Research Summary
The report provides an in-depth analysis of the tokenization of real-world assets (RWAs) on public blockchains. It covers the growth of tokenized assets, the role of institutions in this space, the rise of tokenized U.S. Treasuries, the performance of Ondo Finance, and the use of Polygon for RWAs.
Key Takeaways
Surge in Tokenized Assets
- Significant Growth: The market cap of tokenized assets has surpassed $77.6B, marking a 560% rise in government securities. The majority of these assets are fiat-backed stablecoins, which have found a product-market fit in supporting trading, crypto on/off ramps, and global remittances.
- Ethereum Dominance: Ethereum remains the industry’s financial hub, hosting 77% of the AUM. However, Polygon has emerged as a diverse platform for tokenized offerings, including Corporate Bonds, Government Securities, Real Estate, and Commodities.
Institutional Involvement in Tokenization
- Institutional Tokenization: Institutions have tokenized over $415M worth of assets. Notable examples include Franklin Templeton, which has tokenized their Money Market Funds on Stellar and Polygon with $336M AUM, and Siemens, which tokenized $63M corporate bonds on Polygon.
Growth of Tokenized U.S. Treasuries
- Increasing Popularity: Tokenized U.S. Treasuries have grown to $850M, led by Mountain Protocol’s USDM, a new stablecoin backed by U.S. Treasuries. The Layer 1 Ethereum is now home to nearly 60% of tokenized treasuries, up from nearly 0% a year ago.
Ondo Finance’s Performance
- Market Leadership: Ondo Finance leads the market in the tokenization of real-world assets with over $192M TVL in its cash equivalent products. It recently launched USDY, a yield-bearing stablecoin, on multiple blockchains, including Ethereum, Solana, Mantle, and Sui.
Polygon’s Role in RWAs
- Emerging Platform: Polygon, an Ethereum scaling solution, hosts 14% of the RWA projects, making it the second-largest blockchain for RWAs. It has 27 tokenized asset protocols on its chain, including tokenized cards and watches.
Actionable Insights
- Monitor the Growth of Tokenized Assets: The rapid growth of tokenized assets indicates a significant shift in the financial landscape. Stakeholders should keep a close eye on this trend and its potential implications for traditional financial systems.
- Assess the Role of Institutions: The involvement of major institutions in tokenization could lend credibility and stability to the sector. It’s crucial to understand their strategies and the types of assets they’re tokenizing.
- Explore the Potential of Tokenized U.S. Treasuries: The rise of tokenized U.S. Treasuries suggests a growing appetite for risk-free rates. This could present opportunities for new financial products and services.
- Understand the Impact of Ondo Finance: Ondo Finance’s success in the tokenization of real-world assets highlights the potential of this approach. Stakeholders should consider how similar strategies could be applied in their own operations.
- Consider the Benefits of Polygon: Polygon’s role in hosting a significant portion of RWA projects underscores its potential as a platform for tokenization. Its low gas fees and scalability could make it an attractive option for future projects.
