Tokenization Trends in 2023 – The Future of Tokenization


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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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.