RWA is one of the potential narratives for the bull run of 2024, which we haven’t discussed in previous articles. In this article, we will examine the key aspects of this narrative, its impact on the bull market of 2024, and highlight some RWA projects that could potentially bring significant returns in the future.
1. What is RWA?
Real World Assets (RWA) are assets that exist in the real world and can be used in the cryptocurrency space through tokenization. Blockchain technology provides new opportunities to transfer the value of these assets to the blockchain, enabling convenient transactions and liquidity conversion. By combining the real world with Web3, it creates a new foundation for decentralized finance (DeFi) and has the potential to greatly drive the growth of this field.
In simple terms, RWA assets exist in the real world and can be used as a source of income, such as through sales, exchanges, or leases. Examples of RWA include:
– Real estate
– Stocks and bonds
– Commodities
– Artworks
– Carbon credits
In the process of tokenizing these assets, whether tangible or intangible, the value is converted into tokens, allowing any asset to have high liquidity, serve as collateral, or simply obtain partial ownership through tokenization.
The brief process of asset tokenization includes detailed discussions among issuers, tokenization providers, and investors to reach agreements on investment scale and tokenization process. Token minting and distribution among investors (NFT or other tokens) are carried out, followed by secondary market operations if applicable, such as over-the-counter trading. Investors earn income through the shares of the tokenized assets they hold.
RWA has the potential to drive the development of DeFi with billions of dollars in investment. It also enables the cryptocurrency community to enter the real world and effectively connect cryptocurrencies with our daily lives.
Why tokenize assets?
Asset tokenization can attract people from the traditional finance (TradFi) field who are unfamiliar with the DeFi ecosystem. Real world assets belong to the traditional finance field, which is full of rules, intermediaries, and other factors. The goal of tokenization is to transfer these assets to the decentralized world and make them part of a growing industry.
For example, many parking lots can launch their own tokens, and drivers can receive discounts or privileges by using these tokens. With the long-standing implementation of technologies such as automated market makers (AMMs) and liquidity pools, which make instant transactions possible, the RWA narrative serves as a bridge, combining all these advantages from Web3 with the real world.
2. How does asset tokenization work?
The main process of asset tokenization includes three stages:
– External legitimization of assets: This involves all processes related to compliance, legal, and administrative procedures. It helps confirm the existence of assets that will be bound to tokens.
– Integration of digital and physical: This process involves encoding the financial and legal aspects of token-based transactions into the tokens themselves using smart contracts. The contract is responsible for executing obligations, ensuring compliance, and handling property rights. This process is also known as information bridging, where oracles that receive off-chain data play a role. At this stage, the token model is also selected (ERC-20 for fungible tokens, ERC-721 for unique items, ERC-3643 for securities and regulatory requirements, ERC-4626 for income-generating assets, ERC-1400 for security tokens).
– Market dynamics and management of tokenized assets: This stage involves token issuance to the market. It determines the dynamics of supply and demand, checks liquidity, and assesses the tokens. The issuer also needs to ensure compliance with anti-money laundering (AML) regulations and understand customer identity verification (KYC) of the chosen listing platform. Many common cryptocurrency projects have already applied verification data as a standard for distribution.
2. Current state of RWA
If we look at CoinGecko, the RWA industry is currently going through a brief adjustment due to the price behavior of major cryptocurrencies such as BTC and ETH.
As of early May 2024, the market cap of RWA is approximately $6.5 billion. However, when we take a broader perspective, RWA assets like Ondo have shown significant growth this year.
RWA provides new sustainable investment opportunities by adding value to the blockchain. Through the use of RWA protocols, investors can enter the traditional financial market without intermediaries and at lower costs. For example, you can invest in tokenized US Treasury bonds online and earn stable income with lower risk. Please note that compared to the annual percentage yield (APY) provided by leading DeFi protocols, investing in US Treasury bonds is currently more profitable.
Tokenized government bonds are currently the most popular RWA assets, but the RWA narrative is still very young, and there will be many other tokenized assets that could reach a market cap of trillions of dollars.
Currently, all major RWA protocols are on the Ethereum network, but the RWA narrative still has a long way to go.
Regarding recent investment details from major funds, including BlackRock Group and other market whales, you can find them here.
3. Major types of RWATokens
1) Real estate: These tokens are linked to land, residential, or commercial real estate. They are often referred to as security tokens because their value is determined by another underlying asset. Tokenizing real estate provides investors with a wide range of opportunities. These tokens can be used to generate regular cash flow or passive income, such as lending to other individuals or earning income through rent or royalties.
2) Art: These tokens are related to art collections. They can also be seen as utility tokens because they are primarily associated with goods or services. Several platforms, including Masterworks.io, actively tokenize valuable works by artists like Banksy, Warhol, and others, providing individuals with the flexibility of fractionalized investments.
