Singapore-based Rate3 closed a $17 million funding round to build infrastructure for converting assets into digital tokens that flow across blockchain networks. The company envisions a future where st
Singapore-based Rate3 closed a $17 million funding round to build infrastructure for converting assets into digital tokens that flow across blockchain networks. The company envisions a future where stocks, real estate, intellectual property, and even individuals' time stream between applications as tokenized assets on Ethereum and Stellar.
The addressable market for assets applicable for tokenization is worth more than $700 trillion today. International commerce has reduced friction and lifted developing economies for decades. Rate3's investors believe blockchain infrastructure could accomplish something similar, but faster and at lower cost. The funding came from Insignia Ventures, Alpha JWC, Matrix Partners China, Node Capital, Fenbushi Digital, and FBG Capital.
"Tokenization represents the first significant milestone towards bridging enterprises with the advantages of open, public blockchains," Rate3 CEO Jake Goh said. "We envision a future whereby all assets of material value will become tokenized and easily transferable on blockchains. This will greatly add to the liquidity of the asset and in turn improve the enterprises' working capital position and operational efficiency."
Cross-border settlement through traditional financial infrastructure is slow and expensive. Rate3 argues blockchain can compress both timelines and fees. Two entrenched problems still prevent wider adoption, though.
First, enterprises worry about legal rights. When someone holds a digital token representing a stock or real estate deed, does that token prove ownership? What happens if they want to convert it back to the original asset? Rate3 solved this by partnering with licensed, independent trust companies. These firms issue guarantees that token holders can redeem their tokens for the backing asset. If the trust company fails to honor that promise, token holders have legal recourse. Rate3 also follows local regulatory guidance on KYC and AML procedures. This creates transparency around ownership that other blockchain projects failed to provide, which left investors wondering whether their token claims had any legal substance.
Second, applications demand user identity verification. Users must provide their identity documents and personal information to each new application. Rate3 built an identity protocol that allows users to authenticate once and reuse that identity across applications on both Ethereum and Stellar. A user verified on one platform can access another using the same Rate3 identity without submitting to another KYC process. This eliminates duplicated compliance work and reduces exposure to data breaches, since identity information exists in fewer places.
Ethereum and Stellar complemented each other. Ethereum's programming language is Turing-complete. Developers can build a wide variety of applications on top of it. That flexibility attracted the most developer activity in the blockchain space. Stellar took the opposite approach. It sacrificed programmability to optimize for payments. The numbers showed the tradeoff: on Stellar, 100,000 transactions cost less than one penny and settle in 3 to 5 seconds. Those metrics would have been impossible if Stellar tried to support arbitrary smart contracts.
Rate3 came out of the fintech space. The company's founders had built RateX, a service that saved customers money on foreign exchange fees when they purchased goods from overseas merchants like Amazon and Taobao. Originally, Rate3 began as a protocol focused on cross-border payments. The team intended to build settlement infrastructure for e-commerce that would reduce what merchants and shoppers paid to transfer money between countries.
But the company realized it was solving the wrong problem. A vast gap separated the current reality of fiat banking from any imagined blockchain future. Enterprises could not stake their operations on cryptocurrencies because of price volatility, even if the underlying technology had real advantages for their business. The company pivoted toward tokenization and identity management instead. It planned an SGD-backed stablecoin as its first product, something that would leverage both the tokenization protocol and the identity system.
With this shift, Rate3 offered enterprises three capabilities. First, they could access both Ethereum and Stellar blockchains from a single platform. Second, they received tools to tokenize assets in a way that was transparent and provided legal guarantees to token holders. Third, the identity protocol ensured compliance with regulations around customer verification and retail investor protection without requiring repeated KYC submissions.
Rate3 completed its initial coin offering in May 2018 and went live on 10 exchanges including Huobi, Bitfinex, FCOIN, and IDEX.
