Why tokenized real-world assets are soaring

[Cordillerabit]

Tokenized real-world assets have surged to a capitalization of $8 billion, outpacing Bitcoin and Ether in both market performance and volatility-adjusted returns.

The real-world assets (RWA) market has grown to $8 billion in total value locked (TVL) this year, excluding non-yield-earning stablecoins. Real-world assets currently tokenized on blockchains include private equity, real estate, government securities, commodities and other financial obligations.

Source: https://cointelegraph.com/news/why-tokenized-real-world-assets-are-soaring

[KingsDen]

When I first heard about Real World Tokenized assets like Real Estate, I doubted that it will hold water. I tried to comprehend how this will be like but couldn't have a clear picture.
If we likened this to NFT, the art is better because I own it in the Blockchain. But that of real estate I don't get and maybe I'll research about it.

[ABCbits]

I've heard of term RWA terms. But it seems you need to trust the issuer (trusting BlackRock when you own BUIDL token) and there's question whether you can exchange the RWA token for the goods easily.

[TomPluz]

There is a strong demand for RWA as many people and investors see this option with real, stable and greater value compared to let's say memecoins and even the usual coins and tokens that can be found in CMC. Of course, since this is relatively new, there will always be challenges and even problems that must be threshed out for good to make RWA grow more. We should be warry on possible factors that can stop this growing interest with RWA. Real-world assets (RWAs) are tangible physical items that can be valued, such as artworks, commodities, government bonds, and real estate. The tokenization of these assets is one of the most promising use cases for blockchain technology. It essentially means that the assets, as well as existing in real life, are represented on the blockchain as digital tokens. The benefits of tokenized RWAs include increased liquidity, broader market access, and enhanced security through blockchain technology. Challenges associated with tokenized RWAs include regulatory uncertainty, custody risks, and limited market liquidity for certain assets. We should note that this is a rising use-case of the blockchain technology and this is not yet nearing perfection so we have to watch for more development.

[target]

Which layer 1 smart contract platform do you think companies will best release their RWA?
I am thinking if RWA will soon be a trend because of BlackRock and so companies may also start doing the same tokenization of assets which will make the market comparable to stocks.

I have the feeling they won't be choosing ETH.

[bitterguy28]

Which layer 1 smart contract platform do you think companies will best release their RWA?
I am thinking if RWA will soon be a trend because of BlackRock and so companies may also start doing the same tokenization of assets which will make the market comparable to stocks.

I have the feeling they won't be choosing ETH.

yeah i also don’t think ethereum will be their top pick most likely they would want to choose a project with cheaper transaction fees and since solana has been performing well in recent times they might consider it it attracts a lot of investors but remains to have fast transaction speed and low fees

[Jating]

I guess we are really in the era of digitization, and so with RWA, the old tradition will be replaced already such as deeds and titles. And that's why this are really a big market now, specially the wealthy people who wanted to protect their real state assets and that's why this is growing as we can see it's already reported to be worth billions.

Although from what I see, it might be very complex for some owners, then there is the custodial risks as well. So we might lost it at some point and so recovery process will be long just to proof ownership.

[ABCbits]

Which layer 1 smart contract platform do you think companies will best release their RWA?
I am thinking if RWA will soon be a trend because of BlackRock and so companies may also start doing the same tokenization of assets which will make the market comparable to stocks.

I have the feeling they won't be choosing ETH.

I expect many project would choose L1 with higher TPS or one of ETH L2. But looking at https://app.rwa.xyz/assets/BUIDL. it seems BlackRock RWA token use ETH network directly.

[NotATether]

That is good for market makers but how exactly is this a good investment for everyone else? If you've got a digitized version of some real asset, then it's basically an NFT. And we saw how those flopped - they were just glorified trading cards that did not even manage to preserve its value in the short term, to say nothing about the longer term.

I expect many project would choose L1 with higher TPS or one of ETH L2. But looking at https://app.rwa.xyz/assets/BUIDL. it seems BlackRock RWA token use ETH network directly.

Or maybe they just use Solana which has a higher TPS than all of those.

[SamReomo]

Tokenized real-world assets have surged to a capitalization of $8 billion

That's a good news and very useful one as well, but I don't think that those real world tokenized assets are in way useful for the crypto community. I don't know how one could utilize those to earn any profits, and on what mechanism does they work.

[target]

Which layer 1 smart contract platform do you think companies will best release their RWA?
I am thinking if RWA will soon be a trend because of BlackRock and so companies may also start doing the same tokenization of assets which will make the market comparable to stocks.

I have the feeling they won't be choosing ETH.

I expect many project would choose L1 with higher TPS or one of ETH L2. But looking at https://app.rwa.xyz/assets/BUIDL. it seems BlackRock RWA token use ETH network directly.

That would only mean onlty the rich ones again will reap its benefit since the retail investors wouldn't be able to afford transactions. Unfortunately wherever that large projects are, the others follows.

We the retail investors are left focusing only on companies tokenizing somewhere else like in Sol, Matic or BNB which could equates to pump and dump or if they are legit they are considered penny stocks.

[ABCbits]

--snip--
I expect many project would choose L1 with higher TPS or one of ETH L2. But looking at https://app.rwa.xyz/assets/BUIDL. it seems BlackRock RWA token use ETH network directly.

That would only mean onlty the rich ones again will reap its benefit since the retail investors wouldn't be able to afford transactions. Unfortunately wherever that large projects are, the others follows.

We the retail investors are left focusing only on companies tokenizing somewhere else like in Sol, Matic or BNB which could equates to pump and dump or if they are legit they are considered penny stocks.

ETH gas fee is more pricey than ETH L2 or different altcoin, but these days it's not that high. When i write this reply, gas fee for high priority TX is about $1.2[1] and generally it's low enough to make ETH inflationary again[2]. Although i agree some company will also use ETH network.

[1] https://etherscan.io/gastracker
[2] https://cryptoslate.com/ethereum-supply-turns-inflationary-as-gas-fees-drop-to-record-lows/

[MrSpasybo]

That's a good news and very useful one as well, but I don't think that those real world tokenized assets are in way useful for the crypto community. I don't know how one could utilize those to earn any profits, and on what mechanism does they work.

RWA has been undertaken by large institutions, but the impact of this event on the crypto market has not been truly significant. Typically, these institutions use their own protocols on Ethereum to tokenize and move assets easily. Many tokenization-supporting projects have emerged but have not been widely adopted by large organizations.

Investor expectations are that these tokenization projects will generate revenue when serving the tokenization needs of giant financial institutions, and that tokenization activities can generate sufficiently large transaction fees on the blockchain, leading to the burning of many native tokens. More importantly, as everyone talks about RWAs, most tokens in the RWA sector will experience impressive, albeit unsustainable, price increases, generating profits for investors.