Big things are coming—can RWA be the next wealth code?
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Big things are coming—can RWA be the next wealth code?
After the launch of Ethereum ETFs, RWA could explode.
Navigating Web3 tides with focused insightsAuthor: Crypto, Distilled
Translation: TechFlow
Q3 2024 - RWA Watchlist
First digital gold, now tokenization and real-world assets (RWAs).
BlackRock's master plan is unfolding right before our eyes.
With a potential $ETH ETF launch in July, could RWAs be the next breakout sector?
A New Narrative in Crypto:
While everyone is focused on the $ETH ETF, a larger trend is quietly emerging: tokenization of financial assets.
BlackRock CEO Larry Fink believes tokenization will be "the next generation of markets."
Why Tokenization?
Tokenization leverages blockchain to overcome limitations of traditional assets, unlocking liquidity and investment opportunities for all capital levels.
Here’s an overview of key advantages:
Growth Potential:
How big is the opportunity?
Experts predict the tokenized market could reach $10 trillion by 2030.
For comparison, the current market cap of $BTC is about one-tenth of that figure.
(Credit @21co__)
Are we in the early stages?
Yes, we are likely still in the early stages.
This isn’t just about crypto; it includes stocks, bonds, and real estate.
RWAs remain relatively untapped, with many catalysts expected in 2024/2025.
(Credit @QwQiao )
Opportunities in RWAs:
Real-world assets (RWAs) are the hottest area within the tokenization movement.
From January 1 to May 31, many leading RWA projects outperformed $BTC in Sharpe ratio.
Higher Sharpe ratios indicate superior risk-adjusted returns.
(Credit @Cointelegraph)
RWA Industry Overview:
@BinanceResearch has identified two key areas of innovation in RWAs:
a. RWA Rails – Projects providing regulated and operational infrastructure for RWAs.
b. Tokenized Asset Providers – Focused on creating and fulfilling demand for RWAs.
(Credit @binanceresearch)
RWA Blockchains:
Blockchains are the backbone of the RWA industry.
Examples like Mantra and Polymesh are purpose-built for this function.
(Credit @binanceresearch)
Public vs. Private Markets:
Most platforms prioritize public markets, but the real opportunity lies in private markets.
Private markets hold 2.5 times more equity and 32 times more RWAs than public markets.
(Credit @BainandCompany)
Dark Horse RWA Chains:
$DUSK uniquely addresses challenges in private markets by combining privacy and compliance to ensure secure on-chain transactions for private RWAs.
We covered $DUSK in June's Crypto, Distilled Pro here. Check it out.
Treasuries:
Demand for tokenized treasuries, including fixed-income products and yield-bearing tokens, is surging.
The market recently surpassed $1.5 billion, up from just $114 million in January 2023.
(Credit @binanceresearch )
BlackRock's Dominance:
Traditional finance giants dominate the on-chain treasury market. Currently, BlackRock leads with its $BUIDL fund, boasting nearly $2 billion in total value locked (TVL).
(Credit @rwa_xyz)
Ondo Finance:
In the crypto space, $ONDO stands out, with TVL more than tripling year-to-date.
Ondo Finance also holds shares in BlackRock’s tokenized fund $BUIDL.
It remains unclear how much of $ONDO's valuation is driven by governance versus speculation.
(Credit @DefiLlama)
Credit:
Another key direction in the RWA space is decentralized credit projects.
These projects connect on-chain investors with real-world private credit, led by $MPL and $CFG.
(Credit @binanceresearch )
Maple Finance – Fundamental Improvements:
As of June 13, $MPL stood out with:
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108% increase in TVL/MC ratio over 30 days
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208% growth in fees over 90 days
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196% surge in trading volume over 7 days
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5.61% increase in token holders over 30 days
(Credit @dyorcryptoapp)
Real Estate:
As the world’s largest asset class, real estate is being fractionalized and tokenized.
However, this sector remains quite early-stage.
(Credit @binanceresearch)
Key Risks:
Despite optimism around RWAs, the sector faces several critical risks:
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Numerous regulatory hurdles and bottlenecks.
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Weak value accrual to governance tokens.
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Government blockchains as competitors.
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Lack of standardization and low liquidity.
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Security vulnerabilities.
Summary:
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Tokenization represents a $10 trillion opportunity.
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After the Ethereum ETF launch, RWAs may explode.
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Traditional finance giants are bringing assets on-chain.
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Key directions: Treasuries, credit, real estate.
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Private RWAs remain largely untapped.
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Regulation and weak value accrual are major risks.
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