Future Trends in Real-world Assets Tokenization
Wiktorija Dmitrijewa
Empowering Art & Blockchain | Founder of NFA.space | Bridging Real-World Assets (RWAs) with Digital Innovation
On April 30, 2024, Coindesk reported $9.5 million raised by a token asset issuer and supervised by Gnosis. Top players like Exor Seeds, Cyber Fund, Mindset Ventures, and others participated in this fundraising. These companies aim to improve private token offerings and onboard new players to manage real-world assets. But here's the big question:
What is so special about Real-world Assets? Why is it crucial to stay ahead of the real-world asset market?
Think of Real-world Assets (RWAs) as a class of crypto tokens that exist in both digital and physical forms. This digital asset example represents tangible assets that operate across the digital space. In this article, you will learn of the top future trends to anticipate in real-world assets.?
Preview
First, let us learn the concept of tokenization in RWAs.
Tokenization of Assets
It's simple! Convert a physical asset to a token!
Tokenization involves employing smart contracts and blockchain technology to represent rights to an asset as a digital token. This concept explains how RWAs work. What does this mean?
Imagine you own a framed artwork that you wish to sell. You dislike the protocols for trading artworks through galleries and auction houses, so you try something new. The blockchain approach!
Asset Tokenization allows you to represent ownership of an asset or liability as a digital token. It means you can access the liability in its physical [tangible] and digital form [a real-world asset on-chain). In the art market, asset tokenization focuses on creating an authentic connection between the physical art and the tokenized form.
What future trends can we expect in RWAs tokenization?
1.Advanced Blockchain Technologies
In Blockchain technology, we can expect to see advances in NextGen and interoperability solutions.
The Next-Gen Protocols Approach
In the world of asset tokenization, blockchain technology stands at the forefront. Blockchain technology is expanding to provide new solutions to RWAs using advanced protocols and solutions. Next-gen protocols are at the forefront of this shift.
Next-gen protocols boost the entire blockchain ecosystem by creating a digital representation of assets. Short for Next Generation Protocols, it aims to improve the process of transferring value from RWAs to the digital space. This protocol is scalable, secure, and flexible with smart contracts.?
Thanks to Next-Gen Protocols, businesses, and individuals can tokenize several assets, from real estate to artworks. For traditional markets under RWAs, Next-Gen Protocols will provide a more efficient, transparent, and accessible way to trade and manage assets.
Interoperability Solutions Approach
The ability of different blockchain networks to communicate and share information is crucial for a seamless asset management experience. Interoperability Solutions such as cross-chain technologies are bridging the gaps in RWAs.
Cross-chain technologies in RWAs allow for the free flow of assets and information. This interoperability function creates a unified and efficient market where assets are traded across different platforms without intermediaries. It's a game-changer that will enhance liquidity, reduce costs, and open new opportunities for investors and asset managers.
2. Regenerative Finance (ReFi)
In the 2024 RWA Report, Coingecko shared updates on a new concept, Regenerative Finance. This new concept in blockchain technology aims to address Real-world social and environmental issues. How does it relate to RWAs and boost RWAs tokenization?
ReFi focuses on four areas: Tokenizing carbon credits, renewable energy, conserving ocean and marine, and funding public goods. In this article, we focus on tokenizing carbon credits.
ReFi is working towards enhancing ways to tokenize excess carbon from top carbon companies. To lower environmental pollution and damage, ReFi considers carbon as RWAs and converts carbon to tokens. Protocols such as Toucan, Flowcarbon, and Regen network allow companies to tokenize excess carbon credits.?
Soon, technology experts predict advances in the ReFi approach, thus expanding RWAs tokenization.
3. The Role of NFTs
Non-fungible tokens (NFTs) are already making waves in the digital art world with limitless potential. NFTs are poised to become a primary factor in tokenizing real-world assets (RWAs).?
NFTs represent any asset, including property, vehicles, and personal experiences. As the technology develops, more types of assets will be tokenized as NFTs, expanding the possibilities for what can be bought and sold.
What role do NFTs promise to take in RWAs tokenization?
Ownership and Authenticity
For every RWA including art and collectibles, NFTs provide a secure and transparent digital certificate of ownership. NFTs allow tokenized art to be recorded on the blockchain, creating a safe record of ownership.
