There is real value in RWAs

According to a new estimate, total tokenized market capitalization could reach around $2 trillion by 2030. And while that value could be much higher, it’s an indication not only of the tremendous growth in this category — but also a reminder of how much potential this asset class still holds. 

Some critics, however, still dismiss RWAs as tokenized nonsense, claiming that RWAs could destabilize the global economy rather than help it evolve. But this view overlooks the transformative potential of RWA tokenization. Far from being mere digital representations of physical assets, tokenized RWAs are poised to revolutionize how we interact with, value and trade real-world assets globally.

Read the opposing view in our opinion section: Most RWAs today are tokenized nonsense

The true strength of RWA tokenization lies in the ability to balance stability with innovation. These assets bring durable value onchain and introduce a consistent source of new money flowing into the DeFi ecosystem through off-chain yields. This balance is crucial for the sustainable growth of the onchain ecosystem.

Consider real estate tokenization. Some critics argue it doesn’t solve liquidity problems, but they miss the crucial improvements in transaction efficiency and accessibility. Tokenization replaces the lengthy legal ownership process with immutable, verifiable, onchain ownership. This innovation doesn’t bypass existing legal frameworks; instead, it offers a more efficient precursor to formal ownership transfers, allowing assets to trade with greater efficiency, prior to a token-holder choosing to take formal, legal possession. A process which is itself modernizing, as various land registries continue to experiment with blockchain-based recording systems.

Tokenized real estate goes beyond digitizing structures like real estate investment trusts (REITs). It creates superior, crypto-native alternatives that offer global access to real estate investments previously limited to a select few. These on-chain solutions enhance transparency, improve efficiency and democratize access to a historically exclusive asset class. Unlike publicly traded REITs and mortgage-backed securities that rely on rating agencies and bundling, tokenization facilitates the same approach onchain in a transparent and permissionless way.

Access to publicly traded REITs is currently limited to a select, fortunate few. Onchain solutions, provided the products adhere to jurisdictional compliance guidelines, vastly improve access, giving a worldwide audience improved, more transparent solutions to value preservation.

Still, the potential of RWAs extends beyond real estate. Yield-bearing stablecoins backed by real-world assets offer users a way to preserve purchasing power through both price stability and yield. These products exemplify how RWAs can be tokenized to create better building blocks for DeFi, providing consistent off-chain yields and enhancing the overall ecosystem.

As we look to the future, it’s clear that tokenization will play a pivotal role in shaping financial markets. Larry Fink, CEO of BlackRock, recently declared that tokenization will be “the next generation for markets.” This shift requires persistent innovation across various asset classes, pushing the boundaries of what’s possible in digital finance.

The $2 trillion potential in RWA protocols is just the beginning. As the technology matures and regulatory frameworks evolve, we can expect exponential growth in this sector. Tokenized RWAs can unlock trillions of dollars in previously illiquid assets, bringing them into the digital age and making them accessible to a global audience. Achieving this shift requires a concerted, collaborative effort.

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