(Rejected) Deutsche Bank deploys EOS Blockchain to Issue Tokenized Bonds
Today one of the biggest threats to the banking sector is technology. Whether it’s coming from huge technology firms like Amazon, eBay Inc., Apple Inc., Google Inc., or from new fintech start-ups, traditional banks are starting to taking notice.
Large financial institutions are all beginning to work on their blockchain-based solutions so that to stay on top of this innovation. They know that if they don’t take the role, then someone else will try to take it and topple over them.
Recent few days ago, the dBond team of the Deutsche Bank said they have successfully tokenized some of the bank’s bonds. Now the banking institution is ready to convert traditional bonds over to the EOS blockchain in a major way.
No stone left unturned. The bond market is one sector, which has been recently touched by the tokenization efforts occurring behind-the-scenes.
The EOS Mainnet Adopted
The Deutsche Bank now deploys the EOS blockchain to tokenize the bank’s bonds. The tokenization happened in collaboration with Queen Street Finance – an authorized UK-based custodian – that already has its stablecoin digital asset DUSD, which runs on EOS blockchain.
This is a vital step towards bringing fixed-income securities into EOS network and developing decentralized bank with stablecoin fully collateralized by high valuable on-chain assets like tokenized bonds.
Why Tokenizes Bonds?
I believe that the Deutsche Bank has embarked on this journey to bring bonds to the EOS blockchain by allowing users to invest in and issue fixed-income assets like bonds, using cryptocurrency.
It follows that the Deutsche Bank looks forward to developing a larger investor base. The bank intends its tokenized bonds to become accessible to investors all over the world. With tokenized bonds, almost any person with an internet connection can invest in the product. Such an expanded investor base is suitable for a healthy demand and supply for the product.
The application of EOS blockchain would enable the bank to lower various costs associated with bond issuance. Normally, bond issuance is a long process, which involves numerous intermediaries that incur high costs and the risk of human error. In the financial securities market, there are common pain points which technological innovations can solve.
Generally, developing a blockchain platform to run bonds tokenization would enable Deutsche Bank to improve operational efficiency, reduce counterparty risk, and enhance data visibility.
The bank would, therefore, minimize the administrative costs and processes by applying blockchain for the digital issuance, management, and trading of bonds. For the issuance of tokenized bonds to take place, the company’s information is placed first on the blockchain system as an electronic/digital record.
Moreover, smart contracts are encrypted on the blockchain with the terms of the bond issuance. In this way, the platform issues tokens to investors as digital forms of the bond. Generally, bond action management, like regular payments of interest to investors as well as trading, settlement, and post-issuance of bonds, can be completed by smart contracts.
Take away
Blockchain bonds can transform the future of bond financing. Banks have noticed that and now want to use cryptocurrencies in bond payment and issuance, and this could be a financial practice in the future.
It is confirmed that traditional banks are interested in adopting EOS blockchain, and this indicates that blockchain bonds could develop another potential use case for decentralized technologies.