How Does Tokenization Work Like a Stablecoin?

Tokenization works almost like a stablecoin, Vlad Tenev says. It is a new innovation. A stablecoin takes dollars or treasuries, puts them in a wrapper, puts them in a box, and mints and burns tokens against the box.

The traditional assets stay custodied at a traditional institution like a bank. The tokens can then trade freely on DeFi. They can move anywhere around the world, trade in fractional amounts, and be swapped in different protocols or lending pools. Free trading of the tokens, while the dollars or treasuries stay at the bank, opens up a ton of possibilities.

The same concept can extend to any real world asset.