Author: AYLO&FLOW
##Compiled by Deep Wave TechFlow
We are at an important moment in the history of cryptocurrency.
Over the past few weeks, we have witnessed a 180-degree shift in U.S. attitudes toward cryptocurrencies. Unexpectedly, all eight EthereumETF received SEC approval. Additionally, the U.S. House of Representatives not only passed the Cryptocurrency FIT21 Act, but also passed legislation preventing the creation of central bank digital currencies. But it’s even more striking to see cryptocurrencies even starting to become an important issue in the upcoming US presidential election. So if you are a large financial institution, the message is clear: Cryptocurrency is not going away
, and you better get familiar with it and start exploring its different use cases to avoid being Leave behind.From this perspective, it seems obvious to think that the field of tokenization of real-world assets has huge potential for growth.
But what exactly is this trend, why is it causing such a craze, and how can you make the most of it? That’s what we’ll explore in this article.
The case for tokenization of real-world assets
In recent years, the Real World Assets (RWA) sector has emerged as one of the most promising use cases for blockchain technology, by putting real-world assets on the blockchain. The case for RWA is simple: build a bridge between the stability and value proposition of real-world assets and the innovative capabilities and potential efficiencies of blockchain technology and decentralized finance (DeFi).
In fact, many people regard this field as a new hot spot in the financial industry. Recently, we have even seen the biggest names in finance, such as BlackRock and Franklin Templeton, show serious interest in this space and launch their own tokenized funds.
## (Source:
Bloomberg) Theoretically, any real-world asset that is easy to trade can be tokenized and put on the chain. This includes tangible and intangible assets, as well as fungible or non-fungible assets. Below is a non-exhaustive list of some of these assets.
If there were no obvious advantages in putting assets on the chain, RWA would not gain so much attention. The table below explains the main advantages of tokenization.
The core theory of DeFi is that blockchain can create a better standard for seamless exchange of different assets. In this sense, RWA is simply about recognizing the value proposition of DeFi and extending it to every tradable asset to build the next generation of markets – one that is more transparent, secure, fair and open.
We are entering the tokenization era of the market. Gradually, all assets will be put on the chain, challenging the status quo of global capital markets over the past 30 years. Especially when we consider that the trend of RWA is at the intersection of two trends shaping the world today: financialization and digitization.
Financialization: Today, finance knows no borders and economies are becoming increasingly borderless, with individuals transferring ownership of assets to each other across the globe. Everything has a market, everything has a price, everything becomes tradable. Therefore, it becomes increasingly meaningful to establish a more efficient, transparent, fair and open market mechanism.
DIGITALIZATION: The world is becoming increasingly digital. We have connected phones, watches, and soon connected brains. In this sense, moving proof of asset ownership onto blockchain networks seems like a logical progression.
In this sense, RWA is fully capable of seizing these two trends.
There is no doubt that real-world assets on-chain offer very interesting features . But it also brings many challenges. The main challenges revolve around:
Regulation: Currently, there is no clear answer as to where to build a market for tokenized assets without encountering to a complex regulatory environment. However, this may change as perceptions of cryptocurrencies continue to evolve.
Liquidity: Providing the right market structure for real-world assets to enable liquidity and market making can be a challenge, especially for trading 24/7 highly illiquid markets.
Education: It will take a long time for everyone to understand the true value proposition of putting real-world assets on the blockchain, as blockchain technology and its trade-offs are It may be difficult to understand at first.
Fiat currency Supported stablecoins are the first killer use case for tokenization of real-world assets. This market has grown significantly in recent years. Today, the two largest fiat-backed stablecoins (Circle’s USDC and Tether’s USDT) have a combined market capitalization of over $130 billion, up from around $5 billion at the beginning of 2020.
Tokenization of precious metals has also become another popular application of RWA. Some examples include Tether Gold (XAUT) or PAX Gold (PAXG), which are tokens backed by physical gold. Although this is a relatively new market, it is growing rapidly, with XAUT and PAXG having a combined market capitalization of approximately $840 million.
