What are Asset Backed Digital Securities?
A quick introduction.
What are Asset Backed Securities
An asset-backed security (ABS) is an investment security, which is collateralised by a pool of assets, such as tangible assets like land and chattels (eg., livestock, equipment etc.) or intangible assets like loans, leases, credit card debt, royalties, or receivables.
An ABS is similar to a mortgage-backed security, except that the underlying securities are not mortgage-based.
What's involved?
The pool of assets is typically a group of typically illiquid assets. Pooling the assets into financial instruments - such as Units - enables investors to have access to these assets when otherwise they wouldn't be able to participate in ownership.
Each security represents a fraction of the total value of a diverse pool of underlying assets, which supports more effective risk mitigation for investors.
Basis of Value
The security provides a basis of value for investors. The security also provides a means by which investor capital is 'secured' in the event that the business enterprise experiences difficulties. In this case, the underlying assets can be liquidated to recover capital for investors.
Adding Real Assets to DeFi
The REGEN Series brings asset backed projects into the DeFi space. An excellent explanation of the overall rationale is in this Medium story.
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