Glossary
Tokenization glossary
Tokenization turns ownership rights in a real-world asset into digital tokens recorded on a blockchain. This glossary defines the 60 terms you will meet most often, from token standards such as ERC-3643 and CIP-113 to KYC, NAV, redemption and the rules that decide who may hold a token, in plain language.
Last updated: · 60 terms
Tokenization basics
- Asset tokenization
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The process of representing ownership rights in an asset, such as real estate, a fund share or a loan, as digital tokens on a blockchain. The tokens can then be issued, transferred and recorded with rules encoded in smart contracts, while the legal rights still come from the underlying legal structure.
- Fractional ownership
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Dividing an asset into many smaller units so several investors can each own a share of it. Tokenization makes fractions easier to issue, record and transfer, although the minimum investment and who may invest are still set by the offering’s terms and the applicable law.
- Issuer
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The entity that creates and offers a token, and is responsible for the underlying asset, the offering documents and its obligations to investors, the people or entities who buy and hold the tokens. On Libertum, issuers complete KYB before they can publish an offering.
- Real-world assets (RWA)
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Assets that exist outside the blockchain, such as real estate, funds, bonds, private credit, commodities or invoices, whose ownership or economic rights are represented by tokens on-chain.
- Security token
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A token that represents a financial instrument, such as a share, a bond or a fund unit, and is therefore generally subject to securities law. A utility token, by contrast, gives access to a product or service. Whether a token is a security depends on the law of each jurisdiction, not on the technology used.
- Smart contract
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A program deployed on a blockchain that runs exactly as written when called, for example to issue tokens, check transfer rules or release escrowed funds. Its code and state are visible on-chain, and it cannot be changed unless it was built to be upgradeable.
- Special purpose vehicle (SPV)
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A separate legal entity created to hold a specific asset or project, so its risks and ownership are ring-fenced from the sponsor. In tokenization, investors often hold tokens representing shares or notes of an SPV that owns the asset, rather than the asset itself.
- White-label platform
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Software run under a client’s own brand and domain rather than the provider’s, so the client presents the service to its users as its own. Libertum offers white-label tokenization, in which issuers and asset managers run T-Suite under their own brand.
Token standards and blockchains
- CIP-113
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A Cardano standard for programmable tokens whose transfers are validated by on-chain rules, for example allowing only verified holders. On Libertum, CIP-113 has been live on Cardano mainnet since 5 October 2026, on the Cardano Foundation’s canonical CIP-113 deployment.
- CIP-20
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A Cardano Improvement Proposal for attaching messages to transactions as metadata. On Libertum, CIP-20 tokens are fungible Cardano native assets labelled with that metadata; they have no transfer restrictions on the ledger, so compliance is enforced off-chain by the platform. Live on Cardano mainnet.
- ERC-20
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The standard interface for fungible tokens on Ethereum and other EVM networks, where every unit is interchangeable. ERC-20 has no built-in holder verification or transfer restrictions. On Libertum, ERC-20 is live on Base and Ethereum mainnet.
- ERC-3643 (T-REX)
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An Ethereum token standard for permissioned assets such as securities, also known as T-REX (Token for Regulated EXchanges), originally developed by Tokeny SA and now an ERC. A transfer succeeds only if the receiver has a verified on-chain identity and every compliance module passes. On Libertum, ERC-3643 is live on Base, Ethereum, Polygon and Arbitrum mainnet.
- ERC-721
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The standard for non-fungible tokens (NFTs) on Ethereum and other EVM networks, where each token has a unique ID and can represent a distinct item, such as a single property or a certificate. On Libertum, ERC-721 is live on Base mainnet.
- EVM (Ethereum Virtual Machine)
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The runtime that executes smart contracts on Ethereum. Networks that are EVM-compatible, including Layer 2 networks such as Base and Arbitrum and networks such as Polygon, can run the same contracts and token standards, such as ERC-20 and ERC-3643.
- Mainnet and testnet
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A mainnet is a blockchain’s production network, where tokens and transactions are real. A testnet is a parallel network with test tokens of no value, used to try out contracts and flows before going live.
- Trust line
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On the XRP Ledger, an explicit link an account opens to an issuer before it can hold that issuer’s issued currency, setting how much it is willing to hold. Issuers can require that they authorise each trust line, so only approved holders can receive the token.
- XLS-33 MPT (Multi-Purpose Token)
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An XRP Ledger token type for fungible assets that is held without a trust line and can carry issuer-set options, such as requiring the issuer to authorise each holder. Libertum supports XLS-33 MPT issuance on the XRP Ledger.
- XRPL issued currency
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A fungible token created by an account on the XRP Ledger and held by other accounts through trust lines. Issuers can require authorised trust lines and enable clawback. Libertum supports XRPL issued currencies, with or without authorised trust lines.
Compliance and identity
- Accredited investor
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In the US, an individual or entity that meets the SEC’s income, net-worth or professional criteria and may therefore take part in certain private offerings, such as those under Regulation D. Other jurisdictions use similar categories, such as professional or qualified investors. On Libertum, an offering can set a separate investment cap for accredited investors.
