Element and Everything Tokens: Two-Tier

Architecture for Mobilizing Alternative Assets

Ailiya Borjigin∗ , Cong He∗ , Charles CC Lee† , Wei Zhou∗
∗ ProAI
Laboratory, Probe Group, Singapore
Email: {Ailiya, Cong He, Zhou}@probe-group.com
† Centre for Sustainable Development, University of Newcastle (Australia), Singapore

Email: charles.cc.lee@newcastle.edu.au

Abstract—Alternative assets such as mines, power plants, or and risk profile. Large-scale real assets are inherently hetero-
infrastructure projects are often large, heterogeneous bundles of
arXiv:2508.11266v1 [cs.DC] 15 Aug 2025

geneous, often comprising multiple distinct elements—such as

resources, rights, and outputs whose value is difficult to trade or physical outputs, land or resource rights, operational permits,
fractionalize under traditional frameworks. This paper proposes
a novel two-tier tokenization architecture to enhance the liquidity revenue streams, and environmental credits. In traditional
and transparency of such complex assets. We introduce the markets, these components are bundled together, making the
concepts of Element Tokens and Everything Tokens: elemental asset difficult to value transparently and to trade in parts. As a
tokens represent standardized, fully collateralized components result, investors face high buy-in thresholds and cannot easily
of an asset (e.g., outputs, rights, or credits), while an every- tailor their exposure to specific aspects of the asset [1]. It is,
thing token represents the entire asset as a fixed combination
of those elements. The architecture enables both fine-grained for instance, typically impossible to invest in just the future
partial ownership and integrated whole-asset ownership through gold output of a mining project or only the energy production
a system of two-way convertibility. We detail the design and of a power plant without purchasing the entire asset or entering
mechanics of this system, including an arbitrage mechanism that complex contracts [1]. This bundling leads to illiquidity and
keeps the price of the composite token aligned with the net asset under-utilization of the asset’s potential value.
value of its constituents. Through illustrative examples in the
energy and industrial sectors, we demonstrate that our approach Existing financial innovations provide partial analogies but
allows previously illiquid, high-value projects to be fractionalized still fall short for heterogeneous real assets. Securitization and
and traded akin to stocks or exchange-traded funds (ETFs). We real estate investment trusts (REITs) fractionalize assets into
discuss the benefits for investors and asset owners, such as lower shares, but these shares still represent a claim on the entire
entry barriers, improved price discovery, and flexible financing, pooled asset or cash flow, not on specific sub-components [3].
as well as the considerations for implementation and regulation.
Similarly, basket tokens in decentralized finance (DeFi) and
Index Terms—Programmable asset issuance, fractional own- exchange-traded funds (ETFs) allow investors to hold a port-
ership, real-world assets, blockchain, liquidity, composite tokens folio of assets through one token, but these typically bundle
separate assets of a similar type (e.g., a collection of equities
or cryptocurrencies) rather than decomposing a single complex
I. I NTRODUCTION asset into its elements. Moreover, traditional ETFs rely on
Programmable asset issuance—the process of creating dig- authorized participants to perform creation and redemption
ital representations of alternative assets on a blockchain— in-kind to keep prices aligned with underlying asset value
has been gaining momentum as a means to democratize [4]. Security token offerings (STOs) for private assets have
investment and unlock liquidity in traditionally illiquid asset to date largely adopted a one-token-one-asset model, which
classes [1], [2]. By enabling fractional ownership, tokenization does not provide internal divisibility by asset component. Even
allows high-value assets like real estate, infrastructure, or emerging concepts like fractional non-fungible tokens (NFTs)
commodities to be divided into smaller, more affordable units focus on dividing ownership shares of a singular item and
that can be bought and sold by a broader range of investors do not natively handle assets composed of multiple revenue
[2]. For example, instead of requiring a single buyer for an streams or rights.
