RWA Tokenization Isn’t Just Growing – It’s Spreading
RWAs, in case you haven’t noticed, are on the rise. Blockchain companies are tokenizing them. Institutions are issuing them. And accredited investors are trading them onchain 24/7. Once a bold idea, tokenized real-world assets have ballooned into a $30B economy.
By the time you read these words, there’s a good chance that number will need upwardly revised again. With average monthly growth running at 5% and thousands of assets, from real estate to commodities, being given the RWA treatment, the word “revolution” is for once fully justified.
Tokenization has revolutionized RWAs, turning illiquid assets into highly liquid ones that can be fractionalized, collateralized, and plugged into onchain money markets. The future is here and it sure feels good.
But while the RWA takeover is here, it’s not evenly distributed. If you’re reading this as a retail investor, ask yourself this: how many RWAs have you actually traded? There’s a small chance the answer is “a lot.” And a very high chance that it’s “zero.”
Because right now, RWAs are largely operating on parallel rails – they’re on blockchain but not on the majority of the centralized and decentralized platforms that retail routinely uses. But that’s starting to change as tokenized real-world assets spread their roots and become intertwined with traditional crypto exchanges.
RWAs Grow Roots
Unlike the blockchain industry whose infrastructure they operate on, RWAs have been compliant from day one. While there was some debate, in the early days, as to Bitcoin’s financial classification, securities have always been securities. Which means if you want to trade them, you need to be verified, whether you’re doing so through a broker account or a DeFi protocol.
But DeFi at large remains largely KYC-less, and as a result the places where crypto natives sling tokens rarely intersect with those where RWAs are tokenized and traded. But centralized crypto – primarily exchanges – has been compliant for years now, and thus it’s no surprise that this is where RWAs are spreading first.
The Exchanges Embracing RWAs
Across the CEX landscape, a number of leading exchanges are now integrating RWAs. Fastex has been quick out of the traps, weaving real-world assets tokenization into its diverse digital ecosystem, including its ftNFT marketplace, where RWAs are a core feature.
In doing so, it’s giving its users access to a wider tranche of tokens, including exposure to uncorrelated assets that can support portfolio diversification. This approach introduces comparatively stable, yield-bearing assets to a user base that’s already heavily involved in gaming, trading, and digital collectibles.
So why not add another asset class into the mix? RWAs have the potential to bridge the gap between the speculative world of digital currency and the stable value of real-world assets, as Fastex users are discovering. Other exchanges are also getting in on the act including Kraken, Bybit, and Coinbase.
A number of retail-friendly DeFi protocols such as Aave and Jupiter have also begun exploring RWAs – but in the case of Aave, its Horizon platform for RWAs is permissioned. This illustrates why RWAs have found more fertile soil on CEXs so far: it’s a domain where users are already KYC’d and thus there’s no additional friction at the point of access.
The reasons behind this trend are largely psychological, therefore, rather than technical. Mentally, crypto users are accustomed to their onchain trading being permissionless and their CEX trading being permissioned. As a result, they’re far more inclined to experiment with RWAs on platforms where they’re already verified.
First CeFi, Then DeFi
While centralized exchanges are likely to be the first place where retail trades RWAs, they’re already experiencing their second-order effects on DeFi. Through instruments such as yield-bearing stablecoins, some backed by real-world assets including T-bills, they’re readily scooping up yield.
Protocols such as Ondo Finance have expanded tokenized U.S. Treasuries to Solana, enabling DeFi users to access yield-bearing assets. This allows for seamless use in lending pools and liquidity provision, turning traditional fixed-income instruments into onchain staples.
Centrifuge, another frontrunner, has seen its tokenized asset pools grow to over $1 billion and is facilitating undercollateralized loans backed by real-world invoices and credit. In bridging RWAs with DeFi, these platforms are placing real-world assets within the reach of retail.
The Real Catalyst for Retail Adoption of RWAs
One easily-overlooked reason why RWAs, despite their impressive growth, have been slower to woo retail users, is due to the ongoing crypto bull market. Put simply, the gains to be made from trading cryptos currently outweigh those to be derived from RWAs, no matter how juicy the yield. But that will change.
When the crypto market cools, as it inevitably will at some point, RWAs delivering 4-6% yields on tokenized Treasuries will become increasingly attractive. As retail investors realize RWAs provide uncorrelated returns, the psychological barriers are crumbling. Right now, SOL is a more alluring investment than T-bills for most investors. But when the pendulum swings, RWAs will take charge.
Of course, this isn’t a binary choice: investors don’t need to pick an asset class. Thanks to the increasing integration of RWAs with CeFi and DeFi, crypto users will soon be able to trade a wide range of assets, both digital and physical, under one roof. That’s when RWAs will realize their final form: tokenized and tradable anytime, anywhere.
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