Tokenization of Everything

Yesterday, Harbor announced they were issuing a security token that represents shares in a college dorm.  The dorm is located at the University of South Carolina.  It’s a $20MM offering.  For as little as $21,000, you can buy a token and own a share in the dorm.  There is a 5% dividend.

Is this big?

Yes and no.

No because this isn’t some sort of killer app that someone will utilize everyday to make their lives easier and fuller.  This isn’t the launch of Netscape.

Yes, because it is a democratization of finance.  Who could fund a college dorm and get the financial benefit before?  Only the really wealthy or well funded real estate speculators.  The accredited investor class as defined by a government regulation.

Another reason that it is a big deal is that illiquid assets often have a discounted value due to their lack of liquidity.  Real estate is certainly illiquid, and big commercial properties are the most illiquid.  Creating tokens essentially creates a chance for those kinds of assets to be more liquid and unrealized value might accrue to the owners of the property.

Back in 1995, we saw this at CME.  One of the reasons we took the exchange public was to unlock value that was capped because of the membership structure.  Even with seats being traded, the true value of the asset wasn’t being monetized by the owners.  Turns out, we were right.  CME went public at $35 per share.  Split adjusted, that’s $7 per share.  It’s at $190 per share now.

A portfolio company of ours at WLV is launching securitized token trading on their ATS today. Chicago based CFX, or as the crypto people know them as OFN, is open for business.  They have been trading non-listed but public REITS for a while now.

Chicago is ground zero when it comes to exchanges and clearing.  There is so much talent here.

I am a huge fan of transparency and using markets to help people make better decisions.  CFX is exactly that.  It brings a lot of transparency to markets that are dark.  With securitized token trading, it can be the price discovery mechanism that helps to democratize ownership and allocate capital flows to the places that will give the best return.