entire commercial building or solar farm, tokenization makes Notably, recent research has begun to explore multi-token
it possible to distribute ownership among many investors, each representations for single assets. For example, Joshi and
holding a digital token that confers a portion of the asset’s Choudhury tokenized real estate by issuing multiple token
value or returns [2]. This has the potential to lower entry types on an Ethereum ERC-1155 contract: unique tokens
barriers and increase market liquidity for assets that were once for distinct property rights and fungible tokens represent-
the exclusive domain of large institutions or ultra-high-net- ing fractional shares associated with those rights [1]. This
worth individuals. demonstrates the feasibility of a more granular approach to
However, most existing tokenization approaches treat the as- tokenizing asset components. Building on this insight, we
set as a monolithic whole represented by a single token, which propose a generalized two-tier token model that standardizes
can obscure the diverse components that contribute to its value the decomposition of any complex asset into elemental parts,
while also providing a mechanism to recombine those parts and generate cross-sectional mispricing [12]. These results
into a whole asset token for holistic trading and investment. inform our mechanism design: creation/redemption should be
In this paper, we introduce the Element and Everything (a) programmatic and permissionless where compliant, (b) fee-
Token architecture and argue that it can significantly improve calibrated to avoid abuse, and (c) supported by liquidity in
liquidity and price discovery for complex Alternative Assets. both composite and element markets to keep prices near basket
An Element Token refers to a standardized, fungible token NAV.
representing a specific, independently measurable component
of an asset (for example, one ton of mineral output, one square C. SPACs and Asset-Level Financing
meter of land usage rights for one year, one megawatt-hour of SPACs finance acquisitions using a shell equity that later
energy production, or one unit of carbon credit). These element merges with a target. Recent evidence highlights agency
tokens are designed to be fully collateralized by the underlying problems and costs relative to IPOs but also clarifies conditions
asset components and potentially fungible across projects (e.g., under which SPACs offer flexibility [13], [14]. Our Everything
carbon credit tokens from different projects might be fungible Token plays an analogous role as a project-level financing
if they adhere to the same standard). An Everything Token, by shell, but with transparent, on-chain claims to standardized
contrast, represents an entire asset or project; it is constructed components and programmable cash-flow routing—bridging
as a fixed bundle of various element tokens in proportions that insights from SPAC financing with on-chain composability.
reflect the asset’s composition. The everything token can be
D. DeFi Market Design: AMMs and Basket Construction
thought of as analogous to a basket or ETF share that holds a
predetermined mix of underlying tokens corresponding to the DeFi advances formalize constant-function market makers
asset’s constituent parts. (CFMMs), deriving no-arbitrage bands, price bounds, and
The remainder of this paper is organized as follows. Sec- multi-asset trade optimality via convex analysis [15], [16],
tion II formalizes the element/everything token architecture, [18]. Analyses of Uniswap-type markets suggest that, under
detailing the token design, conversion mechanics, and pricing mild conditions, CFMM prices track external references, en-
relationships. Section III provides illustrative examples of how abling robust on-chain price discovery for fungible tokens
diverse assets—from mining and energy projects to industrial [17]. Multi-asset CFMMs provide natural liquidity backbones
facilities and environmental assets—can be tokenized using for element baskets. We leverage these results to design
this framework. Section IV discusses the practical implica- dual venues: (1) spot CFMMs for each element token and
tions, benefits, and challenges of implementing the architec- (2) a creation/redemption contract for the composite, so that
ture, including perspectives for investors, asset owners, and arbitrage links micro and macro prices.
regulators. Section V concludes with a summary of findings
E. Data Integrity and Oracle Mechanisms
and suggestions for future work in this domain.
Bridging on-chain markets to off-chain realities requires
II. L ITERATURE R EVIEW secure oracle designs. Authenticated feeds such as Town Crier
A. Tokenization of Real-World Assets use trusted execution to attest to HTTPS data for smart
Empirical studies of security token offerings (STOs) in real contracts [20]. Cryptographic protocols like DECO enable
estate document that tokenization expands investor access and zero-knowledge proofs of statements about TLS sessions
fractional ownership while secondary trading remains thin and without trusted hardware [21]. Recent software-engineering
influenced by crypto-specific frictions (fees, sentiment) [7]. work emphasizes verifying oracle deviation impacts on DeFi
Broader surveys and policy analyses argue that tokenization protocols [22]. For RWA tokenization, these lines motivate
can reduce issuance and transfer frictions, improve settlement layered verification—legal attestations, IoT telemetry, and
finality, and mobilize new investor bases for infrastructure oracle proofs—to ensure that element tokens remain fully
and sustainable projects [5], [8], [9]. These findings motivate collateralized and auditable.
architectures that (i) standardize claims at a granular level and III. E LEMENT /E VERYTHING T OKEN A RCHITECTURE
(ii) design market microstructure to support continuous price
A. Design Overview
discovery across heterogeneous claims.