3) Commodities: This category is related to physical and tangible products, including gold, oil, agricultural products, etc. It also includes central bank digital currencies (CBDC) backed by central bank reserves. There are many other directions related to the RWA field.
Now let’s take a look at the major platforms supporting RWA assets.
4. Platforms supporting RWA assets
1) MakerDAO: MakerDAO is one of the earliest platforms to integrate RWA. It collaborates with New Silver to ensure that real estate can be used to mine DAI tokens.
2) Goldfinch: Goldfinch allows businesses to access DeFi opportunities such as crypto lending without providing cryptocurrency collateral. The protocol uses a unique approach to verify businesses through a chain of auditors.
3) Centrifuge: Centrifuge is one of the leading participants in the RWAToken market. Imagine being able to invest in invoices, housing mortgages, or even properties using cryptocurrencies. That’s where Centrifuge comes in: the platform functions like a bank (albeit more decentralized) and facilitates cryptocurrency loans using real-world assets.
4) Maple: Maple is a lending protocol focused on unsecured transactions. It involves multiple parties, including institutional borrowers, pool delegates, and lenders.
5) Ondo Finance: Ondo Finance is another significant player in the RWA market (as shown in the previous charts, it has the highest market cap among RWA assets). Its goal is to bring institutional-grade real-world financial products into the DeFi ecosystem. Ondo offers various products, including OUSG (short-term US government bond fund), OHYG (high-yield corporate bond fund), etc. The company tokenizes these assets, marks them as fund tokens, and allows trading after completing AML and KYC processes.
Asset tokenization provides a new perspective for interacting with traditional finance and asset categories in the cryptocurrency field.
Finally, let’s mention the first six projects in the RWA narrative. These projects are still in the early stages but have gained support:
6) IYK: IYK is creating a decentralized platform for all creators to experiment with the digital and physical by converting physical objects into NFT format in the Web3 space. IYK recently completed a $16.8 million financing round led by A16Z, with participation from 1kx and Collab+Currency.
7) Midas: Midas is an asset tokenization platform that provides access to institutional-grade assets through blockchain, particularly by offering super liquid Blackstone Treasury Bills at a 1:1 ratio as mTBILL securities. The project recently partnered with MorphoLabs to launch the first mTBILL/USDC credit market where you can earn additional $MORPHO tokens. Midas also completed a $8.75 million seed round led by Framework Ventures, Blocktower Capital, and HV Capital.
8) Mogul: Mogul is a decentralized platform that enables investments in tokenized real estate supported by Goldman Sachs analysts. The project raised $3.6 million in funding, with participants including Draper Dragon and Blizzard Fund.
9) Helix: Helix is an accredited trading platform that leverages blockchain technology to provide access to off-chain private loans in emerging markets. You can now fill out a form to gain early access to the platform. The project raised $2 million in seed funding, led by Saison Capital and Superscrypt.
10) Parcl: Parcl is a spot and perpetual trading platform for trading synthetic real estate index in all cities worldwide. The project recently announced that they are ready for snapshots for the first and second-quarter distributions, generating a lot of attention. The project recently conducted its distribution and released the $PRCL token for providing USDC and NFT liquidity and activities in Backpack, as mentioned by the CEO of AirdropHunter in an AMA. The project raised a total of $11.6 million led by Fifth Wall and Archetype Ventures.
11) Avantis: Avantis is a decentralized derivatives trading platform for trading synthetic assets. The project is now operating the Avantis XP loyalty program, where you can earn points through trading and providing liquidity. The project claims not to require a token, but who knows how it will actually turn out. The project raised $4 million in funding led by Pantera Capital.
12) Dinari: Dinari is another platform for purchasing tokens representing US securities-backed stablecoins. The project raised $10 million in two funding rounds from investors such as Balaji Srinivasan and Alchemy.
13) Ostium Labs: Ostium Labs is creating a decentralized trading platform for trading RWA derivatives, initially involving commodities and currencies. Ostium aims to attract both traditional commodity traders and cryptocurrency traders to join the platform. Users can now join the testnet by filling out an application form on the website. The project raised a total of $3.5 million from investors such as Balaji Srinivasan and General Catalyst.
In conclusion, the RWA narrative brings a bright future for anyone in the real finance and Web3 world, providing a new perspective and speed! If you don’t want to miss out on future distributions of significant projects that may introduce tokenization, join AirdropHunter with us to get airdrops!
DYOR (Do Your Own Research).
Tags:
DeFi, NFT, RWA, USDC, Ethereum, Bitcoin, bull run
Source link:
https://www.hellobtc.com/kp/du/05/5195.html
Disclaimer: The content of this article represents the author’s views and does not constitute investment advice.
Original article link:
https://www.bitpush.news/articles/6764759
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