- AML (anti-money laundering)
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The laws, controls and procedures that financial businesses use to detect and prevent money laundering and terrorist financing, including customer due diligence (KYC and KYB), sanctions screening, transaction monitoring and suspicious-activity reporting.
- Claim (claim topic)
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In ERC-3643, a signed statement about an investor attached to their on-chain identity, such as “KYC approved” or “resident in country X”. Each claim belongs to a claim topic, and a token accepts it only if it was signed by a trusted issuer: a party the token lists as authorised to vouch for that topic.
- Compliance module
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A pluggable rule attached to an ERC-3643 token’s modular compliance contract and checked on every transfer, such as a maximum balance per holder, a hold time or a country allow-list. If any module rejects a transfer, it does not happen. This is how transfer restrictions are enforced in the token itself.
Compliance enforcement (User Manual) →ERC-3643 on Libertum →
- Country allow-list and restrict-list
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Rules that limit who may hold a token by jurisdiction. An allow-list admits only the listed countries; a restrict-list blocks the listed countries. On Libertum, they are checked when an order is placed and, for ERC-3643 tokens, again on-chain against the holder’s country claim.
- Forced transfer
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An ERC-3643 agent function that moves tokens between wallets without the holder’s signature, for legitimate cases such as a court order or an error. The receiver must still be verified and pass every compliance module. A related function, wallet recovery, re-links a holder’s identity to a new wallet and moves their tokens in one step when keys are lost.
- Freeze
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Blocking a wallet, or part of its balance, from transferring tokens. ERC-3643 lets authorised agents freeze a whole address or a specific number of tokens, for example during an investigation, and unfreeze them later.
- Hold time (lock-up)
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A minimum period during which tokens cannot be transferred after they are acquired. Lock-ups can come from the offering’s terms or from securities rules on resale; in ERC-3643, a hold-time compliance module enforces the period on-chain.
- KYB (know your business)
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Due diligence on a company rather than an individual: verifying its registration, directors, ownership structure and ultimate beneficial owners, and screening them against sanctions and other lists.
- KYC (know your customer)
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The process of verifying an individual’s identity, typically with an identity document, a liveness check and proof of address, plus screening against sanctions and politically exposed persons lists. On Libertum, approved KYC lets an investor place orders, but each offering’s whitelist and rules still apply.
- On-chain identity (ONCHAINID)
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In ERC-3643, a smart contract that represents an investor’s identity and holds their claims, such as KYC status and country. The token’s identity registry links each wallet to an identity, so only wallets with valid claims can receive the token.
ERC-3643 on Libertum →Compliance enforcement (User Manual) →
- Whitelist (allow-list)
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A list of wallet addresses approved to hold or receive a particular token, usually after KYC or KYB. Transfers to addresses not on the list are refused. On Libertum, an investor’s wallet is whitelisted per offering.
- XRPL credentials and permissioned domains
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XRPL Credentials let an issuer record on the XRP Ledger that an account has been verified, for example after KYC. A permissioned domain defines which credentials grant access, for instance to trade on the ledger’s DEX. On Libertum, a permissioned domain created at deployment limits secondary trading to credentialed holders.
Issuance and token lifecycle
- Burn
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Permanently removing tokens from circulation, which reduces the token’s total supply. Issuers typically burn tokens when they are redeemed, cancelled or replaced; in permissioned standards such as ERC-3643, only authorised agents can burn.
- Cap table
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Short for capitalisation table: the record of who owns which securities in an entity or offering, and in what amounts. For a tokenized asset, on-chain balances show which wallets hold the tokens, and the issuer or its transfer agent links those wallets to verified investors.
- Mint
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Creating new tokens and assigning them to a wallet, which increases the token’s total supply. In permissioned standards, only authorised agents can mint, typically once an investor’s subscription has been paid and approved.
- Redemption
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Returning tokens to the issuer or fund in exchange for cash or another asset, after which the tokens are usually burned. A redemption window is a set period in which holders may request redemption, often with a capacity limit. On Libertum, some offerings open redemption windows in which investors can ask the issuer to buy back their tokens.
- Security token offering (STO)
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A sale of security tokens to investors, conducted under the securities rules that apply to the offering, such as a prospectus or an exemption from registration. Like any securities offering, it generally involves investor verification, offering documents and restrictions on who may invest.
- Smart contract certificate
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A signed technology certificate that Libertum issues for each offering deployed in T-Suite, based on automatic on-chain checks of the token contract. It is publicly verifiable, distinguishes rules enforced on-chain from controls applied off-chain, and is re-checked nightly. It is not a regulatory approval, an audit or legal advice.
- Token import
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Bringing an existing token into Libertum after proving control of it. Mirror mode is read-only for every supported standard: you see holders and transfer history. Operate mode is available on EVM after the issuer grants roles or hands control to their custodian wallet; Cardano and XRPL imports stay read-only.
- Transfer agent
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A firm that keeps the official register of a security’s holders and records issuances, transfers and cancellations; in the US, transfer agents generally register with the SEC. The transfer journal is the chronological record of those movements. Libertum provides the software and is not a transfer agent.
