RWA Tokenization Is the #1 Crypto Trend of 2024

Real-world asset (RWA) tokenization has arguably been the hottest crypto trend in 2024.

BlackRock—the world’s largest asset manager—entered the tokenization sector with the introduction of its tokenized US Treasuries product, which has brought mainstream media attention to RWA tokenization.

Now, tokens closely related to RWA tokenization are surging and outperforming the crypto market.

Table of Contents Table of Contents

1. Key Takeaways
2. Tokenized RWAs Outperform the Broader Crypto Market
3. Why Is RWA Tokenization Trending?
4. Expert Panel: What to Expect From RWA Tokenization?
5. The Bottom Line: Tokenization As the 'Killer Use Case' of Crypto
6. FAQs
7. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Tokenized RWAs Outperform the Broader Crypto Market
3. Why Is RWA Tokenization Trending?
Show Full Guide
4. Expert Panel: What to Expect From RWA Tokenization?
5. The Bottom Line: Tokenization As the 'Killer Use Case' of Crypto
6. FAQs
7. References

Tokenized RWAs Outperform the Broader Crypto Market

Ondo Finance’s governance token ONDO (up over 550% year-to-date as of July 18, 2024) and Mantra Chain’s native crypto OM (up over 2,100% year-to-date) have done particularly well this year. Each token amassed an over $1 billion market cap and cemented itself in the top 100 cryptocurrencies list.

It comes as no surprise that these two tokens are incredibly popular among investors. Ondo’s products have showcased real-world utility, while MANTRA continues to woo the world with its lofty ambitions to become the “chain of regulated digital assets.”

Ondo’s USDY product serves as a perfect example of how financial markets are being revolutionized by tokenization.

If you are not put off by their know-your-customer (KYC) requirements, you can tap into Ondo’s yield-bearing tokenized product USDY that gives you exposure to short-term US treasuries from anywhere in the world.

To add icing to the cake, onboarding on Ondo takes less than five minutes. Their USDY product is available to non-US individuals and is transferable on-chain.

Mantra, on the other hand, is creating a platform that will allow institutions to launch, list, and trade RWAs like real estate and corporate bonds in a regulatory-compliant environment.

The platform has already partnered with Dubai-based real estate developer MAG Group to tokenize $500 million worth of property.

Investor portfolio diversification has never been easier, has it?

Why Is RWA Tokenization Trending?

But why has RWA tokenization only caught the attention of mainstream media in 2024? Tokenization is synonymous with blockchain and blockchain technology has been there for years.

According to Pritam Dutta, founder and chief executive of RWA tokenization company Zoth, 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.

Overall, the total AUM of tokenized government securities now stood at over $1.6 billion with at least 17 products as of July 18, 2024.

After BlackRock and Franklin Templeton’s foray into the space, Goldman Sach is now planning to introduce three tokenization projects by the end of 2024, as reported by Fortune.

We also reached out to Oh Thongsrinoon, chief marketing officer of fashion metaverse company ALTAVA, who said technological innovation has made tokenized assets more reliable than ever before.

Decentralized autonomous organizations (DAOs) have tapped into this reliability to hoard tokenized government treasury products in a bid to diversify their holdings away from volatile crypto assets.

“As the strategy laid out by Securitize and Blackrock, they intend to provide diversification for the crypto ecosystem to access risk-free US treasury yield without needing to leave the blockchain ecosystem,” said Tom Wan, digital asset strategy associate at crypto asset manager 21.co.

$3B Tokenized US Treasuries by the end of 2024?

We are seeing a trend of DeFi Project's DAO diversifying their treasury to RWAs, including stablecoins and Tokenized US Treasuries.

With the maturity of tokenized US treasuries, over 15+ products on EVM Chains, and close to $2B… pic.twitter.com/rzRNvUNYWJ

— Tom Wan (@tomwanhh) July 15, 2024

Out of the DAOs undertaking this strategy, DAI stablecoin issuer MakerDAO has taken it to the next level with its aim of onboarding up to $1 billion “with potential for more in the future” in tokenized US Treasury bills and similar products.

Crypto investors are now looking at MakerDAO as an RWA tokenization play. Its governance token MKR hit a near three-year high in April 2024, driven by MakerDAO’s strategy to diversify its DAI stablecoin collateral by adding US treasury bonds to its portfolio.

As of July 18, 2024, MKR is 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.

Expert Panel: What to Expect From RWA Tokenization?

Looking forward, we asked Techopedia’s expert panel to highlight key RWA tokenization themes beyond tokenized government securities that could be popular among institutional clients and retail users.

To this, Thongsrinoon of ALTAVA said:

“Beyond US Treasuries, I believe 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.”

“One key theme is the democratization of access to previously illiquid and high-value assets, such as real estate and private equity,” added Thongsrinoon.

Meanwhile, Dutta of ZOTH noted that the expected interest rate cut cycle by the US Federal Reserve will make tokenized US Treasuries less attractive due to falling yields.

This could help tokenized corporate bonds shine, said Dutta, whose firm 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,” Dutta added.

The Bottom Line: Tokenization As the ‘Killer Use Case’ of Crypto

Cryptocurrency technology has long been criticized for failing to achieve product-market fit. RWA tokenization has changed this narrative. Now, major financial institutions are rushing to get a piece of the cake.

American multinational investment bank Citigroup thinks tokenization could be the ultimate use case of 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,” said Citigroup.

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