Tokenization of Real-World Assets: How RWA is Changing the Financial Landscape in 2024

The cryptocurrency sector is undergoing a transformation that is attracting the attention of major financial players. At the center of this process is the growing movement to transfer traditional assets into digital formats through blockchain technology. The market for so-called tokenized real-world assets (RWA) demonstrates impressive growth, exceeding $12 billion as of the end of September 2024.

RWA: What Does the Abbreviation Stand For

The term RWA refers to a mechanism for digitizing any tangible and financial assets with value. This includes not only traditional assets like real estate or securities but also government bonds, national currencies, art objects, commodities, and even carbon credits.

The key difference between RWA and other crypto projects is that tokens are backed by real-world value outside the blockchain. This creates a bridge between the traditional economy and decentralized financial systems, opening new opportunities for investors and organizations.

Although stablecoins like USDT are technically tokenized real-world assets (in this case — national currencies), they are considered separately from the overall capitalization of the RWA sector. It is also important to distinguish between the tokenized assets themselves and governance tokens issued by projects for other purposes.

Who Leads the Tokenization Market

The largest volumes in the RWA segment are attributed to tokenized private loans issued by non-bank entities. According to analytics, the total value of such loans reached $8.8 billion by September 2024. The average yield on these products is slightly over 9% per year — a figure significantly higher than the yield on government bonds (around 5% per year).

Among projects actively working with private loans are Figure, Maple Finance, TruFi, and Goldfinch. The latter even attracted investments of $11 million from Andreessen Horowitz back in 2021.

Specific Examples of Successful Projects

Ondo Finance demonstrates a model where users gain access to digital versions of US government securities. Partner funds and specialized custodians ensure authenticity and security of storage. The platform offers two types of tokens: OUSD for accredited investors (operates on Ethereum) and USDY — tokenized dollar deposits with interest accrual for the mass market. The native token ONDO is traded on major crypto exchanges.

Centrifuge took a different approach — created its own blockchain network for issuing tokenized assets in the form of NFTs. This approach is especially convenient for documents, certificates, and real estate. Through special bridges, the network interacts with other blockchain projects and gains liquidity. Assets issued in Centrifuge can be used as collateral in DeFi applications like Aave. The CFG token is actively traded on crypto exchanges.

Parcl is developing an innovative approach to real estate investments. The platform creates indices tracking housing markets in specific geographic regions and cities. These indices are represented by synthetic assets, traded on decentralized platforms with user liquidity. Market data is updated via the Pyth blockchain oracle. Although the market capitalization of the PRCL token is modest, it is already listed on major crypto exchanges.

How Major Financial Corporations Are Entering RWA

A turning point occurred in 2024 when two asset management giants, Franklin Templeton and BlackRock, managing over $3.2 trillion in assets combined, simultaneously launched their RWA products. The main focus was on US government bonds. The amount of tokenized bonds issued by both companies exceeded $950 million.

The mechanism of such tokenization involves owners receiving passive income close to the actual yield of the underlying securities. Digital assets are deployed across various blockchain networks: Ethereum, Stellar, Polygon, Arbitrum, and Avalanche.

However, the openness of blockchain technology is offset by strict access restrictions. Tokens are only available to investors who meet the issuer’s criteria. As noted in studies, compliance with regulatory requirements is a critical element of RWA. Projects implement white and black lists, require KYC/AML verification, and support regulatory reporting.

Meanwhile, BlackRock and Franklin Templeton are expanding their business in the field of crypto exchange-traded funds (ETFs). They manage approximately $22.5 billion in assets invested in Bitcoin and Ethereum through ETFs launched in early and mid-2024, respectively. This demonstrates a comprehensive approach by traditional investors toward digital assets.