RWA is one of the biggest opportunities this cycle.
BlackRock just launched a tokenised fund.
Tokenised assets are set to hit $10T by 2030.
If you're still sleeping on this sector, now is the time to wake up.
🧵: My ULTIMATE guide to Real World Assets (+ top altcoin picks).👇
In this thread, I’ll be covering:
• What is RWA?
• Why RWAs are poised for significant grow in 2024 (and beyond)
• The specific RWA projects I'm interested in
Let's dive in.
• What is RWA?
• Why RWAs are poised for significant grow in 2024 (and beyond)
• The specific RWA projects I'm interested in
Let's dive in.
Firstly, what is RWA?
Real-world assets (RWA) represent physical assets like gold, real estate, and other commodities as tokens on the blockchain.
This increases:
• Efficiency (lower cost without brokers)
• Accessibility (fragmentation and more liquidity)
Real-world assets (RWA) represent physical assets like gold, real estate, and other commodities as tokens on the blockchain.
This increases:
• Efficiency (lower cost without brokers)
• Accessibility (fragmentation and more liquidity)
RWAs are set to be a huge driver of value on-chain because they:
• Tap into huge markets like global bonds ($133T) and gold ($13.5T)
• Use real-world income-generating assets for DeFi yield
• Have a lower barrier to entry
• Reduce brokerage and middlemen costs
• Tap into huge markets like global bonds ($133T) and gold ($13.5T)
• Use real-world income-generating assets for DeFi yield
• Have a lower barrier to entry
• Reduce brokerage and middlemen costs
But how do they work?
RWAs represent ownership rights over an asset as an on-chain token.
Issuers use smart contracts to mint RWAs & determine how they are valued & traded on their underlying blockchain.
Each token represents a part or whole of an asset's worth.
RWAs represent ownership rights over an asset as an on-chain token.
Issuers use smart contracts to mint RWAs & determine how they are valued & traded on their underlying blockchain.
Each token represents a part or whole of an asset's worth.
The numbers confirm the growing demand for RWAs.
• Tokenised public securities have now surpassed $700m in market cap.
• The tokenised gold market is also nearing $1 billion, according to a report by Bank of America.
• Tokenised public securities have now surpassed $700m in market cap.
• The tokenised gold market is also nearing $1 billion, according to a report by Bank of America.
A lot of this demand spike has largely been due to Blackrock's recent foray into RWA.
BlackRock recently launched a digital asset fund that tokenises bonds.
In ~2 weeks, the fund has grown to a $274m market cap with a market share of 37.53%.
BlackRock recently launched a digital asset fund that tokenises bonds.
In ~2 weeks, the fund has grown to a $274m market cap with a market share of 37.53%.
Blackrock CEO Larry Fink has long maintained that he believes tokenisation is the future for securities.
Given Larry's bullishness and the overall fund performance, it's highly likely that Blackrock's involvement in the sector will only continue to increase over time.
Given Larry's bullishness and the overall fund performance, it's highly likely that Blackrock's involvement in the sector will only continue to increase over time.
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And BlackRock's not the only one.
Other major TradFi players like Citi, Franklin Templeton and JPMorgan have also dipped their toes into RWA.
All of this lends validity to the RWA sector in 2024 and beyond.
Other major TradFi players like Citi, Franklin Templeton and JPMorgan have also dipped their toes into RWA.
All of this lends validity to the RWA sector in 2024 and beyond.
This hype has contributed to a spike in interest across the RWA token sector, resulting in RWA being the 3rd best performing narrative YTD.
So now that you understand the RWA space, let's look at some key projects which are poised to benefit from the growing interest in RWAs.
I'll break this down sector-by-sector.👇
I'll break this down sector-by-sector.👇
1. Layer 1 (and L2) blockchains.
Hyped narratives often drive a lot of liquidity and users to the main chain that powers the underlying dApp.
Therefore, L1 chains launching RWA protocols offer indirect exposure to its upside.
Hyped narratives often drive a lot of liquidity and users to the main chain that powers the underlying dApp.
Therefore, L1 chains launching RWA protocols offer indirect exposure to its upside.
The issue with this style of investing, despite its ability to hedge against downside, is the lack of direct upside.
If you want capture more RWA-specific upside, RWA-focused chains like @RedbellyNetwork & @MANTRA_Chain offer more direct exposure.
If you want capture more RWA-specific upside, RWA-focused chains like @RedbellyNetwork & @MANTRA_Chain offer more direct exposure.
2. Oracles
RWA protocols actively use oracles to ensure accurate price feeds to transmit data across blockchains.
A key element of the tokenisation process is ensuring RWA prices remain consistent with real-world markets.
RWA protocols actively use oracles to ensure accurate price feeds to transmit data across blockchains.
A key element of the tokenisation process is ensuring RWA prices remain consistent with real-world markets.
For example, if your house value goes up by 50%, that should accurately reflect on the tokenised version of that property.
Oracles bridge this information to the blockchain.
This is why I'm bullish on oracles like $LINK.
Oracles bridge this information to the blockchain.
This is why I'm bullish on oracles like $LINK.
• @chainlink
$LINK unlocks the full potential of RWAs by providing real-time, secure and cross-chain information bridging.
As one of the OG oracles, Chainlink's services are widely used across the sector for Proof of Reserves, identity, data streams & more.
$LINK unlocks the full potential of RWAs by providing real-time, secure and cross-chain information bridging.
As one of the OG oracles, Chainlink's services are widely used across the sector for Proof of Reserves, identity, data streams & more.
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• @PythNetwork
If you want to move further down the risk curve, other oracles like $PYTH could be attractive.
Whilst Chainlink serves more broader sectors, Pyth is interesting as a DeFi-centric bet, due to its wide L1 compatibility.
If you want to move further down the risk curve, other oracles like $PYTH could be attractive.
Whilst Chainlink serves more broader sectors, Pyth is interesting as a DeFi-centric bet, due to its wide L1 compatibility.
3. RWA-specific protocols
These are dApps which either provide the technology to facilitate DeFi applications for RWAs on-chain, or leverage underlying assets to power their platform.
This is the most direct way to get exposure to RWA.
These are dApps which either provide the technology to facilitate DeFi applications for RWAs on-chain, or leverage underlying assets to power their platform.
This is the most direct way to get exposure to RWA.
• @OndoFinance
With over $250M in TVL across their products, $ONDO is the third-largest cross-chain RWA protocol for US treasuries and stocks.
Ondo directly solves RWA's core scaling problem, liquidity, with its new product, Global markets.
With over $250M in TVL across their products, $ONDO is the third-largest cross-chain RWA protocol for US treasuries and stocks.
Ondo directly solves RWA's core scaling problem, liquidity, with its new product, Global markets.
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• @pendle_fi
$PENDLE is a yield-tokenisation platform that lets you earn yield across a variety of pools, including RWA ones like sDAI.
The flexible nature of their platform allows them to easily spin up new RWA-pools and leverage their existing user base.
$PENDLE is a yield-tokenisation platform that lets you earn yield across a variety of pools, including RWA ones like sDAI.
The flexible nature of their platform allows them to easily spin up new RWA-pools and leverage their existing user base.
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