In the proposed architecture, each complex asset is repre-
B. Exchange-Traded Funds and Creation/Redemption sented by a set of n element tokens E1 , E2 , . . . , En and a sin-
The ETF literature provides the closest analogue to our gle everything token W . Each element token Ei corresponds
bidirectional convertibility. Classic and contemporary studies to the smallest unit of a particular asset component that can
show that authorized participants (APs) arbitrage deviations be independently priced and traded. These could be physical
between ETF prices and the value of their underlying baskets quantities (commodities or outputs), rights or entitlements
via primary-market creations and redemptions [10]. When un- (land or spectrum usage rights, licenses, quotas), or financial
derlying assets are illiquid (e.g., corporate bonds), AP balance- derivatives of asset performance (e.g., a token for a portion
sheet frictions can weaken the arbitrage link and allow persis- of revenue or a carbon offset credit). The element tokens
tent premiums/discounts [11]. Flow-induced, non-fundamental are standardized and backed one-to-one by the specified asset
demand in the ETF primary market can also predict returns components, ensuring that holding an element token entitles
the bearer to a well-defined claim on the underlying asset or its linked to the prices of the element tokens P (E1 ), . . . , P (En ).
cash flows. By isolating components, element tokens facilitate Specifically, under equilibrium conditions one would expect:
transparent price discovery for each aspect of the asset; for
P (W ) ≈ a1 P (E1 ) + a2 P (E2 ) + · · · + an P (En ), (2)
instance, the market can establish a price per MWh of solar
electricity or per ton of copper from a given project. which is analogous to the net asset value (NAV) of an ETF
The everything token W is then defined as a fixed- being the sum value of its holdings. If the market price of W
proportion bundle of the n element tokens that together diverges from this computed benchmark, arbitrage opportuni-
constitute one whole asset unit. If one physical unit of the ties arise. For instance, if P (W ) rises above the right-hand side
asset (e.g., one entire power plant or one mining operation) of Eq. (2) (i.e., W is overpriced relative to its components),
intrinsically includes a1 units of component 1, a2 units of an arbitrageur can purchase the requisite amounts of each
component 2, ..., an units of component n, then one everything element token Ei on the open market and then redeem (or
token is composed of (a1 E1 , a2 E2 , . . . , an En ). In other construct) one W token from them via the smart contract, and
words, W is a composite token representing the complete finally sell the W at the higher market price. This arbitrage
asset, such that: process increases the supply of W (putting downward pressure
on P (W )) and increases demand for Ei (pushing P (Ei ) up)
W ≡ a1 E1 + a2 E2 + · · · + an En , (1) until prices realign. Conversely, if P (W ) falls below the sum
where the addition denotes aggregation of the bundle of of its parts, an arbitrageur can buy one W cheaply, redeem it
element tokens. In practice, a smart contract could enforce to obtain ai of each Ei , and then sell those element tokens
this relationship by only allowing W to be minted (created) individually for a profit. This reduces the supply of W (raising
when the required number of each Ei is deposited (or locked) its price) and increases supply of Ei (lowering their prices)
into a reserve, and conversely, allowing anyone to redeem one until the gap closes. Through these mechanisms, the two-
W token to retrieve the underlying basket of a1 of E1 , a2 of way convertibility ensures that P (W ) remains anchored to the
E2 , ..., an of En . intrinsic asset value as represented by the basket of element
tokens, much like ETF arbitrage keeps fund prices aligned
The fixed ratios ai are determined based on the asset’s
with underlying assets [4].
technical or legal structure. For example, if a solar farm project
The arbitrage mechanism not only stabilizes prices but
is defined by 100 MWh/year of energy production capacity,
also provides continuous feedback between micro-level com-
1000 square meters of land lease, and 100 carbon credits
ponent markets and the macro-level asset valuation. Each
per year, then an everything token for that project might be
element token’s price P (Ei ) is determined by its own supply-
composed of those quantities of the respective element tokens.
demand dynamics (which might include factors beyond the
These proportions remain fixed for that project token; if the
specific project, especially if the token is fungible across
asset’s capacity or entitlements change, the token specification
multiple projects or has an external commodity price link).
would be updated or a new token series issued to reflect the
For example, a surge in global copper prices would reflect in
new composition.
