The Mechanics of Tokenization
To have an appreciation of how tokenized RWAs operate in practice, one would first need to possess a savvy understanding of the underlying blockchain technology. A token, as an ERC-20 or ERC-721 (for non-fungible) standard, is created on a blockchain network such as Ethereum, Solana, or Polygon. Smart contracts govern the token’s behavior, defining rules for transfer, owner checks, dividends, and governance rights. The underlying real-world asset itself is usually held by a regulated custodian or legal entity so that the token is collateralized by a verifiable physical equivalent.
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