Asset Tokenization vs Traditional Securitization: What Actually Differs
Asset Tokenization vs Traditional Securitization: What Actually Differs A smart contract can pay a waterfall. It cannot create one. That sentence contains most of what matters in this comparison. Securitization is legal engineering: isolating assets from the originator's insolvency, then dividing the cash flows into tranches with defined priority. Tokenization is a record keeping and transfer mechanism for whatever interests get issued. They sit at different layers, so they are not really alternatives. The entire securitization market runs without tokenization, and plenty of tokenized offerings involve no pooling or tranching at all. Where the confusion becomes expensive is the one place the two look identical: a waterfall implemented in code looks exactly like the waterfall described in the deal documents, right up until they disagree. Four things securitization does that no contract does Insolvency isolation. Assets move to a vehicle in a way intended to survive the ...