P (ECu ) (a copper output token) rising; this would, via Eq. (2),
A critical feature of the architecture is that it supports two-
increase the implied fundamental value of a mining project’s
way convertibility between the everything token and the ele-
everything token that bundles copper output. Traders in the
ment tokens. This means investors have the flexibility to either
everything token market would then adjust P (W ) upward, or
hold or trade the entire asset via W , or to disaggregate their
else face arbitrage. In this way, the architecture improves price
position into individual Ei tokens and possibly trade those
discovery: each component of value is transparently priced,
separately. The convertibility is enabled by smart contracts
and the whole asset’s price becomes a composite that more
that implement a bundle swap: one W can be exchanged for
accurately and dynamically reflects all underlying factors.
(a1 E1 , . . . , an En ), and conversely, anyone holding the exact
It is important to note that fees or slippage in conver-
bundle of (a1 , . . . , an ) units of E1 , . . . , En can combine them
sions, as well as liquidity differences between W and the
to mint one W . This design parallels the creation/redemption
Ei markets, could create short-term deviations or transaction
mechanism of ETFs, where authorized participants swap bas-
costs for arbitrageurs. However, these can be managed by
kets of underlying assets for ETF shares and vice versa [4].
protocol design (e.g., small minting/redemption fees to prevent
Here, the role of authorized participant could be permissionless
abuse, or time-limited arbitrage windows) and are analogous to
if the smart contract allows open access to the swap (subject to
creation/redemption fees and bid-ask spreads in ETF markets.
any regulatory whitelisting), or it could be restricted to certain
As long as the frictions are not too high, the core principle of
parties if compliance requires it. In either case, the economic
arbitrage-driven alignment holds.
effect is that it ties the value of W to the aggregate value of
its constituents. C. Implementation Considerations
In practice, implementing the element/everything token
B. Pricing and Arbitrage Mechanism model requires careful attention to smart contract security,
Because of the enforced convertibility, the price of the regulatory compliance, and governance. Smart contracts must
everything token P (W ) in an efficient market will be tightly reliably enforce the bundling ratios ai and manage the minting
and burning of tokens. Standards such as ERC-1155 (multi- cold storage capacity, and tokens for vessel usage or fuel.
token standard) could be advantageous here, as they allow An everything token WFishery would package these, allowing
a single contract to manage multiple token types and their investors to trade the fishery as a whole or focus on specific
interactions [1]. Under an ERC-1155 implementation, one components (e.g., selling the fish output forward via the quota
could assign different token IDs to E1 , . . . , En and another token).
ID to W , and enforce through contract logic that transferring
a W out of the contract requires depositing the correct amounts B. Infrastructure and Energy Projects
of each Ei . Infrastructure assets often have multiple value streams and
Regulatory classification of the tokens is another key con- associated credits. For example, a solar photovoltaic (PV)
sideration. The everything token W effectively tokenizes an power plant generates electricity (measured in MWh), poten-
entire asset and would likely be deemed a security in many tially earns renewable energy certificates or carbon credits,
jurisdictions, meaning its issuance and trading would need sits on land (land lease rights), and comprises equipment
to comply with securities laws (similar to security tokens with residual value. We can define Eenergy tokens for each
in STOs). The element tokens, depending on their nature, MWh of power production, Ecarbon tokens for certified carbon
might be viewed as commodity tokens, derivative contracts, offsets from the plant’s generation, Eland-lease tokens for the
or also securities if they represent claims on future revenue. land use per year, and Eequip tokens representing claims on
The architecture allows flexibility: projects could be structured the salvage/residual value of the solar panels (or depreciation
such that the W token is offered in a regulated token offering shares). The everything token WSolar (a ”Solar Plant Token”)
for fundraising, while the Ei tokens could be used internally then corresponds to a fixed bundle, say per year of operation it
or in B2B markets (for instance, energy tokens traded among bundles 1000 MWh tokens, 1000 carbon tokens, the necessary
utilities, or carbon tokens on carbon credit exchanges). A land token, and equipment tokens. This enables separate
governance framework is needed to handle how and when trading of energy and carbon markets if desired; an investor
new element tokens can be issued (e.g., if an asset increases primarily interested in energy can just hold Eenergy , while
production capacity) or how the token economics adjust if another wanting the full project returns can hold WSolar . A
parts of the asset are sold or expire. These issues, while beyond similar structure can be applied to a hydrogen production
the scope of our current discussion, must be addressed in real- facility: element tokens for hydrogen output (kg of H2 ), for
world deployments. Encouragingly, initial empirical studies storage capacity (tank volume units), and for any patented
of tokenized assets emphasize that proper governance and technology or emission credits, combined into a WH2Facility
regulatory adaptation are crucial to maintain market stability token representing the entire facility. Notably, such fraction-
as these new models emerge [5]. alization of solar and other renewable projects has been cited
