2024: Real Asset Tokenization Projects Rise in the RWA Market

The Wave of Tokenization is Changing the Global Investment Landscape

Tokenization – the process of converting valuable assets from the physical world into digital form on the blockchain – is no longer a concept of the future. From early efforts with colored coins on Bitcoin in the 2010s to the explosion of Ethereum in 2015, the field has undergone significant evolution. Today, crypto tokenization projects have become one of the most anticipated trends, with the global tokenization market projected to grow exponentially in the coming years.

Interestingly, instead of being limited to virtual assets, blockchain is now opening doors for traditional assets: real estate, government bonds, artworks, and even complex financial instruments. This transformation is not just a technological advancement but also a revolution in how investors access financial markets.

RWA Tokenization: Bridging TradFi and DeFi

Tokenizing real-world assets (RWA) offers benefits previously hard to imagine:

Liquidity unlocked for assets that were previously difficult to trade

Traditional assets like real estate or high-value artworks often have low liquidity. When tokenized on the blockchain, they can be traded quickly, efficiently, and at any time. This creates opportunities for average investors to access investment opportunities that were once only available to the wealthy.

Partial ownership instead of full ownership

Instead of spending millions of USD to buy a luxury apartment or a rare art collection, investors can now own a small fraction at a much lower cost. This fractional ownership model not only democratizes investment but also allows investors to diversify their portfolios across various asset classes – from cryptocurrencies, to real estate, precious metals, and traditional financial tools.

Global access without borders

A person in Vietnam can own a share of a commercial building in New York without intermediaries. Old geographical and administrative barriers are no longer an issue with blockchain. This global accessibility automatically expands the playing field for all participants.

DeFi redefined

Tokenized RWA is driving a wave of innovation in DeFi. Protocols like Maple, Polytrade Finance, Clearpool, and Goldfinch have started listing tokenized RWA. These assets can be used as collateral, creating new investment opportunities and enhancing liquidity. This move allows DeFi protocols to diversify services while expanding access to real-world assets.

Transparency and security assured

Blockchain records every transaction and ownership rights immutably and publicly. This eliminates fraud, increases trust, and addresses security concerns traditionally faced by financial markets.

Leading Projects in the Tokenization Crypto Revolution

Ondo: When US government assets become tokens

Ondo Finance is a pioneering fintech company in traditional asset tokenization. Their flagship product is OUSG (Ondo Short-term US Government Bond Fund) – a fund accessible via blockchain.

Impressive figures: as of October 2023, OUSG ETF managed over $21.4 billion in assets and was rated AA by S&P. This is no small number – it shows institutional investors are ready to trust tokenization solutions.

OUSG provides liquidity access to US Treasury short-term funds. With extremely low risk, it becomes an attractive choice for conservative investors. Additionally, Ondo also introduced OMMF – a tokenized product for US Money Market Funds, expanding the range of traditional assets accessible via blockchain.

MakerDAO: The oldest DeFi architecture fueling RWA

MakerDAO is one of the oldest and most robust DeFi protocols on Ethereum. Interestingly, they have integrated RWA into their ecosystem.

Institutional investors can borrow DAI stablecoin using tokenized Treasury bills (T-bills) as collateral. According to data from Dune Analytics in October 2023, RWA accounts for over $2.7 billion in MakerDAO’s total balance sheet – more than 50% of the TVL of over $5.5 billion. This indicates RWA has become an indispensable component of the protocol’s strategy.

Swarm: Bridging TradFi and DeFi

Swarm focuses on tokenizing real-world assets with a clear mission: connecting traditional finance (TradFi) with DeFi. The platform supports various asset types, from RWA, securities, to cryptocurrencies, with a goal of full regulatory compliance.

As of October 2023, Swarm maintained a TVL of over $672 million. In July 2023, a partnership with Mattereum enabled more RWA tokenization on-chain, providing a comprehensive and compliant solution for tokenization.

Untangled Finance: Opening doors for private credit assets

Founded in 2020, Untangled Finance focuses on a specific area: tokenizing private credit assets. The platform recently launched on the Celo network, expanding access.

In October 2023, Untangled Finance announced a funding round of $13.5 million, demonstrating investor interest in the company’s direction. Its mission is to increase liquidity and accessibility for private credit assets, which were previously difficult to trade on public markets.

Polymath: A dedicated platform for security tokens

Polymath, founded in 2017, is a pioneer in security token issuance. The platform offers streamlined processes for issuing and managing security tokens with full regulatory compliance.

Polymath’s ecosystem is extensive, including companies providing tokenization solutions – from legal consulting, KYC/AML, marketing, to custody, escrow, and tax services. Their partners include Genesis Block, DWF, Glyph, Wachsman PR, BitGo, and Cryptoworth. Operating on Ethereum, Polymath has built a reputation as an expert in security tokens.

Securitize: Scalable digital securities management

Securitize, also founded in 2017, is a comprehensive platform for managing digital securities. Just three years after launch, in 2022, Securitize Markets became one of the top 10 transfer agents in the US, serving over 1.2 million investor accounts and 3,000 clients.

The platform offers compliance services, investor communication tools, and issuance services. Although primarily using Ethereum, Securitize is designed to be blockchain-agnostic, capable of operating across multiple chains. This flexibility has helped Securitize become a prominent name in the security token industry.

Future: Crypto tokenization projects will reshape the financial markets

Crypto projects focused on tokenization are not just tech startups – they are rebuilding the structure of the global financial markets. As RWA tokenization continues to grow, we can expect:

• Expanded asset scope: From real estate, bonds, to alternative assets, more asset types will be tokenized
• Increased institutional adoption: Major organizations will continue to join, as seen with Ondo and MakerDAO
• Improved liquidity: Previously locked assets will become easier to trade
• Clear legal frameworks: Governments will establish regulations, making crypto tokenization fully legal
• Advancements in DeFi: New protocols will emerge, leveraging RWA to create innovative financial products

The tokenization revolution is not a matter of “if” but “when.” The coming years will witness the maturing of this industry, with RWA projects leading the way in reshaping the global investment landscape.