L4 - Tokenization

Question 1

Tokenization

Answer 1

Tokenization – the process of issuing tokens that represent an asset where the rules and behaviours governing the asset are encoded in smart contracts. An asset can be fungible or non-fungible.

Question 2

Difference between fungible or non-fungible assets

Answer 2

Fungible assets are indistinguishable from their own kind and are mutually interchangeable. Non-fungible assets are not interchangeable and require a unique identification code to distinguish them from other related assets.

Question 3

What does a crypto anchor do?

Answer 3

It is embedded or added to the machine. It serves as a root of trust. A crypto anchor enables tamper-proof digital identity of the asset and creates a digital twin on-chain. A Siamese twin.
–> using the private key: to address the machines and control the remotely

Question 4

What does a digital twin enable in terms of compliance?

Answer 4

It enables end-to-end audit trails for all transactions & thus full regulatory compliance

Question 5

How can assets be tokenized?

Answer 5

Based on an asset’s crypto ID

Question 6

What two things about an asset can be tokenized?

Answer 6

• the asset itself or the data

Question 7

Oracle Problem

Answer 7

In a nutshell, the oracle problem refers to the conflict between security, authenticity, and trust in third-party oracles for the trustless execution of smart contracts. Oracles retain a high degree of power over smart contracts in how they are executed because the data they provide determines how the smart contracts execute. Therefore, data feeds from third-party sources have substantial influence over the execution of a smart contract, removing its trustless nature as part of a decentralized network.

Question 8

How to solve the oracle problem?

Answer 8

A decentralized oracle uses a decentralized network of nodes to obtain real-life data from off-chain sources of information and transfer it to smart contracts on-chain. These decentralized oracles are like public libraries with multiple sources of information.

–> In the lecture a hardware key is the solution (turning machines into trusted data sources - by signing outgoing data)

Question 9

Utility tokens

Answer 9

A utility token is a crypto token that serves some use case within a specific ecosystem. These tokens allow users to perform some action on a certain network. A utility token is unique to its ecosystem.

The token’s value mainly comes from their utility and the resulting demand. Regulation will come early 2023.

Question 10

Security token

Answer 10

An investment contract that represents legal ownership of a physical or digital (mostly financial) asset that has been registered on a blockchain.

Question 11

What were tokens used for in the past?

Answer 11

• crowdfunding of projects
• existing financial assets
• -> Now physical assets and related aspects which opens new business models

Question 12

Purpose of an object wallet

Answer 12

• ownership
• incentivization
• access

Question 13

Purpose of a machine wallet

Answer 13

• provenance
• composition energy
• footprint

Question 14

provenance

Answer 14

a record of ownership of a work of art or an antique, used as a guide to authenticity or quality.

Question 15

entitlement

Answer 15

the fact of having a right to something.

Question 16

Purpose of a car wallet

Answer 16

• entitlement
• data transactions
• cyber security

Question 17

What is the policy layer?

Answer 17

• set of rules that perform and log all processes preceding and following transaction approvals. Policies are defined in a domain-specific language and adhere to the human-readable-provisions of various regulators. All policies are secured cryptographically in a dedicated Trusted Execution Environment (TEE)