as a way to attract wider investor participation and improve
IV. U SE C ASE I LLUSTRATIONS financing [6].
To concretely demonstrate the element/everything token
approach, we consider several types of assets and outline how C. Private Equity in Enterprises (Unlisted Companies)
they could be represented under this model. These examples Consider an agricultural processing plant (e.g., a factory that
span alternative assets, infrastructure, enterprise equity, envi- processes crops into food products). Its value comes from its
ronmental assets, and cross-border projects, highlighting the physical assets (machinery, buildings), inventory (raw inputs
flexibility of the architecture. and processed outputs), and operational rights or contracts.
Element tokens could be defined for machine capacity or out-
A. Alternative Assets (e.g., Mines, Fisheries) put (e.g., processing equipment hours or throughput tokens),
Consider a gold-and-copper mining operation. Traditionally, for inventory units (tokens representing stored raw material or
an investor must buy a share of the entire mining company or batches of finished goods that can be sold), and for property
project. Under our model, the mine could issue element tokens usage (a token for land or factory floor space rights). An
for its outputs and rights: e.g., an EAu token redeemable for WAgriPlant token would combine these such that one whole
a unit of gold produced, an ECu token for copper output, token equates to a proportional share of the factory’s full
a land-right token Eland representing a hectare of mining capacity and assets. Another example is a data center: element
concession, and an Epermit token for the mining license rights. tokens might include Erack (each token representing one server
The everything token WMine (e.g., ”Copper-Gold Mine Token”) rack slot or a certain computing capacity), Ebandwidth (net-
would bundle a fixed proportion of these (reflecting, say, work bandwidth allocation), Epower (electricity consumption
the expected life-of-mine output and rights per share of the quota), and Ecarbon-offset (to neutralize emissions). An integrated
project). An investor could either hold WMine to get exposure to WDataCenter token would package, say, 1 rack + X bandwidth +
the entire project’s performance or break it apart to separately Y kWh + Z carbon offsets to represent a share of an operating
trade the gold and copper tokens, which might be desirable data center. Investors could thus invest directly in specific
if gold and copper prices diverge. Similarly, in a fisheries facets of the business (for instance, buying more of the Erack
asset (such as a commercial fishing quota), element tokens if they believe computing demand will spike) or in the entire
could include quota rights for catch (tons of fish), tokens for enterprise via the everything token.
 TABLE I
U SE -C ASE M AP FROM E LEMENT T OKENS TO E VERYTHING T OKENS

Sector Asset Example Element Tokens (standardized, fully Everything Token (fixed bundle) & Key Benefits
collateralized)
Alternative Copper–Gold Mine Au output; Cu output; land / concession W Mine ⇐ Au + Cu + Land + Permit; Benefits:
Resources right; mining permit sum-of-parts valuation; metals hedging
Fisheries Industrial Fishery catch quota; cold-chain storage right; W Fishery ⇐ Quota + Cold-chain + Ops; Benefits:
vessel operation right quota monetization; capex/ops financing
Infrastructure / Solar PV Plant MWh energy; CO2 credits; land lease- W Solar ⇐ MWh + CO2 + Land + Equip; Bene-
Energy year; equipment depreciation / salvage fits: unbundle revenue vs. ESG; green financing
Infrastructure / Hydrogen Facility H2 output (kg); storage capacity; IP / W H2 ⇐ H2 + Storage + IP; Benefits: offtake
Energy patent license prepay; tech/IP valuation
Private Equity Agri-Processing equipment capacity; raw inventory; W Agri ⇐ Equip + Raw + Finished + Land; Ben-
Plant finished-goods inventory; land / factory efits: working-capital flexibility; inventory finance
use
Digital Infrastruc- Data Center rack capacity; bandwidth; power quota W DC ⇐ Rack + BW + Power + CO2 ; Benefits:
ture (kWh); CO2 offsets capacity hedging; energy/carbon separation
Carbon / Environ- Carbon Offset CO2 credits; renewable energy certifi- W CO ⇐ CO2 + REC; Benefits: compliance ac-
ment Project cates (REC) cess; transparent retirements
Forestry Forestry Carbon Sink land tenure; timber harvest right; carbon W Forest ⇐ Land + Timber + CO2 ; Benefits: dual
sequestration credits timber/carbon monetization; lifecycle pricing
Cross-Border In- African Hydropower MWh energy; land / water usage right; W Hydro ⇐ MWh + Land/Water + CO2 + Con-
frastructure Project CO2 credits; concession / grant cession; Benefits: concession-linked risk isolation;
blended finance

D. Environmental and Carbon Assets concession or public-private partnership contract value. The
Projects like reforestation, carbon capture, or renewable composite WHydro token would constitute an investment in the
energy credit programs yield intangible environmental assets entire hydropower project combining those elements. Investors
that are increasingly traded. Under a single-token approach, wary of certain country risks or regulatory changes could ad-
one might issue a token that entitles the holder to all benefits just their holdings accordingly—if, say, new regulations affect
of, say, a forest conservation project (timber, carbon credits, water rights, the Ewater token price might drop independently
biodiversity credits). Using our model, a forestry project could without dragging down the value of power generation tokens,
issue Eland tokens for land ownership or use rights, Etimber allowing a more nuanced response than if all value were fused
tokens for permissible timber harvest volumes, and Ecarbon to- into a single indistinct asset.
