#binance #tokenized #fond Tokenized and on-chain funds: the difference

The finance and technology space is evolving. Blockchain technologies have entered the traditional investment segment. Two approaches that have been developed are tokenized and on-chain funds. Let's consider their effectiveness and unique features. Tokenized funds

Fund shares are converted into tokens that are minted on the blockchain. Tokens, like shares, represent ownership and can be transferred between holders. The costs of transferring tokens are lower than when transferring ordinary shares.

Tokenization involves splitting shares into smaller shares. This makes investments more accessible.

Tokenized funds still require compliance with the law and there is still a specific company behind them. That is, there may be restrictions for one jurisdiction or another. The investor will also be required to complete KYC.

On-chain funds

The on-chain fund adopts the decentralized model of the general crypto market. Such a fund eliminates intermediaries, including banks. Its operation is automated - repayment and other processes are carried out using smart contracts.

The decentralized nature also means that the client should first examine the fund's reserves. Data about them will most likely be on the blockchain. Like tokenized funds, on-chain funds strive to comply with regulatory requirements. Therefore, they open transaction data to regulators.