The process of replacing sensitive data such as account numbers with unique identification data while retaining all the essential information about the data is known as tokenization. Because tokenization is a non-destructive from of obfuscation, data is recoverable via a unique security key. New Blockchain platforms like decentralized finance and non-fungible tokens try to embed digital assets in to blockchain which has become a trend that continues virtually unbated. These platform sees continuing growth of opportunities like block reward, liquidity mining and yield farming. The block rewards or other forms of inflows to asset holders takes the form of token or coins. When researching the many forms of blockchain tokenization, you will come across digital assets that are suited for trading inside a blockchain project’s ecosystem.
Platform tokens, utility tokens, governance tokens and non-,fungible or NFT are some of the many types of tokenization in the blockchain.
Platform tokenization: A platform tokenization is referred to as tokenization of a blockchain infrastructure enabling the development of decentralized apps (Dapps). Platform tokenization makes use of the blockchain network that serves as the foundation for increased security and transactional support. Solana, Ethereum and DAI are some of the well-known examples of platform tokenization that aid with smart contract transactions support.
Utility Tokenization- The process of generating utility tokens in a protocol to use the protocol’s service is referred to utility tokenization. It is important to state that this type of tokenization does not imply the creation of investment tokens. Utility tokens are created to provide the required activity in a platform for the platforms economy to grow, while the platform ensures the token’s security.
Governance Tokenization- In order to necessitate the raise of decentralized protocols yet another important type of tokenization is needed for the blockchain. Governance tokenization focuses on blockchain-based voting system to help improve decision- making process of decentralized protocols. The utility service of governance tokenization may be seen in the on-chain governance which allows all the stakeholders to collaborate, debate and vote on a system administration.
Non-fungible Tokens (NFTs)- NFTs are the most recent and common kind of tokenization in a blockchain. Non — fungible token represents unique assets digitally, and this form of tokenization has of applications. The demand for NFTs and NFT-based applications development has lately exploded throughout the world. Digital artists have more option of controlling their work’s ownership and trade.
Wrapped tokenization- A wrapped tokens enable trade between unsupported assets like bitcoin and Ethereum on decentralized financial platforms DeFi. A wrapped token represents a cryptocurrency from another blockchain that is worth the same as the original cryptocurrency. Just like the original cryptocurrency transaction, the wrapped tokens can be used on certain non-native blockchains and later be redeemed for the original cryptocurrency. One of the biggest benefits of wrapped tokens is that they create interoperability between non-compatible blockchain and cryptocurrencies on DeFi platforms. This type of tokenization provides high liquidity to decentralized services and boost the utility of crypto assets.
