Tokenization will create a new class of alternative assets

Maciej Zieliński

18 Jan 2021
Tokenization will create a new class of alternative assets

We have already covered the tokenization of companies and real estate extensively on the blog. We can also apply similar solutions to alternative assets. Why does it even make sense to tokenize cars, works of art or wine? 

The need for portfolio diversification and the comfort that comes with owning uncorrelated assets are nothing new in the investment world. But it is in times of market stress that their role becomes particularly important. Just look at last summer's record gold price. Alternative assets, however, have far more faces than just metals and precious stones. Cars, art or exclusive liquors not only satisfy people's whims, but can also turn out to be a safe deposit of funds and even bring profits from investments. Why is it worth tokenising them?

Tokenisation of cars

Exotic cars have played an important role in the world of digital content for years. However, anyone who thinks that their only use is to highlight the owner's status is mistaken. Research shows that they can be an extremely worthy investment alternative. According to a Knight Frank report, investment in vintage cars returned over 330% in the 10 years to 2017. Far outperforming other alternative assets such as diamonds, jewellery and art in this regard. However, for obvious reasons, not everyone can afford it. Such a car remains simply too expensive for most. But what if we could only acquire part of it? 

CT1, which is the result of a collaboration between investment platform CurioInvest and digital asset exchange MERJ Exchange, is one of the latest tokens whose value is secured by collector cars. According to both companies, it is the tokenization of luxury goods that will make them accessible to a wider range of investors. 

" If we look at works of art or collector cars we see that they have historically been seen as safe havens for investment, " says Fernando Verboonen, founder and CEO of CurioInvest. " Today they are held by very few. By introducing new technology, we are enabling everyone to fully benefit from the features and functions that define this asset class as a whole."

An investment for everyone

Last year, companies released 1.1 million tokens secured by the $1.1 million Ferarri F12TDF CTI. For less than 4 zlotys we could become shareholders in a supercar worth almost 4 million, whose value in the coming years will probably only increase. The project assumes tokenization of as many as 500 collector cars with a total value of over 200 million dollars. The machines are to be stored and maintained in a garage owned by CurioInvest in Stuttgart. When buying tokens, we do not have to worry about their transport or maintenance. 

Currently, one of the main problems in the secondary sale of exotic cars is the multitude of diverse and complex price models. Often, due to the lack of standardisation and regional differences, no one is able to determine how much a model is really worth. By harnessing the potential of blockchain technology, tokenization will allow the current market value to be adjusted in real time. This will create a number of new opportunities and simplifications, especially in the insurance industry, where it is necessary to accurately determine the value of a car. 


In 2018, sales on the global art market reached $67 billion. Which represents an increase of 6.3% over 2017 and 12% over 2016. For years, post-war and contemporary art has remained the most important sector in terms of value. Over the past 20 years, works from these periods have produced a compound annual return (CAR) that exceeds the S&P's total return by 10.7%. However, the growing art market remains highly illiquid and, like collector cars, accessible only to a limited number of wealthy individuals and institutions. 

Several token projects have recently emerged that seek to change this. The first of these, Maecenas, in 2018 began tokenizing artworks by launching the groundbreaking work of American pop art pioneer Andy Warhol - '14 Little Electric Chairs'.  By basing the sale on blockchain, it was able to attract hundreds of investors previously unconnected to the art world, helping to increase the valuation of the work from $1.7 million to $5.6 million. 

Tokenization significantly increases the liquidity of investment in art - we are trading tokens, only "part" of the work, so we do not have to look for a buyer for the whole. It can also bring numerous benefits to the artist himself. If the artist decides to tokenize his work, he will both earn from the sale of part of the tokens and retain a stake in the whole, allowing him to profit from the increase in value of his work.

Tokenisation of collector wines

Investing in wine for the uninitiated may sound like a weak joke. Nothing could be further from the truth. Collectible wines, as investment assets, are characterised by a high rate of return and significant resistance to economic fluctuations. While the truthfulness of the statement that the older the wine the better is limited - once it reaches full maturity, the quality starts to decrease, there is no doubt that the price of rare examples increases over time.


