TOKO is a tokenization engine and digital asset creation platform that provides technology services to complement DLA Piper’s legal capabilities.

$504M

Est. value of tokenized securities in 2021

"DLA Piper has integrated the Hedera Token Service (HTS) into its TOKO tokenization platform to enhance the performance, security, and stability of enterprise-grade digital assets."

Scott Thiel

Partner, DLA Piper

Industry

Finance

Use Case

Asset Tokenization

Overview

TOKO is a digital asset creation engine that couples the compliance and regulatory rigor of a global law firm with the innovative technology solutions of tomorrow. It helps solve the inefficiencies of today’s capital markets, leveraging the best of distributed ledger technology.

Challenge

Ethereum and alternative public blockchains prove to have expensive and unpredictable fees, sluggish transaction speeds, forking, and unfair transaction ordering. DLA Piper required a public distributed ledger that offers native tokenization with speed, cost-effectiveness, and compliance. They also required the ability for permissioned blockchain framework transactions to be timestamped and publicly verifiable.

Solution

The TOKO platform uses the Hedera Token Service to improve settlement time from minutes to seconds, reduce transaction and minting fees by over 99.98%, and enhance the end-user experience for participants to drive greater adoption and retention. TOKO also utilizes the Hedera Consensus Service to ensure transparency and trust in transactions that require privacy, while meeting regulatory compliance.

TOKO solves the inefficiencies of today's capital markets, leveraging the best distributed ledger technologies available. TOKO is a digital asset creation engine created by DLA Piper, a Hedera Governing Council member, that couples the compliance and regulatory rigor of a global law firm with the innovative technology solutions of tomorrow.

Assets on TOKO are distributed, traded, and settled rapidly, without the need for slow and expensive intermediaries. The Hedera Token Service (HTS) enables TOKO to easily issue non-fungible tokens representing various asset classes, such as real estate, fine art, intellectual property, ESG, debt restructuring, fund structuring, equity / digital IPO, and reinsurance. TOKO empowers value creation for both the asset issuers and investors — from large-ticket institutions down to the average retail investor who wasn't historically given access to previously illiquid assets.

For private transactions of assets that live on permissioned blockchain frameworks, such as Hyperledger Fabric, TOKO utilizes the Hedera Consensus Service (HCS) with the Hyperledger Fabric plug-in, deployed in Microsoft Azure, to make confidential transactions verifiable on the Hedera public network. HCS ensures privacy while still offering a decentralized, fairly ordered, and publicly verifiable log of transactions for marketplace participants and regulatory bodies.

Capital market inefficiencies add costs, obstruct participation, and increase settlement times

In a traditional value chain, securities' issuance is limited to conventional asset classes and requires slow and expensive intermediaries to meet regulatory compliance. Additionally, securities distribution is often limited to a handful of clients only authorized to trade when matched with other participants during market hours. Transactions of this nature can easily take multiple business days to settle and require manual execution of corporate actions such as dividend payments, voting, and more.

In hopes of reducing the inefficiencies found in traditional capital market value chains, DLA Piper evaluated many blockchains to power its securities tokenization platform. While evaluating several architectures, DLA Piper took issue with gas fees associated with issuing and transacting NFTs on Ethereum. In the same vein, on most public blockchains, transactions execute and are ordered based on which application paid the highest gas fee, which creates unfair marketplaces for bids and asks. DLA Piper found that lackluster scalability and long-term network instability (forking) of Ethereum may hinder their ability to attract mainstream investors and ecosystem partners, such as custodians and banks. All stakeholders of TOKO must be able to trust its underlying infrastructure and be confident in its long-term stability.

"Effective asset management relies on trust. TOKO – working with DLA Piper, and using cutting-edge distributed ledger technology to tokenize assets – delivers that trust" said Simon Levine, Global Co-CEO at DLA Piper

A fast, inexpensive, and fair platform for security token offerings

TOKO utilizes Hedera for non-fungible asset tokenization in two distinct ways. The first is through the Hedera Token Service (HTS), where native non-fungible tokens represent assets that are issued directly to accounts on the Hedera public network without the need for expensive and potentially faulty smart contracts.

The second is for more sensitive transactions and uses a combination of blockchain technologies — specifically, Hyperledger Fabric (HLF) and the Hedera Consensus Service (HCS). TOKO issues and manages tokens through a private instance of HLF but, for every transaction, writes a fairly ordered, encrypted, and publicly verifiable message to the Hedera public network using HCS. This combination brings together the privacy of HLF, with trust and public verifiability of transactions on the Hedera public network.

By utilizing HTS, TOKO overcomes smart contract tokenization limitations through the efficiency of Hedera’s underlying hashgraph consensus algorithm; other obstacles found in Ethereum, such as network forks, are overcome by its global governance structure. HTS reduces the total cost of issuance and management, improves transaction settlement time from hours to seconds, and ensures overall stability for network participants with its no-fork guarantee — all on a public network governed by leading global organizations. Preventing forks through governance alleviates concerns by custodians, banks, and other ecosystem participants around stability and having to track duplicate assets across multiple networks. Additionally, HTS offers built-in compliance configurations, including KYC verification and freeze, token supply management, and more, in order to meet anticipated regulatory requirements.

"DLA Piper has integrated the Hedera Token Service (HTS) into its TOKO tokenization platform to enhance the performance, security, and stability of enterprise-grade digital assets," said Scott Thiel, Partner at DLA Piper. "The native account-based compliance configurations found within HTS enables us to meet regulatory requirements and enhance TOKO's ability to empower value creation."

For transactions sensitive in nature and requiring additional privacy through encryption, HCS combines public networks' trust with the privacy of permissioned blockchain frameworks. HCS interoperates with Hyperledger Fabric on the TOKO platform, enabling verifiable timestamps, decentralized fair ordering, and privacy for sensitive transactions. An example is in the case of an initial public offering (IPO), where certain disclosures cannot be made public but still must be trusted and auditable by specific parties or regulatory authorities.

The TOKO platform by DLA Piper and powered by Hedera Hashgraph enables asset issuers and investors to quickly and inexpensively transact. TOKO makes it cheaper, faster, and easier to raise capital and manage investment than ever before.

view all users

Hedera is not affiliated with, and does not sponsor or endorse this project.

Industry

Finance

Use Case

Asset Tokenization

Overview

TOKO is a digital asset creation engine that couples the compliance and regulatory rigor of a global law firm with the innovative technology solutions of tomorrow. It helps solve the inefficiencies of today’s capital markets, leveraging the best of distributed ledger technology.

Challenge

Ethereum and alternative public blockchains prove to have expensive and unpredictable fees, sluggish transaction speeds, forking, and unfair transaction ordering. DLA Piper required a public distributed ledger that offers native tokenization with speed, cost-effectiveness, and compliance. They also required the ability for permissioned blockchain framework transactions to be timestamped and publicly verifiable.

Solution

The TOKO platform uses the Hedera Token Service to improve settlement time from minutes to seconds, reduce transaction and minting fees by over 99.98%, and enhance the end-user experience for participants to drive greater adoption and retention. TOKO also utilizes the Hedera Consensus Service to ensure transparency and trust in transactions that require privacy, while meeting regulatory compliance.

BUILD THE FUTURE TOGETHER

Submit your application for a chance to be listed or learn how Hedera can decentralize your application