Safeguarded Token: The Third Way between Decentralization vs. State Protection Part 4


“Safeguarded Token” is introduced in the first part of this article as a third-way solution bridging decentralization and consumer protection. The second and third sections delve into potential challenges and barriers this concept might face. In this fourth section, we will explore further what new innovations could emerge from the introduction of the Safeguarded Token.

Understanding the Basics: What Are Blockchain and DeFi? Blockchain is a technology that allows data to be stored in interconnected blocks. Picture it as a ledger that logs every transaction, but this ledger is accessible to many and nearly impossible to modify. DeFi, short for Decentralized Finance, envisions a financial system devoid of intermediaries like banks. Instead, DeFi empowers individuals to transact, borrow, or lend money directly through digital systems.

So, what is a “Safeguarded Token”? The “Safeguarded Token” is an innovation in the DeFi realm. Its premise is straightforward: merge the advantages of a decentralized system with governmental protections and regulations. The goal? To offer enhanced trust and security for users.

How Can “Safeguarded Tokens” Revolutionize Finance?

Curated Launchpad Platforms: Under this model, only quality projects that pass strict vetting can launch their products, mitigating risks for investors. Curated Launchpad Platforms are initiatives within DeFi, providing a space for new projects to introduce and launch their tokens. However, not just any project can pitch and offer their tokens on these platforms. They must undergo rigorous curation and verification processes to ensure they meet specific standards of quality, security, and integrity. This not only boosts investor confidence but also reduces the risk of scams or irresponsible projects entering the market.

Safer Lending Practices: Through “Safeguarded Tokens”, lenders can feel more secure, knowing there’s a certain level of backing provided by these tokens. Guaranteed lending protocols in the DeFi world allow users to borrow or lend their crypto assets. With the “Safeguarded Token” concept, these loans are safer as the token can serve as a vetted collateral. This reduces risks for lenders; if a borrower defaults, the collateral token can be liquidated. Thus, the “Safeguarded Token” introduces an additional layer of trust and protection within the DeFi lending system.

Trustworthy Transactions: Digital asset exchanges can be executed more securely and credibly, avoiding potential scams. The “Safeguarded Token” is a blockchain innovation designed to enhance trust in digital transactions. By blending the decentralization principles of blockchain with protections set by authoritative bodies, “Safeguarded Tokens” ensure every transaction meets certain security standards and is verified, minimizing potential fraud or manipulation risks. In essence, users can trade confidently, knowing their digital assets are shielded by strict security mechanisms.

Clear and Transparent Transactions: All transactions related to “Safeguarded Tokens” are visible to every stakeholder, ensuring full transparency. The main distinction between “Safeguarded Tokens” and current tokens lies in the protection and regulations they incorporate. Most tokens operate within a fully decentralized DeFi environment where transactions are governed by code and protocols without third-party oversight. While this grants freedom and flexibility, it poses risks due to potential scams, manipulations, and legal uncertainties. Conversely, “Safeguarded Tokens” are crafted to marry the strengths of decentralization with protections and oversight from centralized entities, like governments or regulatory bodies. This means that, in addition to the transparency and security offered by blockchain technology, “Safeguarded Tokens” provide an added protective layer through specific standards and regulated verifications. The result is more lucid, transparent, and secure transactions for users.

Protection for Fans: When sports clubs, musicians, or celebrities use Fans Tokens to enhance engagement with their fans, the “Safeguarded Token” ensures each transaction is executed with high integrity, bolstering fan trust. With the “Safeguarded Token”, fans can be confident that the tokens they purchase have undergone rigorous verification and meet specific security standards. This minimizes the risk of fraud or investment in ambiguous projects. Furthermore, integration with KYC (Know Your Customer) and AML (Anti Money Laundering) standards ensures that token transactions comply with regulations, preventing potential illegal activities. In essence, this protection for fans means providing a safer, transparent, and trustworthy environment for fans to engage and invest in the products or services they love without worrying about potential risks.

Price Stability: Price volatility is often a concern in the crypto world. However, with the “Safeguarded Token”, specific mechanisms can be implemented to provide price stability, reducing risks for token holders. This concept allows for setting an upper and lower limit on price volatility while still allowing 24/7 transactions.

Transparent Fractional Ownership: The “Fractional Ownership” concept enables many individuals to own a part of a valuable asset. With the integration of the “Safeguarded Token”, this division of rights becomes more transparent and automatic, ensuring that each portion of the Transparent Fractional Ownership asset bought or sold is authentic.

“Safeguarded Token” differs from existing tokens as it offers added layers of protection and transparency. While many tokens operate based on decentralized and anonymous principles, the “Safeguarded Token” is designed to blend the benefits of decentralization with the protection and oversight of governmental regulation. This token bridges the gap between the traditional financial world and DeFi. Additionally, transactions with the “Safeguarded Token” are more secure, ensuring all parties meet certain standards, such as KYC and anti-money laundering, setting it apart from many other tokens that may not have the same level of verification and security.

Challenges and the Future: Though the “Safeguarded Token” boasts numerous advantages, challenges persist. One of which is establishing close collaboration among the developer community, stakeholders, and regulators. Every innovation requires adaptation and cooperation from all involved parties to ensure its sustainability.

However, with the right approach and shared commitment, the “Safeguarded Token” has the potential to transform how we perceive and engage with the digital financial world. This innovation heralds a new era where transparency, trust, and security are at the forefront.

The digital world continuously evolves with ceaseless innovation. The “Safeguarded Token” represents a significant step towards a more secure and transparent financial future. As consumers, we need to continually educate ourselves and adapt to these changes to seize every opportunity provided by new technologies.

I am extremely excited to oversee this experiment as I happen to be involved in the development of this idea and innovation with BeOneChain, an Indonesian Blockchain Layer 1 project in the ecosystem. We are sleep, eat and dream with this idea!!!

This writing and analysis are also a market test and a means to present this idea to the public, assessing whether it could be a solution to current blockchain technology challenges, or if it’s merely a utopian concept. I will always open for any inputs, critics, comments and feedback from all of you, from any kind of perspectives such as Regulators, Communities, Developers, Investors, Academicians etc.

Tuhu Nugraha
Tuhu Nugraha
Digital Business & Metaverse Expert Principal of Indonesia Applied Economy & Regulatory Network (IADERN)