Tokenization of real-world assets on blockchain is viewed as a way to inject intuitive value into crypto. Though some types of tokenization have stalled, up to $3 billion in real-world assets may already be tokenized.
Current Status of Tokenization
Tokenization on the blockchain comes in various forms, and it may be difficult to estimate the real adoption. Rough estimates suggest up to $3 billion in tokenized products across various chains and protocols. Tokenization approaches range from simply creating tokens to track a certain asset’s price, to special curated on-chain vehicles, such as BlackRock’s BUIDL token, created by Securitize.
Main Types of Tokenized Assets
The most widely held tokenized assets include commodities, especially precious metals. Government securities are the second most widely tokenized asset class, with up to $1.6 billion in tokenized securities across several chains. Leading tokens encompass 17 purpose-built products, including the BUIDL token. Several DeFi protocols have expanded their portfolios of government securities, including Ondo Finance and Maple Finance. Other tokens are spread across public company stocks, private funds, real estate, and other types of funds.
Future Prospects and Challenges
Tokenization has proven more successful in cases where protocols or financial companies already had access to liquidity and demand for new products. The less successful model was that of the security token offering (STO), which followed the model of a public token sale. Some security tokens followed strict regulations but failed to take off among mainstream investors or crypto insiders.
Currently, tokenized real-world assets (RWA) are primarily used by large institutional investors. However, with the expansion of DeFi, the use of RWA tokens and loans is growing. Despite the reduction in interest since April, these assets play a crucial role in legitimizing cryptocurrency, particularly in ensuring liquidity and stability of reserves.
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