RWA stands at the intersection between the real world and the blockchain, issuers and investors. The key to its success lies in its ability to act as an effective intermediary at this crossroads. While it will inevitably rely on third parties such as oracles, custodians, and credit rating agencies, how it effectively utilizes and manages these third parties remains crucial to its ongoing operations.
In 2021 and 2022, the emergence of private credit markets through platforms like Maple, Goldfinch, and Clearpool allowed large institutions to borrow funds based on their creditworthiness. However, these protocols suffered severe defaults due to the collapse of Luna, Three Arrows Capital, and FTX. As DeFi yields plummeted in 2023 and users flocked to rising US Treasury rates, the tokenized government bond market experienced explosive growth. With the total locked value of tokenized government bonds soaring from $114 million in January 2023 to $845 million by the end of the year, providers like Ondo Finance, Franklin Templeton, and OpenEden saw significant inflows of funds.
The 2024 RWA development report highlights four key points:
1. Most RWAs are stablecoins pegged to the US dollar
The top three US dollar stablecoins occupy 95% of the market, with USDT at $96.1 billion, USDC at $26.8 billion, and DAI at $4.9 billion. USDT continues to dominate with a market share of 71.4%. Meanwhile, USDC’s market share plummeted significantly after briefly decoupling during the US banking crisis in March 2023 and has yet to recover.
Stable assets other than those pegged to the US dollar account for only 1% of the market. These assets include other fiat currencies such as Euro Tether (EURT), CNH Tether (CNHT), Mexican Peso Tether (MXNT), EURC (EURC), Stasis Euro (EURS), and BiLira (TRYB).
The market value of stable assets skyrocketed from $5.2 billion in early 2020 to a peak of $150.1 billion in March 2022, before gradually declining throughout the bear market. However, by 2024, its market value is expected to grow by 4.9%, from $128.2 billion at the beginning of the year to $134.6 billion as of February 1st.
2. Commodity-backed tokens have a market value of $1.01 billion, with gold remaining the most popular commodity
Commodity-backed tokens like Tether Gold (XAUT) and PAX Gold (PAXG) account for 83% of the market value of commodity-backed tokens. These tokens are backed by one ounce of physical gold, while Kinesis Gold (KAU) and VeraOne (VRO) are backed by one gram of gold.
While commodity-backed tokens dominate, tokens backed by other commodities have also been introduced. For example, the Uranium 308 project has launched tokenized uranium, which is pegged to the price of 1 pound of U3O8 uranium compound. It can even be redeemed, but only after strict compliance protocols.
Although commodity-backed tokens have a market value of $1.1 billion, they only account for 0.8% of the market value of fiat-backed stablecoins.
3. Tokenized US Treasury products grew by 641% in 2023 and are currently valued at over $861 million
Tokenized US government bonds gained popularity during the bear market, with their market value increasing from $114 million in 2023 to $845 million, a growth of 641%. However, this momentum has stagnated since 2024, with a growth of only 1.9% in January, reaching a market value of $861 million.
Franklin Templeton is currently the largest issuer of tokenized US government bonds, with its on-chain US government currency fund issuing $332 million worth of tokens. This gives it a slightly higher market share of 38.6%.
Income-generating stablecoin issuers like Mountain Protocol and Ondo Finance are also popular. Since its establishment in September 2023, Mountain Protocol has minted $154 million worth of USDM tokens, while Ondo’s income-generating stablecoin USDY has a market value of $132.4 million.
Most tokenized vaults are based on Ethereum, accounting for 57.5% of the market share. However, companies like Franklin Templeton and Wisdomtree Prime have chosen to issue on Stellar, currently holding a dominant position of 39% on Stellar.
4. The demand for private credit is mainly concentrated in the automotive industry, accounting for 42% of all loans
Out of the $470.3 million in outstanding loans issued through private credit agreements, 42% ($196 million) was used for automotive loans. Meanwhile, the financial technology and real estate industries accounted for only 19% and 9% of the debt, respectively.
In 2023, automotive loans saw a significant increase, with 60 loans totaling over $168 million.
A total of 840 loans were received in the real estate and cryptocurrency trading sectors, but currently only 10% of the loans are active. The rest have been repaid, with some defaults. It is worth noting that there were 13 loan defaults in the cryptocurrency trading sector after the collapse of Terra and Three Arrows Capital.
Statistical borrower data shows that most companies come from emerging markets such as Africa, Southeast Asia, Central America, and South America. 42 loans (40.8% of all loans) come from Africa.