Tokenization
Contextual Quotes
1. Amir Taaki:
"The free software movement possessed world class developers with a community of strong believers. But the movement simply lacked resources due to there being no economic model.
Through the power of tokenization, we now have an alternative. Programmable money enables a rich set of techniques to develop economic networks.
Token engineering and DAOs are shattering the basic structure of the old world. The old world is corporate, hierarchical, and rigid. This new world is rich, intense and creative.
In the classical corporate model, you have a consumer-producer dichotomy. This distinction does not exist in crypto. The focus is on community and squad wealth. Rather than a company exploiting users for profit and protecting their property, the owners and producers are the community themselves.
The value of a project is directly proportional to its community. Tokens capture the value generated by a community and circle that value back to the community itself. The ability of projects to foster participation, enthusiasm and engagement is therefore crucial. Communities foster autonomy through discourse, negotiation and narrative. This in turn leads to democratic transformations of the individual, fashioning them for the values of self-governance and self-development.
Nowhere is this social evolution more apparent than in DAOs. DAOs are a new governance primitive that enable latent democratic forces to assemble and organize themselves before power and capital forces can narrow them ideologically. This enables the exploration of unrealized liberation zones. The users are stakeholders that can participate directly in governance decisions. They can decide on development targets, features, salaries, capital allocation and investments.
The ideal of politics is to multiply public spaces. Crypto is therefore deeply political. Politics concerns taking decisions regarding the collective interests of society such as well-being, security and freedom. In this sense politics and direct democracy are synonymous.
The old model of technology is anti-political because it removes ownership from people and places it into the hands of monopoly. The old model encourages passivity and indifference by design, reducing people to consumers. This is essentially the orientation of modern technology. Its arc extends back 5000 years to the origin of civilization itself."
(https://lists.dyne.org/lurker/message/20211021.123016.3dccaf0c.en.html)
2. Kei Kreutel:
"Tokenization introduces a powerful cultural norm into early stage organizations: the expectation of transparent co-ownership of its assets from the start. The tension between more traditional corporate structures that pay dividends and DAOs persists (17). Because most DAOs represent governance rights through a token, in some sense tokens have the ability to Trojan horse principles of cooperatives directly into highly financialized spaces. These are two important sides of, quite literally, one coin, and for this reason, tokenization should not be dismissed. Tokens may be one key to unlock the ownership economy, but to reach a more equitable version of this future, we must participate in crafting the culture around token distribution, mediation, and governance now. This becomes important because, unlike shares in cooperatives, many tokens that double as governance rights can be sold on secondary markets. While this makes the conditions for entrance into an organization easier, DAOs can learn from cooperatives’ emphasis on long termism, through establishing more cultural patterns around token vesting, limited transferability, or more experimental mechanisms."
(https://gnosisguild.mirror.xyz/t4F5rItMw4-mlpLZf5JQhElbDfQ2JRVKAzEpanyxW1Q)
Description
From Coin Telegraph:
"Tokenization is the process of turning things into digital assets.
Assume you have a farm that is worth $1 million. It has a big barn, cows, rabbits, a hedgehog — you name it. All of a sudden, you are desperately in need of money, you can sell that farm the old way — fill out the paperwork, wait for an offer, close the deal, etc. But what if you need less than $1 million and would prefer to keep most of the farm to yourself?
Imagine digitally printing 1 million tokens under the symbol “COW,” for instance, where each COW is worth exactly 1% of your property — or any other amount, just as long as each token represents a certain share of the underlying asset (in this case, your farm).
Technically speaking, you would be developing an algorithm that would be implemented as a smart contract on a blockchain. This algorithm defines all the features of your future token: its value, quantity, denominations, name, etc.
So, how do we actually get those COW tokens out there so that they can be freely bought and sold on different exchanges? For that, we need a platform that supports smart contracts. Ethereum would be the most popular choice. Rather than getting into the technical details about how tokens are created and getting too far off topic, let’s just say you’ll need a smart contract template, a text editor and an Ethereum wallet address.
Voila, COW tokens are now in circulation! Technically, they are ERC-20 tokens — basically meaning that they are powered by Ethereum blockchain. Now that they have entered the market, their value can either go up or down in accordance with demand.
See how blockchain can allow us to tokenize things now? We took a farm and created its digital representation that exists on a blockchain. In short, this farm is now a tokenized asset."
(https://cointelegraph.com/explained/tokenization-explained)
Characteristics
Benjamin Life:
"Pluralistic Units of Value:
At its core, tokenization represents the conversion of value and ownership rights into discrete, programmable digital assets. While much attention has focused on tokenizing traditional financial assets like securities, the true revolutionary potential lies in tokenizing previously non-financialized forms of value.
Tokenization enables several crucial capabilities for pluralistic capital allocation:
Discrete representation of diverse forms of value. Any form of capital—natural, social, cultural, intellectual—can be represented as discrete digital units. This creates commensurability without requiring total homogenization. For example, a regenerative agriculture project might issue distinct tokens representing carbon sequestration, biodiversity enhancement, and water purification, each with its own measurement system and governance rules.
Fractional ownership and governance. By dividing rights into small units, tokenization enables broader participation in ownership and governance of assets previously accessible only to large institutional investors or the wealthy. A community forest could issue tokens representing stewardship rights that are accessible to local residents regardless of financial means.
Programmable rights and responsibilities. Smart contracts can encode specific rights, restrictions, and responsibilities associated with different types of value. For instance, a community housing token might include both ownership rights and commitments to maintaining affordability, automatically enforcing community agreements without requiring trust in centralized authorities.
Composability across value domains. Different tokens can interact through programmable interfaces, enabling complex systems that recognize and reward multiple forms of value creation simultaneously. A local currency might automatically provide rewards when combined with tokens representing volunteer hours or ecological restoration activities.
Traditional financial instruments qualify value primarily through price; tokenization enables qualification through multiple dimensions simultaneously.
For example, the tokenization of carbon removal creates units that represent not just tons of CO2 sequestered but be bundled with tokenized representations of co-benefits (like biodiversity) and community impacts. These attributes can be priced, traded, and governed distinctly rather than being flattened into a single metric.
Such markets can better recognize and reward the unique characteristics of different forms of value creation rather than reducing everything to interchangeable units.
Critically, tokenization opens a design space for economic systems that transcend the monistic unit of exchange value in traditional economies. Rather than creating a single digital currency to replace fiat money—replicating its reductionist approach—tokenization enables a pluralistic ecosystem of value representations that can interact while maintaining their distinctive qualities."
(https://omniharmonic.substack.com/p/beyond-narrow-optimization?)