kens for carbon sequestration credits (carbon offsets generated These examples illustrate how the two-tier token model can
by the forest growth). The everything token WForest (Forestry be adapted to a wide range of use cases. The element tokens in
Carbon Sink Token) would combine these in the ratio that each scenario are designed to be as granular as practical and
one token corresponds to, for example, one hectare of forest economically meaningful, which not only aids in attracting
over a certain period, including its carbon and timber yields. specialized investors (e.g., commodity buyers interested in the
Similarly, a carbon offset project (like a renewable energy gold output of a mine, or tech companies interested in data
installation feeding into a carbon market) might have separate center capacity) but also facilitates cross-project and cross-
tokens for carbon credits and for renewable energy certificates, sector trading of common elements. For instance, an Ecarbon
with an overall project token linking them. This segmentation token from the solar plant and one from the forestry project
can enhance transparency for buyers who may only want the could be fungible if they both conform to a verified carbon
environmental attributes (carbon credits) separate from any credit standard, creating a larger unified market for carbon
financial returns of the project. tokens across projects. This cross-cutting liquidity is a key
advantage of standardizing element tokens.
E. Cross-Border or Multi-Jurisdiction Projects
V. D ISCUSSION AND I MPLICATIONS
Projects in emerging markets or involving public-private
partnerships often involve additional layers of risk and rights. A. Investor Perspective
For instance, an African hydropower dam project could be For investors, the element/everything token architecture
tokenized by splitting: Epower tokens for each unit of electricity offers unprecedented flexibility and transparency. By lowering
generated, Ewater tokens for water usage rights or irrigation the unit size of investment through fractional element tokens,
benefits, Ecarbon tokens for any carbon credits earned by clean it broadens access to asset classes that were previously out
energy, and Econcession tokens representing the government of reach [2]. A retail investor could choose to invest in just
the energy output of a renewable project or just the metal element tokens (like copper or royalties) to different parties.
output of a mine, aligning their investment with their market This unbundling of asset value allows tailoring the financing
outlook or hedging needs. The ability to partially exit a mix to those most interested in each component, potentially
position is another advantage: rather than selling an entire lowering the overall cost of capital compared to a one-size-
project stake (which could be illiquid or take time to divest), fits-all investment offering.
an investor holding an everything token could redeem it and Another advantage is ongoing liquidity and price feedback.
sell whichever element tokens they wish to reduce exposure Even if the project owner retains a significant portion of
to (for example, liquidating the carbon credit tokens if carbon the tokens, the trading of some tokens on the open market
prices are high, but keeping the energy tokens for long-term provides continuous valuation benchmarks. The owner can
revenue). This greatly enhances liquidity and allows dynamic mark-to-market the components of their asset and possibly
portfolio rebalancing. make operational adjustments. For example, if the market
Moreover, transparent pricing of each asset facet makes values energy tokens from a solar farm much higher than
valuation more straightforward and reduces information asym- the carbon tokens (indicating strong demand for energy but
metry. All investors can observe the market prices of the weaker for carbon credits), the project might choose to expand
element tokens, which serve as price signals for the asset’s capacity or alter operations to maximize energy output relative
components. This can lead to more accurate pricing of risk: if a to carbon generation. In a way, the market is signaling which
particular component (say the regulatory permit token) carries aspect of the asset is more valuable.
