Real-World Asset (RWA) Tokenizer Backed Issues First Tokenized Security on Base L2

Backed’s issuance of a tokenized security on Base suggests the shape of things to come for TradFi, DeFi, and Base.

A robot hand rising from frozen lake grabbing falling crypto coins.

Backed, the real-world asset (RWA) tokenization platform, has announced the launch of the first security token on Base. The issuance of a tokenized security on Coinbase’s L2 network is a boon for Base – and for Backed, which is fast making a name for itself in the growing RWA space.

Backed is in the business of supporting the issuance of fully backed tokenized assets. This typically includes stocks, bonds, ETFs, commodities, and anything else that can be used as collateral to create a digital representation onchain. As a result, Backed finds itself at the intersection of DeFi and TradFi, tapping into the global access facilitated by decentralized finance while operating within a regulated framework. The company is incorporated in Zug, Switzerland.

Base, the layer-two network created by Coinbase, only went live in August, but already it’s starting to see real innovation. The issuance of a tokenized security on its Optimism-based chain is a first, however, and hints at the sort of projects Coinbase is likely to welcome to its growing ecosystem. The token Backed chose to issue on Base is bIB01, a tokenized short-term US treasury bond ETF. Its YTM stands at 5.26%.

Bringing bTokens to Base

Backed Tokens (bTokens) are ERC20 tokens that are fully collateralized. The token’s price tracks the value of the security backing it. Being able to provide certainty that a tokenized RWA is fully collateralized is integral to it being traded onchain. Without this guarantee in place, users would lack the confidence required to not only buy and sell a tokenized security, but to use it as collateral for things such as lending and stablecoin issuance.

“We are incredibly excited to see how Base follows through on its commitment to be developer friendly, and how protocols will build on Base using bTokens,” said Giorgio Giuliani, Head of Product at Backed. “We are constantly seeing fascinating new use cases developed for our product, and we are certain Base will provide an excellent platform for further experimentation.”  

Should Backed’s bTokens trial on Base prove a success, there’s scope for other tokenized securities being rolled out. Other bTokens that Based currently develops include bIBTA (IBTA treasury bond) bHIGH (high yield corporate bond), and bCSPX (S&P 500). While billed as a DeFi product, Backed’s tokenized RWAs can’t be traded by anyone: US investors are excluded, while qualified investors and licensed resellers wishing to participate must be onboarded by Backed.

The Rise of RWAs

While there’s some debate over whether RWAs should be bracketed under DeFi, there’s no disputing that they’re a viable onchain use case. From government bonds to carbon credits, all kinds of real-world assets are currently being tokenized and made tradable to accredited investors. Earlier this year, Siemens issued a $63 digital bond on Polygon, while Swiss bank UBS has been experimenting with cross-border repo trades using a blockchain-based solution.

One of the more intriguing ways in which RWAs are being put to use is through fractionalization. Assets such as real estate and art can be broken down into shares as low as $100, increasing the size of the investor set that can access them while increasing liquidity. Property and paintings are highly illiquid assets that can be hard to dispose of when capital is required. Tokenization has the potential to solve this problem while providing greater transparency into pricing thanks to the public nature of blockchain.

While little more than an experiment for now, Backed’s issuance of a tokenized security on Base suggests the shape of things to come for TradFi, for DeFi, and for Base, whose enterprise applications are just getting started.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Alex Costa

Alex Costa is a crypto writer and investor specializing in researching, analyzing and reporting on promising small-cap projects that are gaining traction in the industry. He has been in crypto since 2018, when he began looking for hidden gems in crypto. Today, he is dedicated to finding the next top performing NFTs and tokens.