Crypto, Distilled
Translated by TechFlow
Q3 2024 – RWAs Watchlist
The spotlight is now on tokenization and Real World Assets (RWAs), following the rise of digital gold.
BlackRock’s overarching strategy unfolds before us.
With the potential launch of an ETF for $ETH in July, could RWAs be the next explosive frontier?
A New Narrative in Crypto:
While everyone debates the $ETH ETF, a larger trend quietly emerges: the tokenization of financial assets.
BlackRock’s CEO Larry Fink believes tokenization will be “the next generation of the market.”
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Why Tokenization?
Tokenization leverages blockchain to overcome traditional asset limitations, opening liquidity and investment opportunities at all capital levels.
Here’s an overview of key advantages:
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Growth Potential:
How big are the opportunities?
Experts forecast the tokenization market could reach $100 trillion by 2030.
For comparison, the current market cap of $BTC is approximately one-tenth of this value.
(Credits: @21co__)
Are We Early Stage?
Yes, we could be in the early stages.
It’s not just about cryptocurrencies; it also involves stocks, bonds, and real estate.
RWAs are still relatively underdeveloped, with many catalysts expected by 2024/2025.
(Credits: @QwQiao)
Opportunities in RWAs:
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Real World Assets (RWAs) are the hottest segment in the tokenization movement.
From January 1 to May 31, many leading RWA projects have had Sharpe ratios superior to $BTC.
A higher Sharpe ratio indicates superior “risk-adjusted” returns.
(Credits: @Cointelegraph)
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Overview of RWA Industry:
@BinanceResearch
identifies two key areas of RWA innovation:
a. RWA Rails – projects providing regulatory and operational tracks for RWAs.
b. Tokenization Asset Providers – focused on creating and meeting RWA demands.
(Credits: @binanceresearch)
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RWA Blockchain:
Blockchain is the backbone of the RWA industry.
Examples like Mantra and Polymesh are specifically designed for this purpose.
(Credits: @binanceresearch)
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Public Markets vs. Private Markets:
While most platforms prioritize public markets, the real opportunities lie in private markets.
They hold over 2.5 times the equity and 32 times the RWAs compared to public markets.
(Credits: @BainandCompany)
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Dark Horse RWA Chains:
$DUSK
uniquely addresses the issues of the private market, integrating privacy and compliance to ensure secure on-chain transactions for private RWAs.
We covered $DUSK in June’s Crypto, Distilled Pro.
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Government Bonds:
The demand for tokenized government bonds, including fixed-income products and yield-bearing tokens, has surged.
The market recently broke $1.5 billion, up from just $114 million in January 2023.
(Credits: @binanceresearch)
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BlackRock’s Dominance:
Traditional financial giants dominate the on-chain government bond market.
Currently, BlackRock leads the market with its $BUIDL fund, boasting nearly $2 billion in total value locked (TVL).
(Credits: @rwa_xyz)
Ondo Finance:
In the cryptocurrency realm,
$ONDO
has shown remarkable performance, with TVL doubling since the beginning of the year.
Ondo Finance also holds a stake in BlackRock’s tokenized fund $BUIDL.
It remains unclear how much of $ONDO’s valuation is driven by governance versus speculation.
(Credits: @DefiLlama)
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Credit:
Another key direction in the RWA field is decentralized credit projects.
These projects connect on-chain investors with private credit in the real world, with leaders including
$MPL
and
$CFG
.
(Credits: @binanceresearch)
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Maple Finance – Fundamental Upgrades:
As of June 13th,
$MPL
has shown impressive performance:
TVL/MC ratio increased by 108% in 30 days.
Fees increased by 208% in 90 days.
Trading volume increased by 196% in 7 days.
Token holders increased by 5.61% in 30 days.
(Credits: @dyorcryptoapp)
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Real Estate:
As the world’s largest asset class, real estate is being segmented and tokenized.
However, this field is still quite early.
(Credits: @binanceresearch)
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Major Risks:
Despite optimism about 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.
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Summary:
Tokenization represents a $100 trillion opportunity.
RWAs could explode post-Ethereum ETF launch.
Traditional financial giants are moving assets onto the chain.
Key directions: government bonds, credit, real estate.
Private RWAs remain largely undeveloped.
Regulatory and poor value accrual are major risks.