high risk, its price will be discounted accordingly and that From an operational standpoint, distributing revenue to
will reflect in the overall asset token only to the extent of that token holders can be automated via smart contracts. Each
component’s weight. In essence, investors can see exactly what element token could be set up to automatically receive its share
they are paying for each part of the asset, unlike traditional of any corresponding revenues (for instance, if a utility pays
bundled investments where opaque internal valuations may the solar farm for electricity, that payment could trigger the
hide such details. smart contract to distribute stablecoin to each Eenergy token
The architecture also enables cross-asset diversification at holder proportionally). The everything token would entitle
the component level. An investor could assemble a portfolio holders to all streams, which can be achieved either by directly
of just copper output tokens from various mines around the paying W holders or by requiring conversion to elements
world, effectively creating a diversified metals investment to claim each stream separately. Different implementations
without the need to buy equity in mining companies. Or, are possible, but the result is that token holders can get
they might hold an everything token for a wind farm plus programmable cash flows—a feature not easily achievable
extra carbon tokens from other projects to overweight the with traditional equity without intermediaries.
environmental attributes. This granular approach to investment Asset owners should also be cognizant of the regulatory
could give rise to new strategies and derivatives (for example, implications. Splitting an asset into multiple tokens might
one could imagine futures or options on individual element trigger various regulatory regimes (securities law, commodities
tokens like energy tokens, allowing hedging of specific risks). regulation, etc.) for different token types. Compliance can
It is worth noting that the complexity of managing multiple be maintained by whitelisting investors, embedding transfer
tokens might be a barrier for some investors. Asset man- restrictions, or registering tokens as necessary. The archi-
agement platforms and wallets would need to simplify the tecture itself is neutral to these choices, but in practice a
user experience, perhaps by providing a consolidated view or permissioned or hybrid model might be employed for sensitive
synthetic instruments for those who want a single exposure. assets. Nonetheless, even traditional institutions like banks and
However, the trend in decentralized finance is towards com- stock exchanges are exploring tokenization precisely to handle
posability and user-friendly aggregation, suggesting that such such fractional ownership with compliance, suggesting that
tools would emerge as the market matures. regulatory barriers can be overcome with collaboration [2].
B. Asset Owner Perspective C. Market-Level Implications
For asset owners and project developers, the ele- If adopted broadly, the element/everything token architec-
ment/everything token model provides innovative financing ture could lead to a more interconnected and efficient market
and asset management capabilities. By issuing an everything for Alternative Assets. By establishing a common framework
token, a project can raise capital in a manner similar to to digitize and trade everything from infrastructure to natural
issuing equity or project shares, but with the added appeal resources, it creates a unified market infrastructure akin to how
that investors know the token is directly backed by con- stock markets aggregate corporate equity trading. Previously
crete asset components. The element tokens can be used to non-standard, bespoke transactions (like selling a portion of
monetize specific asset outputs in advance; for instance, a a power plant or leasing out mining rights) could migrate
mining company could sell some gold tokens forward to to standardized token markets with greater transparency and
secure funding from gold purchasers, effectively pre-selling a lower transaction costs. This not only unlocks value from
portion of its production without giving away ownership of the previously illiquid assets but also could improve resource
entire mine. Meanwhile, it could retain or separately sell other allocation in the economy: capital can more easily flow to asset
components that yield the highest returns or fulfill demand (as erties (price alignment, liquidity, and composability). We out-
evidenced by their token prices). line a pragmatic blueprint.
The pricing transparency and continuous arbitrage should 1) Smart-Contract Stack.: (i) Element Token Contracts.
reduce instances of mispricing or “trapped value.” For exam- Each standardized element Ei is implemented as a fungible to-
ple, conglomerate discounts (where a company owning diverse ken with strict mint/burn controls. Contracts SHOULD expose
assets trades at less than sum-of-parts value due to opacity) pausability/allowlists for regulatory actions and emit granular
might be mitigated if each part has a token price that investors events for custody and audit. Minting is gated by oracle attes-
can point to. In essence, it fights the opacity and complexity tations (Sec. V-D2) to ensure that outstanding supply remains
that often plague large projects or companies by making them fully collateralized by the referenced real asset component. (ii)
legible as a set of simple tokens. Everything (Composite) Contract. A per-asset contract spec-
On the flip side, the model introduces new complexities ifies the composition vector a = (a1 , . . . , an ) and enforces
to manage. Markets for the element tokens could potentially creation/redemption at exact ratios: depositing (a1 , . . . , an ) of
be less liquid than the everything tokens if they attract only (E1 , . . . , En ) mints one W ; P
burning one W returns the basket.
niche participants, which could lead to volatility. There’s also This makes P (W ) track i ai P (Ei ) up to frictions via
the risk of partial markets: if some element tokens do not trade ETF-style arbitrage. [10]–[12] Fractional issuance is handled
actively (say nobody trades the land-right token of a project), by scaling a, and all conversions MUST be evented for
then the price discovery for that component may be weak, and indexers and surveillance. (iii) AIO and Yield Distribution.
