Get ready for trillions of dollars to flow into this space.
Every bull market has its narratives.
2017 saw the rise of Ethereum, ICOs, and the advent of many altcoins, which are still actively used.
2020-21 had DeFi, NFTs (Bored Apes, anyone?) and the biggest one of them all, the Metaverse.
In the current cycle, memecoins, decentralised physical infrastructure networks, AI agents, and one of my favourite narratives, RWAs.
How do RWAs tie into blockchain tech and crypto?
As Bitcoin, Ethereum, and altcoins/tokens have created a system where you can easily own the tiniest fraction of crypto, there will be a system where you can easily trade fractions of stocks instead of buying whole amounts.
In tandem with the rise of smart contracts and rapid advancements in AI, this tokenisation will allow tangible assets to be easily divided into hundreds or even thousands of portions on a blockchain.
This will be significant for transforming direct ownership for portions of high-end investments, such as real estate, artwork, and, to a lesser extent, a handful of NFTs.
With the global property market valued at around $654 trillion (including residential and commercial real estate), the idea of RWA fractionalisation, even for just 1-2% of this figure, has enormous potential.
This concept is appealing because it’s highly relative to everyone, particularly retail investors. No more worrying about being excluded from partial ownership of tangible goods exclusively available to high-net-worth investors, aristocrats, and companies.
Yes, I know people can do this through REITs, real-estate-focused mutual funds and ETFs, crowdfunding, and other means.
Having this ownership data verified using blockchain technology (in addition to automated systems) means less reliance on intermediaries, using a system that will eventually work 24/7 rather than being limited to business hours.
Many would roll their eyes and scoff at owning one hundredth (1%) or one thousandth (0.1%) of luxury property in Hong Kong, Sydney, San Francisco and other expensive housing markets. What’s the prestige in that?
Many don’t care about the prestige; they want that ROI, which can also be achieved through emerging, reasonably priced markets, but I digress.
Lowering the barrier of entry helps boost liquidity in the property sector…not that it needs it in these cities.
Nonetheless, I’m all for giving people reliable and practical options. If blockchain technology and digital assets allow for this RWA fractionalisation worldwide, I’m all for it.
Earlier this year, it launched its BlackRock USD Institutional Digital Liquidity (“BUIDL”) Fund via Securitize, a fintech that specialises in tokenising RWAs.
When the world’s largest asset manager is interested, you know it’s time to pay attention.
It manages over $1 billion of tokenised assets on-chain (as of October 4, 2024).
Two months ago, Securitize announced that BUIDL would expand to other Ethereum-compatible chains such as Avalanche, Aptos, Polygon PoS and L2s such as Arbitrum and Optimism (OP Mainnet).
If BUIDL were to succeed, which it most likely will, other corporations would flood into this market, much like the swathes of institutional investors who have been flocking to Bitcoin since the advent of spot BTC ETFs in the USA.
Projects and tokens to watch
Mantra ($OM)
Mantra is a bespoke layer-1 blockchain that streamlines regulatory compliance for tokenising real-world assets (RWAs).
This Layer 1 system was built using Cosmos SDK. Mantra is compatible with Ethereum and other EVM-compatible chains, such as BNB Chain, Polygon, and Base, to facilitate network connectivity.
Its native token, OM, is mainly used to secure the network with its proof-of-stake system and pay fees to the protocol treasury when new tokens are made or burned within the Guard Module. Click here to learn about other ways it’s used within the network.
Its focus on RWAs should be one of the protocol’s biggest drawcards, particularly when the tokenisation of physical assets is expected to exceed $16 trillion by 2030, representing 10% of global GDP.
https://propy.com/home/
Propy ($PRO)
This platform helps connect property buyers and sellers and settle contracts faster, cheaper, and more effectively using AI and blockchain technology. Best of all, smart contracts allow you to close these deals 24/7.
Furthermore, notable advisors, including Michael Arrington (TechCrunch), Daniel Kottke (Apple), Barry Enderwick (Netflix), and Tim Draper (a venture capitalist who is extremely bullish on Bitcoin) are helping shape the project.
As Bitcoin, Ethereum, and altcoins/tokens have created a system where you can easily own the tiniest fraction of crypto, there will be a system where you can easily trade fractions of stocks instead of buying whole amounts.
This will become mainstream in the coming years once we see greater scalability directly on Ethereum, improved cross-chain interoperability, and a superior UX overall.
Ondo ($ONDO) a.k.a. Ondo Finance
Ondo (a.k.a. Ondo Finance) aims to make institutional-grade products and services universally available through blockchain technology.
