The process of having managed financial assets on the blockchain is much more than tokenization. For the institutional side, the actual issue is being able to cover the complete lifecycle of the assets, which will be in sync with the regulatory, operational, and market norms of the entire process of issuance, distribution, trading, settlement, corporate actions, and management of ownership. The concept of Dusk Network is built in such a manner that it is meant for the complete lifecycle of the assets to occur on the blockchain.
Talking about the issuance stage, authorized assets on the Dusk network can be issued with rules embedded in them, representing real-world economic structures. Rather than issuing generic assets and manually restricting their transfer, issuers on the network can implement rules on eligibility, transfer, and asset behavior in authorized smart contracts on the network. This way, assets such as tokenized funds, bonds, and even equities can be on the network with rules reflecting their legal frameworks from inception. For institutions, there is a lack of operational risk and any form of ambiguity on asset behavior throughout various life cycles.
Distribution is another domain where Dusk's model excels. In the traditional markets, the onboarding of investors and the management of their eligibility might sometimes involve the use of multiple third-party entities. This is because the distribution of assets on Dusk could potentially incorporate the compliance rules at the protocol level, which would result in eligible users having access to the qualified assets.
After the assets go live, the subsequent important step is the process of trading. Most blockchain platforms treat the process of trading and, subsequently, the process of maintaining regulatory standards separately, which means that every application has to define its own set of rules. However, the Dusk Network bypasses this limitation by facilitating regulated environments for trading, which automatically benefit from the robustness of the network. Thus, there is no fragmentation of liquidity, and institutions have a clear idea about the execution process.
The process of settlement is one of the most critical lifecycle phases of regulated assets, and it is a domain in which Dusk can provide tangible operating value. A traditional financial market involves a delayed cycle of settlement, which implies that it locks up capital as a result of counterpart risk. The capability provided by Dusk is atomic on-chain settlement, as it enables the transfer of a given asset while simultaneously achieving finality in terms of ownership in a single operation.
Apart from the aspect of trading and settling, real-world assets are associated with corporate actions and require management throughout their life cycles. Other corporate actions include dividend payment, redemption, and voting. The said processes are integral parts of financial products and are overseen by financial regulations. On the Dusk network, these processes are executed automatically using smart contracts that are compliance-enabled and accurate to predefined rules, hence obviating human intervention and potential errors associated with processes carried out offline. All processes are recorded on-chain, and none of the confidential data is revealed.
Ownership management is yet another important part of asset management in asset lifecycle operations. This essentially pertains to having some clear definitions with regard to ownership of an asset that is in existence and when it can change hands, and so forth. This is where Dusk Network ensures a deterministic environment, which means change in ownership committed in a way that satisfies legal expectations. This plays a crucial role in cases where legal rights are involved.
Brought together in all these stages, however, is the role which the $DUSK token plays. The DUSK token secures the network by incentivizing validators in a manner which follows the reliability of execution and the concept of finality. In order for validators to get involved in the process of block production, they stake $DUSK, which they risk should they not act in a manner which follows the rules. This is critical for institutions which require predictable behavior in the manner in which they treat their regulated assets.
Another benefit of a lifecycle-focused design of the Dusk system is its ability to be composed together under a unified legal and technical system. While normally a given app would develop its own isolated concept of the issuance, trading, and settlement of an asset, the apps on the system of Dusk are able to work together under the same standards of the asset and rules of compliance.
From a regulatory standpoint, the lifecycle management on the Dusk Network gives a clear benefit because all the actions take place on chain based on predefined rules in such a way that it becomes possible for the regulator or the auditor to check the level of compliance without having to depend on the in-house reporting or the reconciliations performed in a centralized database in a way that the confidentiality needed in the financial system is maintained.
What makes Dusk different, in the end, is that it handles regulated assets in terms of longer-term financial instruments, and not short-term tokens. The system is built with the capabilities to last through the entire lifecycle, from the point of initial issue until multiple years of trading, distribution, and corporate actions. This plays an integral part for institutional players who want to deploy actual financial instruments on the chain.
Conclusion by providing a full lifecycle management solution directly at the protocol level, Dusk Network is offering a financial infrastructure that is in line with how actual financial markets function. It also eliminates fragmentation, enhances capital efficiency, and minimizes risks along the entire lifecycle of an asset. This is a fundamental solution that can be applied by institutions to move regulated financial activities to a blockchain network since the security of these processes is guaranteed by DUSK.
