πͺTokenization Market
Tokenization of real assets (most often material, such as real estate; non-material, such as stocks/bonds/bonds) is the process of dividing real estate into tokens stored in a blockchain, a decentralized database. Blockchain is an analogue of a digital ledger that transparently and securely stores the necessary information.
Today, we see a clear trend towards tokenization of assets (asset-backed tokens) and RWA. For example, according to DeFiLlama, the volume of funds locked in RWA protocols exceeds $450 million [source].
In addition, tokenization is noted by experts as the next trend in the development of the crypto industry. It is likely that tokenization will define the prospects of the digital asset industry in 2023. For example, BlackRock CEO believes that tokenization will be the next generation for markets and the next generation for securities:
βThe next generation for markets is tokenization. In the blockchain world, tokenization is the process of creating a digital representation of an asset on the blockchain, which certifies the history of its transactions and ownership.β [link]
*BlackRock is the largest investment fund in the market, with over $9.74 trillion under management. Larry Fink, CEO of BlackRock, is one of the most respected people in the world.
Advantages of tokenization:
wide range of use (any product/service can be tokenized);
physical asset backing (trees);
flexibility (including working with foreign partners);
reliability and transparency of blockchain technology;
confirmation of the right to profit through a token in a wallet without long bureaucracy.
The idea of the project (asset-backed token) is supported by the report of one of the most authoritative companies in the crypto environment, Messari. In a recent document, Crypto Theses for 2023, Messari believes that one of the trends will be a bullish attitude towards the markets for tokenization of carbon offsets (including carbon credits) and tokenized real estate [link].
Quote from the report:
"So you can imagine how excited I am about crypto protocols that lay the foundation for reducing the carbon footprint of corporations and individuals, rebuilding the broken carbon trading markets. Through the tokenization of carbon offsets and the creation of reliable carbon markets on-chain, these protocols can provide transparency, liquidity, and aggregation in global green markets." - Ryan Selkis, CEO of Messari."
Messari is an analytical and research company that collects and analyzes information about the blockchain and cryptocurrency market. The company offers tools for in-depth analysis of the cryptocurrency market as a whole, information about various events (listings, token sales, etc.) and market news [link].
Messari is βbullishβ on the regenerative finance (ReFi) sector. ReFi uses blockchain to combat climate change through carbon credits. A report on this topic was released, The Regenerative Finance Movement | Messari [ΡΡΡΠ»ΠΊΠ°].
The carbon market has grown by 30% since 2020 and is continuing to gain momentum.
Messari is one of the most authoritative market research companies, and its reports and data are cited by Coinbase, Kraken, Galxe (ex. Galaxy Digital), Ledger, Chainalysis, Multicoin Capital, Dragonfly, and many other crypto market whales. Messari's report is a culmination of the year and major market participants pay special attention to the theses of the document.
Leading financial institutions have implemented the tokenization of real assets, and a number of banks are conducting pilot programs on the tokenization of various projects to reduce the transaction settlement time.
JP Morgan, Deutsche Bank, and SBI traded tokenized currencies and government bonds in November 2022, using Polygon, the Ethereum Layer 2 blockchain, for the experiment.
More and more DeFi projects are considering RWA tokens as collateral:
MakerDAO is exploring the tokenization of real assets, offering to secure DAI with real-world assets.
We see increased in the number of RWA-backed loans, which indicates a growing demand for RWA tokens as a means of financing real assets. In fact, MakerDAO receives over 80% of the total commission income from RWA [link].
For example, four Real-World Asset (RWA) lending protocols are among the top ten DeFi lending protocols that collect the most 180-day accumulated interest fees paid by users, according to a recent analysis by crypto investor Defilgnas [ΡΡΡΠ»ΠΊΠ°].
TrueFi (TRU), Maple Finance, Goldfinch (GFI) and Centrifuge (CFG) rank third, fourth, seventh, and tenth, respectively.
According to research by analysts and partners, it is expected that tokenization of real-world assets will play a significant role in the growth of the entire digital asset industry in 2023-25.
Reports confirm the prospects for growth in the tokenization of real assets (RWA) in 2023
Analytical company CoinMetrics highlighted the potential growth of the tokenization of real assets in its report, calling it one of the main trends in 2023. Tokenization of real assets is the representation of physical and traditional financial assets on the blockchain. It is a safer and more efficient investment environment for those who want to invest in real estate, but for example, cannot or do not plan to acquire a physical asset [link].
According to a forecast by consulting firm BCG, the total size of tokenized assets worldwide could reach $16 trillion by 2030, which would be more than 50,000% compared to $310 billion in 2022. It is expected that by the end of the decade, 10% of global GDP will come from RWA. In addition, there is a noticeable growth in RWA-backed loans (which recently grew to $140 million). Such a sharp increase highlights the growing demand for RWA tokens as a way to attract investment in real assets [link].
By 2030, Citi Group forecasts that the market volume of tokenized assets (TAM, total addressable market) will grow to $5 trillion, of which more than 7.5% (about $1.5 trillion) will be occupied by the market of tokenized real estate (Real Estate Funds). Moody's Investor Service forecasts that tokenization can save $1.7 billion per year in spending in the United States [link].
This is why we at Web3Eco decided to combine real-world assets and Web3, providing the opportunity for everyone to invest in trees, environmental restoration and the environment quickly, easily and safely.
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