W pricing might rely on models rather than market prices for A regulated primary offering (AIO) can be implemented as a
that piece. One mitigation is that market makers or the asset sale contract that escrows the initial W supply (or a separate
issuer could provide liquidity in all key components to ensure wrapper) and releases tokens against payment schedules and
continuous pricing. lockups. A per-asset yield pool contract accumulates dis-
Another implication is the possibility of disaggregated tributable value and pays pro rata to token holders (pull-based
ownership and control. In a traditional asset, one owner (or a claims or periodic streams). Streaming/epochal payout choices
set of shareholders) has holistic control. With element tokens, should consider gas economics and user custody; unclaimed
different parties might effectively control different aspects yield may be auto-compounded into the pool subject to policy.
(imagine one entity accumulates a majority of the land tokens, 2) Proof-of-Behavior (PoB) and Oracle Layer: To anchor
another accumulates energy tokens). This raises questions on-chain issuance to real productivity (e.g., MWh generated,
about governance: decisions about the asset (like expanding ore tons mined), validators submit proofs of measured outputs;
capacity or taking it offline) affect all components and thus blocks or rewards are conditioned on accepted proofs. In
all token holders. Governance tokens or agreements might be practice, PoB integrates:
needed to coordinate token holder interests. This is an area • Data oracles: Authenticated feeds from audited teleme-
for future exploration—perhaps a third token type (governance try/IoT or third-party attestations. Trusted-execution and
token) or using the everything token as the governance right cryptographic designs (e.g., Town Crier, DECO) provide
while element tokens are non-voting claims. authenticated statements to contracts without trusted in-
Lastly, from a financial stability perspective, the architecture termediaries. [20], [21]
echoes some traits of structured finance and derivatives, which • Verification and deviation control: Multi-source aggrega-
warrants careful risk assessment. The two-way convertibility tion, time-weighted averages, and deviation guards reduce
and arbitrage closely tie markets together, which generally manipulation; formal checks of oracle deviation risks
enhances stability by removing arbitrage gaps, but can also (e.g., OVer) inform safe update policies and pause rules.
transmit shocks rapidly across markets. If one element token [22]
crashes in price (for instance, the carbon credits market • Tokenization alignment: Element minting hooks fire only
collapses), it will immediately affect the everything token upon validated output events; failed/contested proofs pre-
and by extension all holders. In that sense, token holders are vent inflationary drift of Ei supplies.
still exposed to the full set of risks, but at least they are
transparent and possibly hedgeable. Studies have noted that PoB can run at L1 (protocol-native) or L2/off-chain with
while tokenization can improve efficiency, it also introduces finalized attestations bridged on-chain; the economic require-
new interconnections and requires robust risk management ment is identical: only verified behavior can expand tokenized
[5]. Policymakers might need to monitor these markets to claims.
ensure that fragmentation of assets into tokens does not lead 3) Liquidity and Market-Making: Each Ei pairs against
to unforeseen systemic issues. a numeraire (e.g., stablecoin) in CFMM pools; basket NAV
is synthesized by on-chain or off-chain routers. CFMM the-
D. Implementation Considerations: Smart Contracts, PoB, ory guarantees coherent pricing bands and convex trade op-
and Liquidity timality under mild assumptions, [15]–[17] while the cre-
Deploying the Element/Everything architecture requires an ation/redemption contract supplies the hard NAV boundary for
end-to-end stack that ties on-chain claims to verifiable off- W . Practical guidelines:
chain production while preserving market microstructure prop- • Dual surface liquidity: Maintain depth on element pools
 and narrow conversion fees on W to keep the arbitrage every asset, no matter how intricate, as easy to trade and invest
loop tight. in as a common stock or bond. Realizing this vision could
• Incentives: LP rewards time-weighted by utiliza- mark a significant advance in the financialization of real assets
tion/volatility prevent mercenary liquidity and support and the efficiency of capital markets.
thin elements.
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