There are a number of factors that guarantee the constancy of this trend. First of all, connoisseurs consider the grape harvest vintage as a factor defining the characteristics of individual bottles, and this vintage is unique - there will not be another 1945 or 2010. 

The growing value of the land on which grapes are grown is also of no small importance. The average price of a hectare of vineyard in the famous Champagne exceeds 1 million euros, which is still a modest amount compared to the 15 million you have to pay for the best Grand Cru in Burgundy. Often, within just one hilltop, there are several parcels with different growing conditions. The differences between them may seem insignificant to the layman, but to the connoisseur they are often colossal. For example, the fruit for the auction record-breaking Domaine de la Romanée-Conti La Romanée Conticomes from a plot of just 1.81 hectares. Demand for rare wines continues to grow (largely due to growing interest in China) while the number of prestigious plots is limited and fixed.

In addition, ongoing climate change and the associated rise in temperature are forcing winemakers in particular regions (e.g. Bordeaux) to change their production processes and even the style of their finished products, potentially increasing the value of older vintages.

Does good wine have to be expensive? 

When it comes to wines that have investment potential this statement is unfortunately completely true. Only about 5% of the wines produced are suitable for ageing, and among these only a small proportion is of real interest to collectors. Of course, it pays to invest not only in the most expensive labels. A few hundred dollars for a bottle of wine, whose price may increase even 4 times over time, does not necessarily sound like an insurmountable barrier for the average investor. It should be remembered, however, that such wine cannot simply be placed on a shelf and wait until its market value increases. Proper storage is key. Temperature, humidity and even lighting - all these determine whether the beverage will actually mature over time and acquire new qualities, or simply spoil. 

Unfortunately, the prices of specialised refrigerators, suitable for storing collectible wines, start at several thousand dollars. Buying and maintaining such equipment with only one bottle in mind simply does not make sense. Not everyone has enough space at their disposal, either. Moreover, wine trading, due to numerous legal restrictions (wine is, after all, an alcoholic beverage), is rarely conducted in the peer-to-peer model, which significantly complicates the matter of its sale by an independent investor. As a result, investments in wine collectors, despite numerous advantages, remain so far closed to a narrow group of people and institutions. As in the case of antique cars and art, this problem can be solved with tokenization.

Tokens as a breakthrough for the industry

When buying tokens whose value would be secured by wine, we would not have to worry about storing the bottles. They would be kept in refrigerators or entire special cellars of the token distributor, just like cars in the garages of the aforementioned CurioInvest. Furthermore, tokenization would significantly increase liquidity in the collectible wine market. When buying wine in the traditional way, we in a way freeze our funds. It often takes years for the value of wine to rise, and even when we decide to liquidate our investments, we have no guarantee that we will find a buyer for our bottle right away. Tokens would be free from such restrictions, we could sell them at any time, without worrying about the cost and risk of transport (bottles are made of glass!) or looking for someone willing to buy the whole wine. 

Source: The World of Fine Wine

Projects distributing such tokens are already emerging. One of them is Vinsent, which, thanks to tokenization, makes it possible to buy cases of wine while it is still in the initial stages of production. The market for exclusive wine during a coronavirus pandemic is characterised by much lower volatility than global stock markets. And as this coincides with a renewed interest in blockchain technology we can expect more similar projects to emerge in the near future.

Where will the tokenization of alternative assets take us?

The tokenization of cars, art or wine does not sound so exotic if we look at already existing projects that have taken even less typical assets for a spin. Take SardineCoin, for example, a token offered by Luxembourg-based MY Sardines, whose value is secured by tinned sardines. The company is banking on the durability and ease of storage of the canned fish, which it says can last for hundreds of years as a collector's item. All indications are that all the possible uses of this technology will be explored for a long time to come. Of course, not every tokenization idea is doomed to success. Not only the characteristics of the assets themselves, but above all the quality of the technological solutions used have a determining influence on the end result. 

Do you have your own idea for a tokenization project? Get in touch with our team of experts who will certainly be able to help you. 

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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.