2Tokens Panel Discussion
Several times a year, 2Tokens brings together a large group of professionals to discuss the how, why, and what of tokenization. The latest event was held on November 23rd, and invoice tokenization was one of the main topics discussed. Right in the center of Amsterdam at the historic 100-year-old GIC building, several interesting guests participated in a panel discussion. The Invoice Token, featuring Bhairav Patel, Tomaž Fleischman, and Erich Schnoeckel, is one of them. As the panel discussion has been recorded, now you can all be part of the latest discussions and insights about invoice tokenization. Listen to the recording via Spotify, Youtube, or another podcast host.
About the invoice token (use case)
The Invoice tokens use case is brought into the 2Tokens foundation by ABN Amro bank and supported by, among others, CMS Law, Erasmus University. The working group has an international approach and representation and consists of many people from different sectors. To create a token standard, a balance between theoretical and field knowledge is important.
An invoice is one of the most common documents used in a (business) transaction. It ranges from a simple receipt from a cash register to a highly complex document that relates to goods or services (to be) provided. Most of these invoices are not instantly paid, locking a lot of value of the issuers that can not be used in their day-to-day business operations. Tokenizing these invoices opens up many new possibilities to lend, borrow and trade these invoices, unlocking working capital for the issuers, alternative yield options for lenders, and more substantiated foundations for trading, netting or bartering.
Creating a token standard is the goal of the invoice token working group. The token will represent the invoice but also considers that not all information on it can be disclosed due to the sensitivity of the information. The digital ledger technology can provide trust to the lending and borrowing processes related to the invoice by preventing double lending, questioning the content via zero-knowledge proofs, or implementation in permissioned blockchain solutions. It can be used to tap into new financial offerings like liquidity pools and other DeFi solutions. These are just a few examples of the possibilities.
About the Panel Discussion Guests
Bhairav Patel is the CTO of Defactor.com – a Dublin, Ireland-based company. Defactor is building a solution that accelerates the adoption of decentralised finance and enables companies around the world to achieve economic growth. They are one of the first platforms to put real-world assets (RWAs) onto the blockchain. The invoice being one of them, a standardised representation of it makes it possible to make it easier to trade within their own solution but between different chains as well.
Tomaž Fleischman is one of the founders of Collaborative Finance – a Ljubljana, Slovenia-based company that specialises in netting principles. While using netting, invoices are not paid via a traditional banking system but obligations are settled within a network.
Erich Schnoeckel is the captain of the working group. Partner of Zaisan.io, based in Amsterdam and having close contact with all the participants in the standardisation project, he is the co-writer and editor of the Invoice token white paper. With a history in accounting (software) and researching tokenization since 2015, it all comes together in the white paper.
The Use Case's current status
The Invoice token working group has been working on creating a standard whilst implementing a token taxonomy framework for a little over a year now. We covered the whole life cycle of the invoice, the stakeholder's positions in it, and the options and possibilities that new technology brings. The November roundtable was the last input that will be used to complete the final draft of the white paper. This version will be sent to the stakeholders, both national and international, for comments. So we’re close to the first final version.
What are the next steps?
The white paper, version 1.0, will set the mark for future additions and modifications. The legislation used for this version is based on EU law, but country-specific exemptions are not all covered. There is much work for that, unless the upcoming Mica regulation provides guidance here.
This white paper only covers the implementation of the token standard on a single blockchain where it is highly likely that supply and demand are not in sync on one chain only. Implementing inter-blockchain communications (IBC), that provide bridging between different blockchains and provide instant finality of transactions can lead to faster adoption and exponential growth of the invoice token.
Netting, although covered in the panel discussion, and bartering are not yet covered in the white paper. There are several parties who want to cover these topics but more knowledge is appreciated.
How to participate & contribute?
2Tokens and the partners in the Invoice tokens use case are in no way omniscient. Participation by means of participation in the discussions, round tables, or co-writing the white paper is appreciated. Inviting the use-case contributors to disseminate their knowledge, and discuss the benefits in your organisation or at your event will receive a warm welcome. Please contact email@example.com.