What is a Debt Tokens?
Debt tokens are the digital format of representing debt or cash that are analogous to short-term loans with an interest rate to a specific principal amount lent to the enterprise. It is similar to debt-financed capital. Debt tokens are provided by the lenders to represent a company's debt. They are the same thing as loans or IOUs in that they have an interest rate which is doubled or compounded against the principal amount loaned to the corporation.
Benefits of Tokenized Debt
Below mentioned are some of the benefits of Debt tokenization.
Fractionalization - It is the capability to fractionalize debt by examining the asset's openings to a new and wide category of investor.
Universality - it aids in the operation and analysis of debt representation that contributes to universal debt transportation.
OTC Trading - Debt transportation is conducted Over The Counter (OTC), globally. Security tokens make existing processes more efficient by digitizing them.
Composability - Debt can be simply represented by using real estate contracts as a security token to reflect a collateralized debt obligation (CDO).
Futures - Debt is an excellent way to transition futures and derivatives to security tokens. Rather than using traditional future models, debt created an ad-hoc model.
To know more about what is debt token and understand its features and functionalities in detail, get in touch with Developcoins, a leading token development company.
