Most current tokenisation work replaces markers of ownership with tokens and then encodes the rules of each asset class into smart contracts. This delivers real benefits, but it carries the structure of the existing ecosystem onto a new technology. Operations, regulation and technology stay specific to each asset class and product type, so complexity keeps growing.

The composable alternative starts from a simple observation: every financial product has two atomic components, current value (what you own today) and future value (what you expect to give or receive later). A fully digital ecosystem therefore needs only two token types:

• Title tokens, which represent existing ownership.
• Entitlement tokens, which represent rights to receive, and obligations to deliver, future value.

From these two components, clusters of tokens represent any asset, product or derivative. A swap is the clearest test of the model. It is not a distinct token type but a pair of back-to-back entitlement flows, and it runs on the same platform as a bond, an equity or a loan.

This paper sets out each building block in detail: its definition, structure, behavior, composition rules, governance needs and technical attributes. It then covers risks, opens questions and a path to implementation.

Why composability

1.1 The AS IS vs. TO BE

Today’s financial ecosystem is built along asset-specific and product-specific lines. Ownership markers, applicable laws, transaction processes, valuation and risk methods, operating models, technology platforms, regulated entities and roles all tend to be peculiar to an asset class. Each new product adds new processes, technology, analytics, regulation and often new entities. Introducing a new asset class typically takes three to five years before analytics, operations, platforms, regulation and roles settle down. CDS and ETFs are the standard examples.

The consequences are higher cost, higher risk and slower innovation. They also limit individualization: bespoke solutions below a high value threshold are impractical and unprofitable, so most clients receive commoditized products.