Funds and valuation
- Dealing and cut-off
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In an open-ended fund, a dealing day is a date on which subscriptions and redemptions are processed at that day’s NAV. The cut-off is the deadline for an order to be included in a dealing day; orders received after it generally move to the next one.
- Distribution (dividend)
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A payment from an issuer or fund to its token holders, such as a dividend, interest or rental income, generally made pro rata to holdings on a record date. With tokenized assets, the list of holders on that date can be taken from the on-chain register.
- Private credit
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Lending to companies or projects by non-bank lenders, such as private debt funds, outside public bond markets. Tokenization can represent a loan, a pool of loans or a credit fund’s shares as tokens, while the credit risk stays with the underlying borrowers.
- Tokenized fund
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A fund whose shares or units are issued and recorded as tokens, such as a tokenized money-market fund investing in short-term debt or a closed-ended fund that draws investors’ commitments through capital calls. In Libertum Funds, the fund administrator remains the NAV calculation agent and the transfer agent.
Markets, custody and payments
- Bonding curve
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A pricing formula in a smart contract that sets a token’s price automatically from its circulating supply, so buyers and sellers trade against the contract rather than against each other. Libertum’s B-DEX is a preview only, with no live trading.
- Custodian wallet (custody)
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A wallet whose private keys are held and secured by a custodian on the user’s behalf, so the user does not manage keys. Libertum’s Custodian Wallet is platform-managed; custody of USDT and USDC in it is provided by Libertum, S.A. de C.V. under its CNAD DASP licence (PSAD-0094).
- Delivery versus payment (DvP)
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A settlement method in which the transfer of an asset and the corresponding payment happen together, or not at all, so neither side is left exposed. On a blockchain, DvP can be atomic: the token and the payment move in the same transaction.
- Escrow
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An arrangement in which funds or assets are held by a neutral party, or locked in a smart contract, until agreed conditions are met, and then released to the right party. In token sales, escrow helps ensure investors’ payments and token deliveries match.
- Gas fee
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The network fee paid to process a transaction on a blockchain such as Ethereum, priced in the network’s native coin and varying with demand. On Libertum, investors paying from their custodian balance are not charged gas; the network fee is billed to the offering’s issuer.
- P2P order book
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A list of buy and sell orders posted by holders and matched directly between them, rather than through an intermediary taking the other side. On Libertum, the P2P secondary market is live on Base mainnet only, and every trade still has to pass the token’s on-chain compliance rules.
- Primary and secondary market
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The primary market is where an issuer first sells newly issued tokens to investors. The secondary market is where existing holders later trade those tokens with each other. Secondary trading of security tokens is generally subject to resale rules and to the token’s transfer restrictions.
- RLUSD
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Ripple USD, a US dollar-denominated stablecoin. On Libertum, investors can pay XRPL offerings in RLUSD. On the XRP Ledger it is an issued currency, so holders need a trust line to its issuer.
- Stablecoin
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A token designed to keep a stable value, usually one unit of a fiat currency, backed by reserves such as cash and short-term government debt. US dollar stablecoins such as USDC, USDT and RLUSD are commonly used to pay for and settle tokenized assets. Under EU law, many stablecoins are e-money tokens under MiCA.
Regulation and licensing
- CNAD
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The Comisión Nacional de Activos Digitales, El Salvador’s National Digital Assets Commission, which supervises digital-asset issuance and service providers under the LEAD. Libertum, S.A. de C.V. holds an El Salvador Digital Asset Service Provider (DASP) licence from the CNAD, registry entry PSAD-0094.
- DASP and VASP
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Digital Asset Service Provider, the term used in El Salvador, and Virtual Asset Service Provider, the term used by the FATF and many jurisdictions: a business that provides services such as custody, exchange or transfer of digital assets for clients. Libertum, S.A. de C.V. holds an El Salvador Digital Asset Service Provider (DASP) licence from the CNAD, registry entry PSAD-0094, covering custody, exchange and transfer of USDT and USDC and receipt and transmission of client orders. It does not cover issuance and applies in El Salvador only.
- LEAD
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The Ley de Emisión de Activos Digitales, El Salvador’s Digital Assets Issuance Law, which governs public offerings of digital assets and the service providers involved, under the supervision of the CNAD.
- MiCA
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The EU’s Markets in Crypto-Assets Regulation, which sets rules for crypto-assets not already covered by EU financial-services law, including e-money tokens and asset-referenced tokens, and for crypto-asset service providers. Tokens that qualify as financial instruments generally fall under MiFID II and related rules, including the DLT Pilot Regime, instead.
- Regulation D (Reg D)
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A set of US SEC rules that exempt certain private offerings from registration under the Securities Act of 1933. Offerings under Rule 506(c) may be advertised but sold only to verified accredited investors; securities bought under Reg D are generally restricted from resale for a period.
- Regulation S (Reg S)
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A US SEC safe harbour under which offers and sales made outside the United States are generally not subject to US registration requirements, provided conditions are met, such as no directed selling efforts in the US and, for some offerings, restrictions on resales to US persons for a period.
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