By Richard Baker & Gerard Banaszkiewicz, Founders of Tokenovate
Building a business is a tireless activity. Doing it in a fast-paced, dynamic and ever-evolving industry doubles the intensity. Viewing Tokenovate’s progress in 2023 through that lens makes us very proud and incredibly excited about 2024. Let us share some thoughts on where we are and where we are going:
An amazing team
We’ve grown from four to fourteen. And we have established excellent partnerships with external experts too. Blended together, it’s an effective code-machine developing innovative software for precise use cases: “Creative collaboration, constructive conclusions” as we phrased it when we all came together in October. Part of our ethos is also to “give forward” by engaging in academic activities, from supporting master students to giving guest lectures. The foundation of our team is formidable!
Next year will see us grow even further. Our goal is to continue to build a team that contributes collectively to our vision of “engineering a smarter financial world”. We are on an exciting journey that will see us engage more deeply with our ecosystem partners, sharing knowledge, passion and probably some “ups and downs” too. But with a steady focus, and always being execution oriented, we are confident 2024 will be another rewarding year for everyone at Tokenovate.
Product market fit
We are building a software platform, hosted in AWS, that is integrating best-in-class external tools and technologies. Our platform is designed to remove inefficiencies in the trading life-cycle through tokenisation, automation and intelligent event management. It’s an ambitious project, using cutting edge solutions.
In May this year we hit a key major external milestone when we executed the world’s first smart legal contract for voluntary carbon credit (VCC) derivatives trades referencing the 2022 ISDA Verified Carbon Credit Transaction Definitions. To secure such an important win so early in our journey is not only incredibly satisfying, but it also sets the bar high for what we want to accomplish next.
Being a product-led company, where design principles drive our architecture and decision making, we are now converging Layer 4 protocols – “TCP/IP meets Bitcoin Protocol”. Cloud based compute and a microservices architecture underpin our platform and give us flexibility to adapt to customer needs.
In 2024 we will accelerate our product release schedule, creating cohorts of customers that are excited about fusing standards and legals with smart technology. And we hope to have more exciting news to share in the VCC space too…
The trends
In 2023 we saw a number of interesting and promising trends. Obviously the rapid progress of AI is at the forefront of everyone’s mind. Clearly, we will see numerous AI-based use cases drive significant change in the financial services industry in 2024. But we wanted to pick out three other trends:
- Growing industry acceptance of public blockchains
- Tokenisation of RWAs
- Interplay between technology and regulations
Tokenovate has selected to work with original Bitcoin protocol as our blockchain. We have done so for several reasons: its scaling approach and an uncapped blocksize allow for unbounded transaction processing, the exceptionally low transaction costs and strong regulatory compliance. Tokenovate’s platform enables private ledger governance and privilege control on a public permissionless chain by utilising native UTXO coinbase ledger design. We will talk more about this later in 2024.
Tokenisation of real world assets (RWAs) really took off in 2023. We saw many organisations dabble in the RWA playground. 2024, we think, will be the year when mature, established industry players fix their tokenisation strategies. There are so many benefits to gain from tokenisation of assets, from better management, more intelligent collateral mobility, to reduced time to settlement. Tokenovate is determined to play an important role in realising these benefits.
When we describe the context within which Tokenovate operates, we often say that we “drive innovation, not disruption”. Our industry need to fuse economics with technology and legals. The next few years will see compliance pressure increase as new regulations (such as MiCA and DORA) are implemented across global markets. Technology can help to drive adoption and adherence, but only if it is accepted by governing bodies and standards. We are, of course, believers in technology as a solution, and we are working closely with regulators and policy makers to advise them on benefits and risks with different approaches.
The opportunity
When we started Tokenovate in April 2022, we saw clear signs that the market was ready to embrace a technology-first approach to blockchain solutions. We also identified an incredible opportunity to solve the painful problems of trading workflow inefficiencies and oversights. From the outset, we focused our efforts on enabling smarter programmatic lifecycle event management of OTC and exchange-traded derivatives.
The drive towards standardisation, digitisation and automation of derivatives trading, combined with mature blockchain technology and inefficiencies caused by manual legacy systems, creates a perfect opportunity to deliver a new digital solution for a $600+ trillion notional value market that transforms operational efficiency, and drives significant cost savings in collateral and settlement management. We are pleased to see that this view is now picking up support across parties in the pre-trade to post-trade process.
Our ultimate goal is to be entirely asset agnostic, with a common lifecycle event management platform for all types of derivatives. However, it has become clear to us that the fragmented, nascent but rapidly evolving global voluntary carbon credit market would be very receptive to a DLT-based solution like ours.
A final reflection: the brainspark behind what is now Tokenovate was lit by Professor Christopher Clack at UCL and Ciarán McGonagle, Assistant General Counsel at ISDA, in their 2019 paper Smart Derivatives Contracts: the ISDA Master Agreement and the automation of payments and deliveries. It’s been a pleasure to share our ideas and progress with both Chris and Ciarán throughout the year, and we are grateful for their interest and insights.
We wish you a fantastic end to the year and look forward to an exciting 2024!
Richard & Gerard
From all of us, to all of you…!
