend architecture ensures that critical dApp functionalities remain decentralized while offloading resource-intensive tasks to off-chain systems. This makes applications cheaper, faster and more user-friendly while still adhering to blockchain's principles of transparency and security.

Example: NFT-based Game with Off-Chain Logic

Imagine a Web3 game where users buy, trade and battle NFT-based characters. While asset ownership should be on-chain, other elements like:

  • Game logic (e.g., matchmaking, leaderboard calculations)
  • User profiles & stats
  • Off-chain notifications

can be handled off-chain to improve speed and cost-effectiveness.

Architecture Diagram

Below is an example diagram showing how a hybrid Web3 application splits responsibilities between backend and blockchain components.

Hybrid Web3 Architecture

Comparing Web3 Backend APIs vs. Blockchain-Based Logic

FeatureWeb3 Backend (API)Blockchain (Smart Contracts)
Change ManagementCan be updated easilyEvery change requires a new contract deployment
CostTraditional hosting feesHigh gas fees + costly audits
Data StorageCan store large datasetsLimited and expensive storage
SecuritySecure but relies on centralized infrastructureFully decentralized & trustless
PerformanceFast response timesLimited by blockchain throughput

Reducing Web3 Costs with AI Smart Contract Audit

One of the biggest pain points in Web3 development is the cost of smart contract audits. Each change to the contract code requires a new audit, often costing tens of thousands of dollars.

To address this issue, Nextrope is developing an AI-powered smart contract auditing tool, which:

  • Reduces audit costs by automating code analysis.
  • Speeds up development cycles by catching vulnerabilities early.
  • Improves security by providing quick feedback.

This AI-powered solution will be a game-changer for the industry, making smart contract development more cost-effective and accessible.

Conclusion

Web3 backend development plays a crucial role in scalable and efficient dApps. While full decentralization is ideal in some cases, many projects benefit from a hybrid architecture, where off-chain components optimize performance, reduce costs and improve user experience.

In future posts in this Web3 backend series, we’ll explore specific implementation details, including:

  • How to design a Web3 API for dApps
  • Best practices for integrating backend services
  • Security challenges and solutions

Stay tuned for the next article in this series!