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Overview

Collections are the core unit of tokenization on Rarity—the mechanism through which rare, illiquid, and difficult-to-price real-world assets become tradable, composable, and yield-bearing on-chain. An issuer acquires tangible or financial assets (luxury watches, collectibles, tokenized treasuries, or loan portfolios), authenticates them, and mints the corresponding on-chain tokens that represent economic exposure to those assets.

The collection defines the mapping between assets and tokens—how supply scales, how pricing works, and what trust assumptions apply. This mapping is critical because it determines how the tokenized assets interact with DeFi primitives: AMMs, lending markets, yield optimizers, and futures contracts. The right collection model ensures prices reflect real asset value while maintaining 24/7 tradability and composability with the broader DeFi ecosystem.

Why collections matter​

Collections bridge the gap between off-chain value and on-chain liquidity. They transform physical or financial assets into liquid on-chain representations that preserve authenticity, auditability, and compliance while enabling:

  • Fractional ownership: participants can acquire exposure to rare assets without full purchase
  • 24/7 trading: continuous price discovery via CL AMM, not periodic auctions or OTC markets
  • DeFi composability: tokens interact seamlessly with lending, futures, and yield optimization protocols
  • Yield generation: the same tokens can earn yield through lending, staking, or other DeFi mechanisms
  • Price convergence to objective value: collection model properties ensure market dynamics move prices towards objective value through transparent supply math and mark-to-truth auctions

The collection model chosen determines how these benefits manifest—whether supply scales transparently with item count or proportionally with contributed value, and what pricing mechanisms ensure alignment with fundamentals.

Two issuance models​

Rarity supports two issuance models, each optimized for different asset classes, portfolio structures, and trust requirements:

Asset-backed token​

Designed for equivalent assets where each asset maps to a fixed number of tokens. This model works best when items are economically interchangeable within a narrow reference class—think investment-grade FP Journe watches, standardized collectibles, or tokenized treasuries with identical terms.

Key properties​

  • Fixed tokens per asset: transparent, predictable supply scaling
  • Total supply formula: S=N×TS = N \times T (where NN = number of assets, TT = tokens per asset)
  • Price discipline: spot price via CL AMM, with mark-to-truth auctions to realign mispricings

When it fits​

  • Narrow reference classes (e.g., "investment-grade FP Journe CB")
  • Markets where mark-to-truth auctions can establish objective pricing when market prices deviate
  • Communities that value transparent supply math and comparability

This model minimizes trust requirements by reducing valuation complexity—each asset contributes equally, and supply math is straightforward. See the Asset-backed token page for detailed mechanics, examples, and trust assumptions.

Fund with variable issuance​

Designed for heterogeneous assets where each acquisition may mint a different number of tokens proportional to acquisition NAV. This produces fund-like behavior—minting aligns with contributed value, not item count.

Key distinction: In this model, users are investing in the issuer's ability to grow the fund and manage the portfolio, not just the underlying assets themselves. Unlike asset-backed tokens where participants acquire exposure to specific commodities, here participants acquire exposure to the issuer's curation and portfolio management—the fund's ability to acquire assets at favorable prices and grow NAV over time.

Key properties​

  • NAV-based minting: tokens minted = Acquisition NAVTarget Token Price\frac{\text{Acquisition NAV}}{\text{Target Token Price}}
  • Dynamic supply: grows with acquisitions (redemptions would require governance approval and are not automatic)
  • Issuer-dependent: requires trust that the issuer acquires assets at correct prices; NAV calculations can be done on-chain with provided values

When it fits​

  • Mixed assets with varying valuations (e.g., diverse watch portfolios, loan pools)
  • Dynamic portfolios with frequent acquisitions/dispositions
  • Scenarios where proportional minting is preferable to fixed-per-asset issuance
  • When participants want exposure to issuer expertise and portfolio growth potential

This model requires trust that the issuer acquires assets at correct prices—the primary trust assumption is around acquisition pricing and portfolio management decisions. NAV calculations themselves can be verified on-chain using the values provided by the issuer. This tradeoff enables flexibility that asset-backed tokens cannot provide for heterogeneous portfolios. See the Fund with variable issuance page for detailed mechanics, examples, and trust assumptions.

Choosing a model​

The choice between asset-backed tokens and variable issuance depends on asset homogeneity, trust requirements, and community preferences. Both models enable tradability, composability, and yield-bearing—the difference is in how supply scales and what trust assumptions apply.

  • Asset-backed tokens: simpler math, lower trust requirements, ideal for equivalent assets
  • Fund with variable issuance: flexible growth, value-proportional minting, ideal for heterogeneous portfolios. Users invest in the issuer's ability to grow the fund, requiring trust that the issuer acquires assets at correct prices

See the Model comparison page for a detailed analysis of advantages, disadvantages, and when to use each approach.

Implementation roadmap​

Initial release: Asset-backed tokens​

The protocol's initial implementation focuses exclusively on the asset-backed token model. This choice is deliberate:

Why asset-backed tokens first:

  • Simplicity: Fixed issuance per asset creates transparent, predictable supply math
  • Lower trust requirements: Minimizes reliance on issuer valuations and ongoing NAV calculations
  • Easier verification: Anyone can count assets and verify supply math on-chain
  • Clearer pricing: Mark-to-Truth auctions work more directly with fixed-per-asset issuance
  • Faster time to market: Simpler mechanics enable faster development and auditing

The asset-backed model provides a solid foundation for the protocol while minimizing complexity and trust assumptions. This enables the team to focus on core infrastructure—spot trading, minting mechanisms, mark-to-truth auctions, and lending—without the additional complexity of NAV-based minting.

Future expansion: Fund with variable issuance​

Once the asset-backed model is proven in production and the core infrastructure is battle-tested, the protocol will expand to support the fund with variable issuance model. This expansion enables:

  • Heterogeneous collections: Diverse asset portfolios with varying valuations
  • Dynamic growth: Collections that evolve with frequent acquisitions and dispositions
  • Issuer expertise exposure: Participants can invest in portfolio management capabilities
  • Broader asset classes: Support for loan portfolios, mixed treasuries, and other heterogeneous assets

The phased approach ensures that complexity is added incrementally as the protocol matures, rather than attempting to support all use cases from day one.

Rationale​

Starting with asset-backed tokens allows the protocol to:

  1. Establish market confidence through transparent, verifiable mechanics
  2. Build liquidity in simpler, more predictable markets
  3. Test core infrastructure (AMM, minting, auctions) with minimal complexity
  4. Gather community feedback on what additional features are most valuable
  5. Iterate on mechanisms (hold periods, release curves, open interest) in a controlled environment

Once these foundations are solid, expanding to variable issuance becomes a natural evolution rather than a risky leap.