Increased liquidity
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RWAs tokenization into NFTs makes the asset more liquid. It means that tokenized RWAs can be traded more easily without complicating processes. One of the features that investors identify before investing in assets is liquidity. Increased liquidity makes it easy for people to invest in several assets.
NFTs offer a new way to own and trade assets that are secure, transparent, and accessible to more people. As technology advances, experts predict NFTs to become a significant part of the financial landscape.
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4. Market Dynamics
Another area to expect shifts in RWAs tokenization is market dynamics!
When discussing market dynamics in RWAs tokenization, we focus on institutional Adoption and market liquidity. In the future, RWAs tokenization will improve the market liquidity of assets. It will allow large and illiquid assets to split into smaller, tradeable tokens.
?This is a game changer for RWAs like real estate, art, And collectibles existing today. Tokenization will improve the ease at which tangible assets are bought and sold.
Increased liquidity will attract a new wave of investors who are eager to participate in the markets. It will expand RWA markets, thus leading to more investment opportunities and growth.
Institutional Adoption
?In institutions today, we observe a growing trend where traditional financial institutions are embracing the tokenization of assets. Institutions are discovering new ways to boost their services by offering digital and tangible forms of their products or liabilities.
Are there cases of banks, investment firms, or other companies integrating Tokenized assets into their portfolios?
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Case Study: ANZ Bank and Cross-Chain Settlement?
In March 2024, the Australia And New Zealand Banking Group (ANZ) partnered with Chainlink. The partnership aims to provide clients with access to tokenized assets across multiple blockchains using Cross-chain Interoperability Protocol (CCIP). Thanks to this tokenization approach, clients are exposed to cross-currency tokens through blockchain. The result?
The partnership is paving the way for improved customer experience and cross-chain interaction via a single interface. According to ANZ technology domain lead Lee Ross, the partnership aims to provide clients a seamless access to tokenized assets.
Are banks the only approved institutions to adopt RWA tokenization?
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Case Study 2: NFA Space Traditional Art?
In 2022, NFA.space announced its launch in the art and NFT market.
NFA Space operates on the concept of RWAs tokenization.
This project aims to bridge the gap between physical and digital art using NFTs. In this case, the physical or traditional art acts as the RWAs. By employing asset tokenization, NFA Space makes it possible for investors to access artworks in digital form.
NFA Space studied the art market and discovered its high investment potential. Sadly, the art market faces challenges such as Market manipulation, provenance disputes, ownership, and Forgeries.? Traditional artists find it difficult to sell their work through galleries or receive too little compensation.
Thanks to this art project, phygital art is formed. Here, investors can own both physical and digital copies of artworks, thus boosting the concept of RWAs tokenization.?
5.Technological Innovations
In the World of RWAs, technology is not just a trend, it's a pillar and necessity. Technological Innovations such as AI and Machine Learning are changing Asset valuation and investment strategies. In the future, investment in RWAs will be considered 100% secure thanks to technologies that provide Predictive analytics.?
Predictive analytics forecast market trends and asset performance with high accuracy. When it comes to investing in tokenized assets, Predictive analytics can serve as a guide to investors.
Today, RWA sectors like real estate apply advanced AI to analyze trends in the real estate market such as economic indicators and demographic data. Data obtained from this analysis guides investors and real estate professionals in decision-making.
In time to come, advanced technological tools will result in cybersecurity Advances too. Since RWAs tokenization focuses on creating digital forms of assets, top security measures must be applied.
Thanks to technological innovations, security measures such as Anti-money laundering AML, Know-Your-Customer and Crime Identification solutions are being applied.
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The Future of Assets Tokenization
As we look toward the future of RWAs, asset tokenization stands out as a beacon of innovation. The concept is gaining momentum, promising to redefine how we interact with and value our assets.?
Experts in the field are buzzing with anticipation about the potential of asset tokenization. As technology advances, the tokenization of assets will improve from real estate and fine art to intellectual property and even personal data.?
RWAs tokenization will make assets more accessible and create a more transparent and efficient market. With blockchain technology at its core, tokenization offers high security and trust that traditional markets struggle to match. It could lead to a significant shift in investment strategies as illiquid assets become easily tradable.
The future of asset tokenization is bright!
It is set to change the way we think about ownership and investment are lowered, the markets are more inclusive, and the possibilities are as limitless as our imagination.
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