Definition
Tokenization is a blockchain concept in which ownership, access rights, or claims over an asset are expressed as cryptographic tokens on a distributed ledger. These tokens function as digital representations of value or rights, allowing them to be issued, held, and transferred using blockchain infrastructure. Tokenization can apply to native digital assets as well as off-chain assets whose economic rights are mirrored on-chain.
In decentralized finance, tokenization provides a standardized way to encode and manage different asset types, including forms often described as RWA, Security Token, Utility Token, or Stablecoin. Each tokenized representation follows rules defined in smart contracts, such as supply, transfer conditions, and compliance constraints. As a concept, tokenization focuses on the abstraction of rights into tokens, rather than the specific legal or technical implementation details.
Context and Usage
Tokenization underpins many DeFi protocols by turning various claims or assets into interoperable tokens that can be integrated into on-chain markets, collateral systems, and settlement layers. For example, a Security Token typically reflects regulated ownership interests, a Utility Token encodes access or usage rights within a network, and a Stablecoin represents a value claim designed to track a reference asset. RWA tokenization extends this idea to off-chain economic interests, such as claims on real-world financial or physical assets.
As a conceptual layer, tokenization defines how rights, obligations, and attributes are modeled in token form, including divisibility, transferability, and governance properties. It provides a common representation that allows different token types—whether framed as RWA, Security Token, Utility Token, or Stablecoin—to coexist and interact within the same blockchain environment. This shared representation is what makes complex DeFi compositions and programmable financial structures possible.