One of its main protocols is Flux, which allows people to loan and borrow stablecoins against short-term tokenised US Treasuries. The only collateral available on this platform is OUSG, a tokenised Treasury issued by Ondo Finance.
Last June, Drift, a Solana DEX focused on providing perpetual futures and spot trading with leverage, announced a partnership with Ondo. Access to USDY marks the first RWA option on the perpetual platform, permitting its clients (who hold USDY on Solana) to use tokenised T-Bills as collateral.
ONDO is up 590% over the past 12 months, making it the fifth-best-performing crypto asset in the top 100.
Tether Gold ($XAUT)
This ERC-20 token is pegged to the price of one fine troy ounce of gold. Tether’s reserves are fully backed by physical gold under the Good Delivery standard of the London Bullion Market Association (LBMA).
Unlike purchasing gold via conventional markets, XAUT is available 24/7. Furthermore, you can have exposure to gold without worrying about storage costs and readily convert to and from digital assets, which was unavailable before gold stablecoins like XAUT hit the scene.
Wildcard: Clearpool (CPOOL)
This small-cap DeFi lending protocol has recently launched a testnet of its upcoming “RWA-focused” blockchain, Ozean, which operates on Optimism.
Clearpool operates a series of lending pools across different networks, including Ethereum, Mantle and Flare. The latter is also a standalone project in RWA, among other crypto sectors.
This small-cap DeFi lending protocol has processed over $661 million of loans and has $99 million of total value locked in it.
I expect DeFi projects and related tokens to rapidly gain popularity as we see a vast swathe of RWAs on-chain in the coming years. Whether Clearpool makes it in the long term remains to be seen.
Some banking on explosive gains might be put off by its being a relatively “older” project and crypto—it launched in October 2021, a month before it peaked with the rest of the market—as many looking to make quick returns often focus on newer assets (less than 180 days old).
I don’t see this as a problem, as many established assets, such as XRP, ALGO, and HBAR, have staged a massive comeback, partly due to Trump’s recent comments about incentivising American(-based) crypto assets.
Never rule out the established projects, especially amid a bull run.
I’ve listed this as a wildcard due to the low number of developer commits for this project. Mind you, Ondo is in a similar situation (based on DefiLlama data), so it’s only one of many metrics to assess when determining whether to invest in a crypto.
The highly anticipated launch of Ozean moves one step closer…
🔱 Ozean’s Poseidon Testnet is LIVE! 🔱
This milestone brings us closer to enabling automatic native yield on-chain through Ozean’s RWA-focused blockchain, paving the way to unlock trillions in TradFi capital.
— Clearpool (launching Ozean🌊) (@ClearpoolFin) December 12, 2024
DEXTools and Moralis have issued excellent security scores for CPOOL, indicating a high likelihood (but no guarantee) of this token’s legitimacy.
N.B. Before buying new tokens, I recommend using these resources to help gauge whether a token is worth buying. These websites now cover tokens on Solana, BNB and other L1s besides Ethereum.
Bubblemaps also visualises wallet size, distribution, ownership (in some cases), and, where applicable, connections with other addresses (i.e., wallet clusters).
Concluding thoughts
Many people don’t realise how disruptive this (let alone crypto assets and distributed ledger technology) will be in the coming years.
Some would say, “We’re lucky to be here,” but I’d argue otherwise.
Rather, well done for learning about RWAs and following the developments in this space. People have had years to learn about Bitcoin, altcoins, blockchain technology, RWAs and other related concepts. Thus, it’s superficial to (still) attribute this to good fortune.
Now is the time to start accumulating the RWA crypto assets if you want to see a significant ROI in future.
Will the above-mentioned assets remain relevant for years to come? I believe they will, at least most of these. But in this rapidly changing landscape, it is important to stay informed and approach this with an open mind.
What do you think about RWAs? Is this all overhyped, or will it become a massive sector? Leave your thoughts below.
Disclaimers
– N.B. None of this is financial advice; I am not a financial advisor. You are solely responsible for crypto investments, let alone in any asset class.
– The opinions expressed within this piece are my own and might not reflect those behind any individual or organisation listed here. I have no affiliation with any of them.
– Please research (DYOR) before investing in any crypto assets, staking, NFTs, or other products affiliated with this space.
– Information is correct at the time of writing.
– I hold ONDO and PRO, which account for about 1% of my crypto portfolio.
Featured Image by dogorasun at Freepik.
This article was originally published at Medium on January 19, 2025.