From highly-coveted collectibles to US treasuries and real estate, offline-world assets are rapidly moving on-chain
Ever wondered what it would be like to own something hugely expensive, precious, and beyond the means of mere mortals? Could be a Picasso, a rare gemstone, or a guitar owned by Jimi Hendrix. Tokenizing real world assets (RWA) makes such unattainables attainable — at least in part — by digitizing and fractionalizing their ownership.
Tokenisation isn’t just for rare treasures. Traditional investments like real estate and equities are rapidly being pulled into the decentralized finance (DeFi) ecosystem, transforming how they’re owned, managed and traded.
Boston Consulting Group estimates the cumulative value of tokenized RWAs could reach $16 trillion by 2030, while Standard Chartered thinks $30 trillion is possible.
Now that BlackRock — the world’s largest asset manager —has launched a tokenized US Treasuries product, greater mainstream adoption seems all but certain. The impact is already being felt.
The principle behind real-world asset tokenization is easy enough to grasp: take physical assets like art, real estate, precious metals, or collectibles and use them to create a virtual investment vehicle on the blockchain.
Rather than write the deed to a house or a certificate of authenticity on paper, proofs of ownership and validity are put on-chain. They can then be traded between counterparties, or fractionalized and put up for sale so many people can have partial ownership.
The concept is cathing fire. In 2024, Ondo Finance’s governance token ONDO grew by over 550% year-while Mantra Chain’s native crypto OM grew 2,100%. Each token amassed a market cap exceeding $1 billion and cemented their position in the crypto top 100 table.
Their popularity with investors is driven by real-world utility, and the ease with which they give traders an entry point to DeFI-based gains.
Ondo’s yield-bearing tokenized product USDY gives investors exposure to short-term US treasuries from anywhere in the world. Onboarding can take less than five minutes — almost unheard of in the fiddly and technically complex world of DeFi Ux.
Mantra’s platform aims to do the same for institutions, making the process of launching, listing, and trading RWAs more like investing in real estate and corporate bonds in a regulatory-compliant environment.
The platform recently partnered with Dubai-based property developer MAG Group to tokenize $500 million in real estate assets.
Though RWA tokenization only caught the attention of mainstream media last year, tokenization is synonymous with blockchain.
Pritam Dutta, founder and chief executive of RWA tokenization company Zoth, told Bloomberg that “improved regulatory clarity and the approval of spot Bitcoin ETFs have boosted institutional confidence among traditional finance players.”
In July 2024, BlackRock’s tokenized US treasuries product BUIDL surpassed the $500 million in assets under management (AUM) less than five months after its debut.
After BlackRock, Franklin Templeton joined the fray, then Goldman Sachs announced plans to introduce three tokenization products this year.
Oh Thongsrinoon, chief marketing officer of fashion metaverse company ALTAVA, told an industry gathering in August 2024 that DeFi innovations have made tokenized assets more trustworthy and reliable.
Tom Wan, digital asset strategy associate at crypto asset manager 21.co, tweeted last year that decentralized autonomous organizations (DAOs) were tapping into this reliability to diversify their holdings away from volatile crypto assets.
DAI stablecoin issuer Sky (formerly MakerDAO) aims to take this to the next level by onboarding up to $1 billion in tokenized US Treasury bills and similar products.
Crypto investors are now treating Sky as an RWA tokenization play. Its governance token MKR hit a near three-year high in mid 2024, driven by plans to diversify its DAI stablecoin collateral by adding US treasury bonds to its portfolio.
In August 2024, MKR was up over 70% year-to-date, outperforming bigger names such as Bitcoin (up 53% year-to-date) and Ether (up 51% year-to-date). This highlights the popularity of the RWA tokenization narrative.
What will RWA tokenization look like in 2025? ALTAVA’s Thongsrinoon believes the democratization of access to previously illiquid and high-value asset means tokenized real estate, commodities, and private equity will see substantial interest.
“These asset classes offer the potential for high returns and diversification, making them attractive to both institutional clients and retail users.”
Zoth’s Prittam Dutta told Reuters that he expects this years’ interest rate cut cycle by the US Federal Reserve to make tokenized US Treasuries less attractive due to falling yields.
This could help tokenized corporate bonds shine, he added, one reason why Zoth is set to launch a tokenized liquid note with exposure to both corporate bonds and T-bills soon.
“Corporate bonds are particularly appealing as a high-quality yield alternative in a low-interest-rate environment, especially with the Federal Reserve hinting at potential rate cuts later this year.”
In an analysis published for its 10th Digital Money Symposium, Citigroup said tokenization presents investors with the ultimate application for cryptocurrencies and blockchain.
“Almost anything of value can be tokenized and tokenization of financial and real-world assets could be the killer use case blockchain needs to drive a breakthrough.”
Crypto has long been criticized for failing to find the right product-market fit. With some of the world’s biggest tradFi institutions wading in, RWA tokenization could change the narrative.
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