The Future of Real World Assets (RWA) in Web3

gmeow gmeow gmeow! it’s been a while since Intern wrote a piece of musings but here goes. this time, Intern is looking into the real world assets (RWA) sector or ecosystem in web3.?

did a really nice visual compilation for your enjoyment here:

RWA cooking

real world assets is a sector that’s been cooking for a while now, such as stablecoins, but it’s only getting hotter! aside from stables, DeFiLlama shows the trend of RWA total value locked (TVL) growth:

?? 1 July 2022: $155.79M

?? 1 July 2023: $2.324B

?? 1 July 2024: $3.778B

that’s an estimated 2326% 2-year growth! for context, DeFi TVL grew 88% from 1 July 2022 to 1 July 2024, so it does seem like RWA outperformed the general DeFi market.?

as seen in Intern’s RWA ecosystem table, the sector covers a wide range of asset types. one that has gained much attention especially during the crypto bear market is tokenised US Treasuries. just in 2023 alone, the market cap of tokenised US Treasuries grew from $104M to $917M — that’s close to 800$ growth.

our team also mentioned RWAs in our article, check it out here!?

the potential of the RWA sector

apart from tokenised government bonds, the rising interest rates and bear market made yield from other traditional instruments like private credit and real estate more attractive too. think: higher yield for lower risk.

this has been quoted plenty — GFMA and Boston Consulting Group estimated that tokenisation of global illiquid assets could grow to $16 trillion by 2030. to put things into context, it’s currently worth around $0.3 trillion. 2030 is more than half a decade away, but it’s hard to ignore the positive movements in the sector.

institutional interest in RWA

there’s been ever increasing institutional interest towards digital assets and tokenising bonds, becoming the entry point for several TradFi institutions such as Franklin Templeton’s $FOBXX, BlackRock’s $BUIDL, and WisdomTree’s $WTGXX, just to name a few. after BlackRock’s $BUIDL went live in March this year, it quickly overtook Franklin Templeton’s $FOBXX with the larget market cap among all tokenised US Treasury products.

bringing in institutional capital could be monumental to crypto as a whole, but lack of infrastructure and security has prevented TradFi entities from dipping their toes in the space. there’s been steps taken to work on this:

JPMorgan

in October 2023, JPMorgan debuted an in-house on-chain tokenisation application, called the Tokenized Collateral Network (TCN), allowing investors to transfer collateral ownership without moving assets in underlying ledgers, streamlining the process of traditional settlements on-chain. JPMorgan Onyx also brands itself as a leader in institutional DeFi and the US banking giant has been actively experimenting and launching crypto-centred services through this arm. back in November 2022, DBS was the first Asian bank to perform an intraday repo transaction via Onyx’s Digital assets platform.

Hong Kong Monetary Authority (HKMA)

in May 2024, the Hong Kong Monetary Authority (HKMA) announced a special community of industry representatives and regulators to develop tokenisation standards in Hong Kong, called “Project Ensemble Architeccture Community”.?

Deutsche Bank

also in May, Deutsche Bank joined Project Guardian, a project started by the Monetary Authority of Singapore (MAS) that focuses on tokenisation of assets in funding markets and DeFi apps. this project already involves many established TradFi institutions and regulatory groups.?

Goldman Sachs

in July 2024, Goldman Sachs announced the launch of three new tokenisation products coming up this year. this would likely include a RWA marketplace catered to institutions in the US and Europe, relying on permissioned blockchains.?

Chainlink

in the same month, Chainlink launched its Digital Assets Sandbox (DAS), aimed to provide a safe environment for institutions to experiment and innovate with tokenisation and digital assets, powered by the Cross-Chain Interoperability Protocol (CCIP).

what about RWA tokens and projects? read our full article here!

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