#RWA’s latest big trend is the tokenization of U.S. Treasury bonds. We note that the market capitalization of this segment has grown rapidly, exceeding $1.3 billion, according to 21co data. But what’s more interesting is that traditional financial institutions are entering this market. For example, Franklin Templeton’s BENJI token has accumulated approximately $370 million in deposits, while BlackRock’s BUIDL token has garnered over $380 million in deposits.
This tokenization trend has just begun and is expected to continue to grow rapidly. According to predictions from the Boston Consulting Group, the global tokenization market for financial assets is estimated to reach $16 trillion by 2030, and may finally become the bridge we have been waiting for to connect traditional finance and DeFi, building the next generation market.
Looking to the future, we can envision a world where not just purely financial assets, but almost all assets that are easily monetized, from luxury watches to art From real estate to real estate, the future will be tokenized on the blockchain. This is the future of finance.
After reading this, I’m sure you must be asking yourself now: “Okay, I get it, but my investment How are combos taking advantage of this new trend? “Don’t worry, I’ve got a RWA watch list for you (+ a BONUS).
But before we dive in, a word of warning. There is currently significant speculation in the cryptocurrency market, so great caution must be exercised. So what follows is not a prediction, just some thoughts. And as data becomes more available and time passes, ideas can change significantly.
This is not an exhaustive list, just a few projects that I have researched in depth and that I think are worthy of attention. There are many other items in this category and I'm obviously missing a lot.
Are you ready? Now let’s explore some projects you might want to add to your watchlist:
In a nutshell: Chainlink recently updated their description of the network, calling it a “universal platform for creating the future of global markets on-chain.” By building a bridge between real-world data and blockchain, Chainlink is the key to tokenizing real-world assets.
This tweet I wrote before is still very relevant today. Chainlink is actively working with Swift, The DTCC, and some of the largest banks in the world. These are not hyped partnerships. Very real pilots and case studies have been conducted to prove the feasibility of the technology, and it is only a matter of time before we see full settlement of RWA on-chain.
(Tweet details here)
Long term, I’m very Be optimistic about Chainlink.
In short: Ondo is building the next generation of financial infrastructure to increase market efficiency, transparency and accessibility. It allows retail and accredited investors to access the bond market on-chain through products such as USDY (tokenized notes backed by U.S. Treasury securities) and OUSG (short-term U.S. Treasury securities).
About ONDO, you need to know the following:
(Tweet details See)
# ONDO is one of the best performing new coins in 2024. I think this project is very interesting and there's been a lot of momentum lately. But it might be a little overhyped and overrated right now. Still, it's definitely worth adding to your RWA watchlist.
In a nutshell: Pendle is a decentralized finance protocol that allows users to tokenize and sell future earnings. It is an innovative tokenized model solution that provides users with flexible and dynamic revenue management options.
This is also a great deal to earn points.
In short: TrueFi is a modular chain On the credit infrastructure, connecting lenders, borrowers and portfolio managers through smart contracts, governed by $TRU.
In short: Mantra is a security-first RWA Level 1 blockchain designed to comply with real-world regulatory requirements.
Learn more about the project with this tweet:
In a Nutshell: Similar to Mantra, Polymesh is an institutional-grade permissioned blockchain purpose-built for regulated assets.
If you want to learn more about why this project is important, you can check out this tweet:
In a nutshell: Centrifuge provides the infrastructure and ecosystem to tokenize, manage and invest in a A complete, diversified portfolio of real-world assets. The asset pool is fully mortgaged and investors have legal recourse. The agreement has no restrictions on asset classes. The asset pool includes structured credit, real estate, U.S. Treasury bonds, carbon credits, consumer finance, etc.
In short: Dusk is a permissionless, ZK-friendly first-level block Chain protocol, focusing on the tokenization of real-world assets.
You can learn more about Dusk here:
In a nutshell: Clearpool is a decentralized financial ecosystem dedicated to creating the first permissionless institutional liquidity market.
In short: This is a market for real-world assets. It brings together tokenized treasury bills, credit, stocks, real estate, commodities as well as collectibles, art, intellectual property, creator royalties, luxury goods and more from all chains into one platform.
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