The fractionation of a reinsurance contract into tradable tokens, making an illiquid asset liquid without changing the nature of the risk.
Tokenization turns a reinsurance contract, a right to a future, contingent cash flow, into an asset fractionable into thousands of tokens, opening the underwriting of risk to capital that had no access to it and creating a secondary market. Its real contribution is financial, it reinvents the financing of insurance, not insurance itself, which remains a craft of selection, assessment and pooling. It abolishes neither the oracle problem, nor basis risk, nor selection, and it introduces a new risk, the procyclicality of capital tradable in real time, liable to flee at the moment of loss. Financing risk differently is not insuring it differently.
A reinsurance token brought to market draws investors seeking a decorrelated yield, but someone must still decide which risk to accept and verify that the event occurred.
jeton, actif tokenisé, token