2024 Q3 – RWAs Watchlist
First up is digital gold, now it’s tokenization and Real-World Assets (RWAs).
BlackRock’s master plan is unfolding before us.
Will RWAs be the next booming sector with the potential launch of an ETF for $ETH in July?
A New Narrative in Cryptocurrency:
While everyone is talking about the $ETH ETF, a bigger trend is quietly emerging: the tokenization of financial assets.
BlackRock CEO Larry Fink believes tokenization will be the “next generation” of the market.
Why Tokenization?
Tokenization leverages blockchain to overcome the limitations of traditional assets, opening up liquidity and investment opportunities for all levels of capital.
Here are the key advantages summarized:
Growth Potential:
How big is the opportunity?
Experts predict that the tokenization market could reach $100 trillion by 2030.
As a comparison, the current market value of $BTC is roughly one-tenth of this figure.
(Credits to @2_1co__)
Are We in the Early Stages?
Yes, we may be in the early stages.
It’s not just about cryptocurrencies; it also involves stocks, bonds, and real estate.
RWAs are still relatively undeveloped, and many catalysts are expected to emerge in 2024/2025.
(Credits to @QwQiao)
Opportunities for RWAs:
Real-World Assets (RWAs) are the hottest area in the tokenization movement.
From January 1st to May 31st, many leading RWA projects have had a higher Sharpe ratio than $BTC.
A higher Sharpe ratio indicates superior “risk-adjusted” returns.
(Credits to @Cointelegraph)
Overview of RWA Industry:
@BinanceResearch identifies two key areas of RWA innovation:
a. RWA Rails – projects that provide regulatory and operational tracks for RWAs.
b. Tokenized Asset Providers – focused on creating and fulfilling the demand for RWAs.
(Credits to @binanceresearch)
RWA Blockchains:
Blockchain is the backbone of the RWA industry.
For example, Mantra and Polymesh are specifically designed for this purpose.
(Credits to @binanceresearch)
Public Markets vs. Private Markets:
Most platforms prioritize public markets, but the real opportunity lies in private markets.
They have 2.5 times more equity and 32 times more RWAs than public markets.
(Credits to @BainandCompany)
Dark Horse RWA Chain:
$DUSK uniquely addresses the challenges of private markets, combining privacy and compliance to ensure secure on-chain transactions for private RWAs.
We previously reported on $DUSK in Crypto, Distilled Pro in June. Check it out.
Government Bonds:
The demand for tokenized government bonds, including fixed-income products and yield-based tokens, is surging.
The market recently surpassed $1.5 billion, compared to just $114 million in January 2023.
(Credits to @binanceresearch)
BlackRock’s Dominance:
Traditional financial giants dominate the on-chain government bond market, and currently, BlackRock leads the market with its $BUIDL fund, with a total locked value (TLV) of nearly $2 billion.
(Credits to @rwa_xyz)
Ondo Finance:
In the cryptocurrency space, $ONDO has performed exceptionally well, with the TVL doubling since the beginning of the year.
Ondo Finance also holds a stake in BlackRock’s tokenized fund, $BUIDL.
It is currently unclear how much of $ONDO’s valuation is driven by governance and speculation.
(Credits to @DefiLlama)
Credit:
Another key direction in the RWA field is decentralized credit projects.
These projects connect on-chain investors with real-world private credit, with leaders including $MPL and $CFG.
(Credits to @binanceresearch)
Maple Finance – Fundamental Improvement:
As of June 13th, $MPL has shown outstanding performance:
108% growth in TVL/MC ratio in 30 days
208% increase in fees in 90 days
196% increase in trading volume in 7 days
5.61% growth in token holders in 30 days
(Credits to @dyorcryptoapp)
Real Estate:
As the largest asset class globally, real estate is being fragmented and tokenized.
However, this sector is still relatively early-stage.
(Credits to @binanceresearch)
Major Risks:
Despite the optimistic outlook for RWAs, the sector still faces several key risks:
Numerous regulatory barriers and bottlenecks.
Weak value accrual to governance tokens.
Government blockchains as competitors.
Lack of standardization and low liquidity.
Security vulnerabilities.
Summary:
Tokenization presents a $100 trillion opportunity.
RWAs may explode after the launch of the Ethereum ETF.
Traditional financial giants are bringing assets onto the blockchain.
Key areas: government bonds, credit, real estate.
Private RWAs are still largely undeveloped.
Regulatory hurdles and weak value accrual are major risks.
Will the RWA track experience a boom after the launch of the Ethereum ETF