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Model comparison

Choosing between asset-backed tokens and fund with variable issuance depends on asset homogeneity, trust requirements, and community preferences. This page compares both models across key dimensions: advantages, disadvantages, trust assumptions, and when to use each approach.

Top-level summary​

Asset-backed token: Simple, transparent supply scaling with item count. Best for equivalent assets. Relies on audits and NAV backstops for price discipline.

Fund with variable issuance: Flexible and value-proportional. Best for mixed assets. Requires higher trust on the issuer for NAV inputs and valuation processes.

Advantages​

Asset-backed token​

  • Simpler mental model: fixed tokens per asset makes supply math transparent and predictable
  • Easier comparability: collections of similar assets can be compared directly (same tokens per asset = same economic structure)
  • Lower valuation subjectivity: each asset contributes equally, reducing per-item valuation complexity
  • Transparent scaling: supply grows discretely with acquisitions—easy to verify and audit

Fund with variable issuance​

  • Naturally adapts to heterogeneity: portfolios can include assets with varying valuations without forcing equivalence
  • Aligns minting with value: tokens minted reflect contributed value, not item count
  • Flexible growth: portfolios can evolve organically with acquisitions without supply constraints
  • Issuer expertise exposure: participants gain exposure to portfolio management and curation capabilities

Disadvantages​

Asset-backed token​

  • Requires equivalence: less suited for diverse or unique items where valuation varies significantly
  • Discrete supply steps: supply grows in fixed increments, which may not align with value contributed
  • Limited flexibility: cannot easily accommodate portfolios with varying asset values

Fund with variable issuance​

  • Higher trust on the issuer: depends on integrity of NAV inputs, valuation processes, and governance decisions
  • Complexity in communication: supply changes require explaining NAV calculations and valuation methods
  • Centralized truth dependency: relies on trusted sources for NAV inputs, creating a single point of trust

When to use which​

Prefer asset-backed tokens when:​

  • Narrow reference classes: equivalent or near-equivalent assets (e.g., investment-grade FP Journe watches)
  • Simplicity priority: communities that value transparent supply math and easy comparability
  • Mark-to-Truth viability: markets where mark-to-truth auctions can establish fair value when prices deviate
  • Lower trust requirements: scenarios where minimizing trust assumptions is important

Prefer variable issuance when:​

  • Heterogeneous portfolios: mixed assets with varying valuations (e.g., diverse watch collections, loan pools)
  • Dynamic growth: portfolios with frequent acquisitions/dispositions where fixed-per-asset issuance would be impractical
  • Value-proportional minting: scenarios where minting should reflect contributed value, not item count
  • Flexibility priority: communities that prioritize portfolio flexibility over supply simplicity, and are comfortable with higher trust on the issuer

Trust assumptions​

Both models require:​

  • Authentication/audit correctness: assets must be genuine and properly verified
  • Custody guarantees: secure storage and custody of underlying assets
  • Transparent processes: clear documentation of acquisitions, pricing, and governance

Variable issuance additionally requires:​

  • Acquisition pricing trust: trust that the issuer acquires assets at correct prices (not inflated)
  • NAV input integrity: valuations provided must be honest and transparent
  • Portfolio management trust: confidence in issuer's ability to grow fund value over time

The key difference: asset-backed tokens minimize trust requirements by using fixed issuance per asset (simple, verifiable supply math), while variable issuance requires trust that the issuer acquires assets at correct prices to enable portfolio flexibility. Both models still rely on mark-to-truth auctions to handle market mispricing.

Note: Some deeper minting mechanics and formulas also live under the Minting section; see that page for additional details and formal definitions.