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Tokenizing real-world assets on blockchain has been one of the hottest topics this year, and this time we’re hearing from not only established financial firms like Citi, JP Morgan, and Northern Trust, but also crypto-native players. It’s a hot topic.
The initial hype around tokenization using blockchain started around 2015 among banks, and while they could never accept Bitcoin or cryptocurrencies, the underlying ledger technology could support 24/7 payments, It said it could potentially be a game-changer by giving way to guaranteed execution and reduced trading fees. As the cryptocurrency world becomes more intertwined with broader financial markets, there is a growing desire for real-world asset tokenization (RWA) even from smaller participants.
“When RWA first started trending, we focused on institutions such as high-net-worth individuals, family offices, and pension funds. [and] “University endowments – that’s still true, but what I think of as on-chain institutions are emerging,” Maria Shen, general partner at Electric Capital, told CNBC.
For example, DeFi protocol MakerDAO.
“MakerDAO borrows dai, a stablecoin, to effectively tokenize T-bills and collaborate with institutions that MakerDAO uses in its ecosystem,” Shen said. “This is a really interesting change that hasn’t happened before.”
She sees this as retail users who can use RWA to send money and save, businesses that use stablecoins to pay suppliers, and in-chain institutions like MakerDAO that seek to access yield through tokenized U.S. Treasuries. classified into.
Stuti Pandey of Kraken Ventures said that since the last hype cycle of tokenization, RWA has benefited from changes in economics, technology, and credibility.
“Interest rates have been very low over the past few years, which favors very high-growth, high-risk assets,” he said. “In decentralized finance, there was little chance for RWA to flourish because synthetic yields were between 80% and 200%. Now that interest rates have come down, it’s these real assets that actually have interesting yields. .”
She added that it could also benefit from better tokenization infrastructure and gain mindshare this time.
