How to Tokenize a Real-World Asset on Kaleido

Asset tokenization is the process of converting ownership rights in a physical or digital asset into a token on a blockchain. Essentially, these tokens represent a share or stake in an underlying asset, such as a stock or bond, physical thing, account, or intellectual property. These tokens can then be easily transferred or traded, or allow for fractional ownership.

Asset tokenization offers several advantages, including increased liquidity, lower transaction costs, and greater accessibility. By breaking down high-value assets into smaller, tradable units, a broader audience can participate in investment opportunities. Tokenization also enhances market efficiency and transparency, reducing fraud and making compliance easier to manage.

The growing use of tokenization in finance is driven by the demand for more interoperable, agile, and cost-effective investment platforms. The Kaleido Asset Platform eliminates a lot of the technological complexity involved in tokenization with an open, adaptable console that allows institutions to meet an evolving market.

In this article, we’re going to walk through the tokenization of an asset and show how we can connect this new digital asset to a public blockchain.

How to tokenize an asset on the Kaleido Asset Platform

First, we need to connect to a blockchain. You’ll see in the screenshots below we can create a namespace then connect it to the Avalanche testnet.

To follow along you can connect to the testnet using this link or find connection steps in the Avalanche docs.  

You’ll see the platform has some advanced settings to apply to your blockchain connection, including gas management and transaction processing details.

Next you’ll be prompted to connect to your IPFS. A Kaleido Asset Platform deployment will come with an IPFS to select from the dropdown. You may also connect to a public IPFS using the associated API URL and Gateway URL.

With these steps completed, we can connect to a wallet. We’re using an HD Wallet for this demonstration.

You’ll be prompted to add a new wallet key. For this tutorial we’ll add two, one called “test” and one called “receivenft”.

The “test” key is what we will use to sign transactions and the “receivenft” is the address where we will mint our created NFT later on in the tutorial.

To get started, grab the wallet address of the “test” key.

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Next, go to the fuji faucet. Here is where we’ll enter our wallet address to add tokens to facilitate operations.

A blockchain testnet is a separate, parallel environment used for testing and development purposes. It mimics the functionality of the main blockchain network, allowing developers to experiment and test new features, smart contracts, or dApps without risking real assets.

Here we can see in the Kaleido platform that the connection between our console and Avalanche was made.

Now that we have our namespace and we’ve connected to a blockchain, we can go to the “Build” section of the platform.

Here we can tokenize any real-world asset, intellectual property, or financial tool.

For the sake of discussion, we’ll assume in this example we’re going using an ERC-721 token template to represent a corporate bond.

After creating our smart contract, click “Next” and then select or create a path for where you want to place your build.

Once created, we can click on the build and select the rocket icon to deploy the build to your created namespace. When deploying we need to make sure that our wallet has AVAX funds. If your wallet has funds then the amount will be displayed like below.

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After deploying you should see a “Successful” status for the deployment.

Next we'll want to create a token pool. We’ll select the build we just created then create a pool for the chosen token type.

In this screen we can verify that it was successful.

Next, we can navigate back to the namespace and see that we have successfully created a token pool.

Entering the token pool section we’ll see more details about the token we created.

Minting your asset as an ERC721 token

There are multiple ways for you to mint a token on Kaleido. This includes using our NFT Services, Actions functionality, Sandbox, or directly via APIs. In this example we’re going to use the NFT Services.

Using NFT Services

The NFT Service builds on top of the Hyperledger FireFly API to provide a factory for the creation, curation, and minting of NFTs.

It performs a number of key functions:

• Managing and executing your Templates to generate new NFTs
• Storing the unique Attribute Values of those NFTs
• Organizing those NFTs in Collections
• Letting you preview the final NFTs before you mint them
• Orchestrating the minting of the final NFTs using Hyperledger FireFly

The first thing we want to do is create a template for our NFT collection. There are example templates provided in the platform, and for purposes of this tutorial we will copy the YAML for the “Static Image” template.

With the copy code added, click “Parse” and then “Create Template”.

Now that we have a template, we’ll navigate to the “Collection” section. Here we can name our asset. You can also add additional collection metadata here.

After we create a template, we can navigate to the “Off Chain” section, click “files” and upload an image file to represent our bond.

For this example we uploaded an image of a company bond.

With the template for our bond created, we can click into the Collection to “Create NFT”.

When we create our NFT we can name each individual asset and define asset attributes, including the image we uploaded.

Then click “Generate”.

Here we will see the metadata for the tokenized bond with the .jpg attached to represent the bond.

Then we click “Create NFT”.

You can choose what wallet to mint the NFT to, either the wallet in the platform or an external, third-party wallet address. For this example we’re using the “receivenft” wallet that we created earlier.

Now the NFT is minted and we can verify its creation.

We can then go to the fuji testnet explore and see that the NFT was properly minted to the blockchain.

Clicking deeper into the NFT on the blockchain we can see more details about the asset that we published.

Note that everything that we have just done can be completed via APIs as well. To do so, view the Kaleido Asset Platform APIs in the top right and navigate to the NFT section.

Here you will see the APIs for templates, collections, and minting which we just used via the UI. This can be done programmatically or within the available Swagger UI.

The benefits of tokenizing assets with Kaleido

Kaleido offers a complete, open blockchain development platform with a full suite of tools and services to help businesses to design and run blockchain networks. We've streamlined the process of asset tokenization on our Asset Platform, making it easier than ever for financial institutions to create, manage, and monetize digital assets on a large scale.

Our offerings to support the tokenization of real-world assets include:

• Smart Contract Tools: Kaleido provides an assortment of pre-designed smart contract templates that can be tailored to align with a bank's unique requirements. We simplify the process of handling your smart contracts over multiple deployments through one unified console.
• Advanced Visibility: With our platform, banks can monitor the value of assets using tools such as oracles and our white label block explorer. Our platform is favored by business teams for its user-friendliness and enhanced visibility.
• Integration with Existing Systems: Kaleido emphasizes interoperability, simplifying the interoperability of your present systems with web3, and allowing the management of thousands of digital assets at an institutional level.
• Unlimited Connectivity: Kaleido facilitates access and control of digital assets on a large scale across your preferred chains. This includes public chains, private chains, consortium chains, sidechains, L1s, or L2s—all via one console.

By adopting the Kaleido Asset Platform, financial institutions can tokenize real-world assets effortlessly and effectively, delivering advantages to both the institutions and its customers.

If you want to put the platform to work for you, reach out to one of our solution architects to schedule a demo and explore how we can transition your real-world assets to the blockchain.