The prices of natural resources have soared during the last year, increasing by 50%-75%. This creates a significant interest from investors and makes businesses very attractive and profitable. On the contrary, the possibility to invest in commodities companies is very limited, so raising capital to start or grow your natural resources business is challenging.
There are 2 models that can be taken as lead:
- The first model suggests tokenizing the commodity itself — a piece of gold or oil and gas. In this case, a token holder owns a fraction of, let’s say, the barrel of oil or gold bar. The process is similar to the tokenization of real estate.
- The second model suggests tokenizing the natural resources business. In this case, the investors acquire securities issued by the company involved in extracting, processing, and selling natural resources and will have a right to share its profits.
Invest in sustainability (ItWorldCanada*)
Industry surveys show that greenwashing is the leading concern for nearly half of all investors in sustainable financial products, and the immense challenge of auditing the data behind green funds, bonds, and carbon credits is a systemic risk to an investment category that doubled between 2020 and 2021 and is expected to reach a green bond value of US$1 trillion in 2022.
Similar to the measurement of underground carbon sequestration, an array of measurement and visual data captured by QR scanners, cameras, and drones about natural asset ecosystems like forests, grasslands and coastlines can be registered in on-chain, verified by third-party organizations against international standards, and fractionalized into tokens that would form the base units of funds and investment products.
Through oracles that feed data into the registry network, like research agencies or NGOs, assets could be ranked and benchmarked, giving price support and investor confidence. Across the green sector, blockchain has the potential to reimagine an automated, digitized economy that the enormous scale of the climate challenge requires, building liquid ecosystem services investments without the untenable expense of manual verification or risk of misrepresentation.
In the future, whole biomes might trade on public digital markets, composed of fractional assets representing diverse types of value. The programmable nature of tokens means they could also be attached to conventional transactions like a green surcharge or impact offset, making meaningful climate action an automated layer on top of traditional economic activities.
Natural Assets into Crypto
Turning natural assets into crypto assets on decentralized blockchains has the potential to give natural assets the following important properties:
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Transparent uniqueness: as companies and governments commit large sums of money to become carbon neutral by investing in natural assets in faraway lands, it is crucial that these assets aren’t “double spent.”
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Instant access to global markets: borderless, permissionless transactions verified on-chain will enable participants to participate in natural asset markets anywhere in the world.
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Enhanced liquidity: It’s much easier to trade stocks on the blockchain. This makes business even more attractive for the investors because they can make an exit easier in case they are not satisfied with the performance or merely need to lock profits.
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Use as collateral: tokenized assets can be collateralized for use in lending, insurance, stable coins, and other on-chain financial products.
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Open third-party verification of asset quality (oracles): not all natural assets are created equal, and their quality changes over time. Adding identifiers like source and age on-chain can help determine the quality of the asset as it is traded globally. With tokenized assets, any third party can add verification and quality data.
Tokenized natural resources have the potential to become one of the largest crypto asset classes due to the sheer scale of the world’s natural assets.
Blockchain technology, when combined with the social power of legitimacy and trusted oracles for climate data will make possible the governance of commons at scale. Aligning financial incentives will unlock the true value of natural assets and aid in the resolution of the climate crisis.
Based in Zug, the platform is fully compliant with all Swiss laws related to financial intermediaries, banking, anti-money laundering, and organized trading facilities. Among its core values, there are innovative solutions through blockchain technology, which ensures security and liquidity.
EDSX is the first platform in Europe with primary and secondary markets for both institutional and retails. EDSX is a pioneering platform that employs the world’s leading technology to globally list security tokens in both primary and secondary markets, listing digital securities of real financial instruments to the public with a decentralized peer-to-peer exchange. Our goal is to fully engage every aspect of the financial revolution.
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