Research by the Boston Consulting Group (BCG) suggests that the tokenization of global illiquid assets could become a $16 trillion industry by 2030. Real-world assets include equities, bonds, investment funds, and other financial instruments.
They can also include commodities such as gold and silver and real estate.
Furthermore, analysts are predicting that this will become a catalyst for mainstream crypto adoption.
Real World Assets a “Killer Use Case”
According to Citi Group’s latest global perspectives and solutions (GPS) report, RWA tokenization could become a “killer use case.”
In its March report, Citi wrote that there would be up to $4 trillion in tokenized digital securities and up to $5 trillion of central bank digital currencies (CBDCs) circulating around the world.
Managing editor of the Citi GPS, Kathleen Boyle, predicted that adoption will be driven by the CBDCs, tokenized assets in gaming, and blockchain-based payments on social media, adding:
“Successful adoption will be when blockchain has a billion-plus users who do not even realize they are using the technology.”
Crypto industry executives have echoed the sentiment.
“So obvious that tokenized property and contracts will be the norm in the next 5-10 years,” said Circle CEO Jeremy Allaire on March 29.
DeFi analyst ‘Edgy’ highlighted some of the recent examples of RWA tokenization, such as Amazon’s NFTs being tied to real-world assets.
Additionally, Goldman Sachs launched a digital asset platform (GS DAP) earlier this year to tokenize traditional assets.
The Monetary Authority of Singapore is testing asset tokenization via Project Guardian, and Siemens has issued a 60 million Euro bond on Polygon, so it is already happening, he said.
RWA tokenization also offers more stable yields as opposed to highly volatile DeFi returns influenced by the crypto bull and bear cycles.
Other benefits include more flexible investments as a token can be used to buy a fraction of a property for those that can’t afford the whole thing. It also makes traditional assets such as art, real estate, and private equity more liquid and easier to trade.
There are already a number of crypto protocols dealing in real-world asset tokenization. These include GoldFinch, Centrifuge, TrueFi, Maple Finance, and DeFi pioneer MakerDAO.
Maker’s ‘Endgame Plan’ proposes converting its DAI stablecoin to a free-floating asset, initially collateralized by real-world assets.