Tokenized real-world assets such as US Treasuries, real estate and commodities could make up 10% of the global GDP by 2030, new research indicates.
The tokenization of real-world assets (RWAs) has grown steadily in recent years, a new report by Binance Research indicates. The market is estimated to reach a staggering $16 trillion by 2030 – a substantial increase from $310 billion in 2022.
Tokenized real-world assets are different from digital assets like Bitcoin or Ethereum. As the name suggests, they represent tangible and intangible assets in the physical world, such as real estate, bonds and commodities. Equities, carbon credits and collectibles also qualify as RWAs.
The difference between a traditional, physical asset and a tokenised one is that its ownership is accounted for on the blockchain, improving transparency and accountability. In practical terms, tokenized assets can take many different forms. In the context of real estate, it could mean that a commercial property’s ownership is represented by fractionalised digital tokens, rather than one lump sum, allowing multiple investors to hold fractional shares of the property.
Government and corporate bonds can also be tokenized, enabling investors to easily trade and transfer ownership of fixed-income assets on blockchain platforms. Gold is a common tokenised RWA, having surpassed a $1 billion market cap in April this year.
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The tokenized RWA market is still budding, but it’s currently the 10th largest sector in DeFi, rising from 13th place just a few weeks ago. A large contributor to this growth, according to Binance Research, is the launch of stUSDT in July – a protocol that allows USDT stakers to receive yield based on RWAs.
Ethereum, as with the NFT market, is leading the way with RWA tokens. There are currently 41,300 RWA token holders on the Ethereum network, a 143% increase from the 17,900 holders recorded last year.
Tokenized US Treasuries have experienced significant uptake.
Tokenized US Treasuries, i.e. government treasuries that are recorded on-chain, appear to have emerged as a “bright spot” in the RWA market, offering investors an attractive alternative in the face of rising interest rates.
Representing government-issued sovereign debt securities, tokenized treasuries have seen their yields steadily increase over the past six months, surpassing those found in DeFi protocols.
The current tokenized Treasury market is valued at approximately $603 million. Investors are effectively lending this sum to the US government while enjoying a 4.2% annual percentage yield (APY) on their investments.
As the market continues to grow, tokenized US Treasuries are poised to become a pivotal player.
What are the benefits of tokenization?
Tokenized RWAs may just be the key to mass adoption of Web3, because any asset can effectively be tokenized, be it gold, oil, bonds, property or private equity.
The benefit of tokenized assets are numerous, but a big one is increased accessibility. Tokenized RWAs allow for fractionalised ownership in illiquid assets such as real estate or fine art, potentially lowering the entry barrier and increasing the pool of investors in a given asset. Fractionalisation also reduces the concentration risk for investors.
The tokenized RWA market also has the potential to bring increased liquidity to the market, since tokens can be traded on various blockchain platforms 24/7 without barriers. This means that companies can capture a much wider, global market reach.
Tokenised assets will make up 10% of the global GDP if the estimated $16 trillion market value is reached by 2030.
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