Real-world assets need real-world utility

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Ask anyone or look at any Twitter poll; “real world assets” are considered the catalyst for the next bull run. I agree with this thought, but we must keep one thing in mind. Assets as we know them have little utility beyond speculation, and to achieve mass appeal we need to go beyond speculation and create real utility.

Improving the utility encourages user adoption; As people experience the benefits of tokens in their daily lives, they will begin to see them as indispensable allies in their lives. So, if the next bull run is going to be fueled in part by the tokenization of Real World Assets, then we should also pursue Real World Utility.

Beyond DApps to self-referencing tokens

Decentralized applications are still the central idea. Even though their backends use decentralized technologies, they continue to operate with the traditional assumption that it’s the application, not the token, that matters. In a DApp-centric world, the application is the utility, not the tokens. It provides the functionality and hosts the interface that provides access to these features.

For real benefit in the real world, we must go beyond the application and put the benefit into the token. All you need is a wallet; Tokens carry all other benefits. The token itself becomes a dApp and carries this utility wherever it goes.

The token must be the communication channel between the issuer and its owner; It must provide the owner with all price information and underlying assets. It should be able to connect to a wallet and provide the full experience without another dApp. All these elements only increase the value of the token by making it self-referential.

This also ensures that the experience is future-proofed, as token holders can access utilities on the platform of their choice and app developers do not have to redesign an app for every new operating system that comes along.

Off-chain utility

Token utility was also viewed solely through the on-chain lens. While blockchains are great for creating some benefits, such as ownership and user rights, they are not great databases for everything. They are slow, public, and immutable. These are not great qualities for applications that require latency, the ability to easily upgrade and fix bugs, and situations where token issuers do not want all their customers’ data to be public.

Splitting these two worlds allows token utilities to be managed as easily as any website, keeping data private and experiences running with web2 latency. This unlocks a world of use cases that on-chain logic cannot solve on its own.

For example, we developed the Smart Cat game as an example of a token with an interactive application with a visual front end. To do this effectively, you need both on-chain and off-chain logic: on-chain to manage ownership, off-chain to manage front-end game logic for a smooth and enjoyable user experience.

By enabling tokens to go beyond the limitations of the blockchain and embrace off-chain logic, we can begin to discover real-world utility that makes sense to the world beyond being merely on-chain assets, ironically isolated from the “real world” that they represent. .

More price discovery

A simple, real-world utility that any token can carry is information, and an easy and powerful set of information that any token can carry is price discovery. This simple utility can be applied to any token because every token is an asset and carries value.

Take a gaming token for example. You play a character and by reaching level 9 out of 10, new game levels are unlocked for you. The token can now inform you that the going rate for a level 9 token is $X, allowing you to rent or sell the asset in the same interface. Although this information is dynamic and stored off-chain, it is transferred with the token, giving it a new benefit.

This information is conveyed in a way that helps the end consumer know the exact value of the asset and helps the seller convey the true value of the asset. This is a simple real-world utility.

Enhanced digital experiences

Beyond token migration and proof of ownership, advanced utilities such as communication channels or implementation of tokens themselves can unlock a new era of functionality.

For example, there should be no need to download a car app; Your token can allow you to access critical functions like unlocking, finding or starting your car. This eliminates all consumer friction from the car buying experience. No apps to download, no registration required, and no setup information; All are transmitted via tokens.

Real-world utilities like asset management can allow you to manage your assets directly from the token. Price discovery of your vehicle’s rental and sales rates allows the owner to maximize his or her asset. With a simple click of the button on the token, the vehicle owner can rent, take out a loan or sell the vehicle at these rates.

Additionally, the issuer of the token can communicate directly with the token. Manufacturers can directly notify you of any defects, service needs or offers via tokens. Real-world benefit, both on-chain and off-chain, can deliver a better car ownership experience and create more value for society.

to the real world

The real-world benefit must of course extend to the real world as well. The more a token can integrate into the world around it, the greater its value. The car token can easily be linked to your service station, keeping track of all service records, and gaming assets can transform from static proofs of ownership into dynamic interactive experiences. Not between games, but between games and the outside world.

A token can carry information, as well as on-chain and off-chain logic. This is a utility that allows any third party to know how to interact with the token in real time. For example, you go to McDonalds and link your game token to the kiosk where you order your food. McDonalds may read the token and offer to upgrade you to the next level if you upgrade your meal to the next level. You upgrade your food and they instantly upgrade your game. All across the coin.

We’re still very early in the world of token utility, but as we enable real-world assets, we should also consider an equal dose of real-world utility that will accompany them. We must move beyond the basics of proof of ownership and token migration to create enough value for the world to care about tokens beyond speculation.

Innovations like allowing tokens to become the centers of our digital world, viewing them as communication channels, helping holders better manage their assets, and allowing others to discover more prices are just a few of the ways we can start. All of this is possible today if we are ready.

Mathew Sweezey

Mathew Sweezey is the chief strategy officer of Smart Token Labs, a blockchain-based service network that facilitates the execution of token logic. Mathew is the former co-founder of Salesforce Web3 Studio; There he helped create Salesforce’s first commercial web3 products and worked with the world’s largest brands on their web3 strategies.