Tokenization is taking off, as more value flows into RWA projects. The biggest driver for growth is private credit, along with US Treasuries. Real-world asset tokenization is becoming a new source of fiat inflows into crypto markets.
RWA tokenization is showing a faster growth trend, driven by inflows from private credit, as well as US Treasuries. The latest hike to $2B in tokenized treasuries also arrived faster, suggesting the RWA field may be entering the ‘hockey stick’ stage.
Tokenization trends are happening even independently of stablecoins, which are sometimes counted among RWA projects. The new sector of RWA issuers is offering a new onboarding tool for mainstream investors in crypto markets, as well as new forms of collateral for DeFi projects.
The first $1B of inflows into RWAs took more than 400 days, while the next billion was added in just around 150 days. Specialized tracker services see the trend as bullish, boosting both the market and leading projects like Ondo Finance. Ondo and Securitize remain leaders in the space, but several smaller projects expanded their assets rapidly in the past month. Hashnote, Open Eden, and Superstate all mark double-digit growth for August.
Ethereum remains the go-to chain for tokenization, while Mantle is also growing its share rapidly due to being specialized for RWA assets and using treasuries to support its native USDY token. Mantle is also one of the major partners of Ondo Finance.
Tokenization targets liquid financial products
Tokenization is still concentrated among purely financial projects and is driven by one of BlackRock’s early projects, which combined short-term treasuries into the BUIDL token on Ethereum. The sector is still relatively small, with just 101 issuers of tokenized products.
When counting just crypto insider projects that grew their RWAs, the value locked is still around $6.5B. In the past two months, the value for top projects grew vertically, doubling in August. Currently, Maker is still the biggest RWAs holder among DeFi projects after restructuring its collateral and treasuries.
Many platforms are more widely engaged with RWAs, though they may not be direct issuers. RWA projects range from neutral platforms to infrastructure builders, as well as DeFi and liquidity networks. Several projects still try to tokenize events, real estate or physical collectibles.
The Gnosis platform also emerges as a specialized hub, with allocations to both US Treasuries and equity-based tokens. NFTs also have a relatively small share in terms of tokenization, drawing in $43M through the Tangible marketplace.
Private credit grows the RWA sector
Tokenized private credit is one of the biggest sources of growth in RWAs. In the past quarter, more than $1B flowed in from private credit issuance through decentralized projects. The most significant growth came from the Figure platform, which deals in traditional credit products and tapping home equity.
The data from Figure is still not fully integrated, but the project’s inclusion among RWA crypto issuers shows a convergence with traditional finance. Not counting Figure, tokenized private credit is still under $400M, based on Maple, Goldfinch, and TrueFi.
During the 2024 bull cycle, RWA and DeFi projects also showed more agility while not spreading contagion during market downturns.
The inflow of mainstream credit issuers into crypto is still uncertain. However, even a relatively small company can significantly change the landscape and value locked.
RWAs are also reviving as a narrative in 2024. More than 300K addresses and around 150K identified holders are interacting with various tokenized traditional assets. RWAs are also reaching decentralized trading, with more than $4B in trading volumes in the past weeks.
RWA projects also recovered by around 30% in the past two weeks, with the whole sector valued above $30B. The RWA narrative may start returning, causing another rally of relatively older altcoins and tokens. RWAs and their ability to provide predictable yield are also seen as a promising sector after another slowdown in meme tokens.
Trading volumes for a selection of RWA projects also increased in the past week, showing a swap between the most active narratives. RWAs still contain a dose of hype, especially for niche projects and less liquid tokens. The RWA narrative is also reviving very old projects like Ravencoin, hyping it again after being almost forgotten since the previous bull cycle. However, not all tokens labeled as ‘RWA projects’ will perform in a similar way, and some may move only based on greed and hype.
Cryptopolitan reporting by Hristina Vasileva
