A new wave of adoption in the form of Real World Asset (RWA) tokenization could drive the next leg of the crypto market, as protocols catering to this section of the industry gain momentum.
Data from Messari shows that RWA protocols have seen their Total Value Locked (TVL) surge 60% since February, which the blockchain analytics firm attributes to a market preference for debt-based, high-yield investments.
Over the past year, RWA protocols have seen a remarkable resurgence, with their TVL soaring to nearly $8 billion, driven by a market preference for debt-based, high-yield investments.
✍️ @SteimetzKinji provides insights in the latest Messari Pro report: https://t.co/GeDgqu3hkW pic.twitter.com/zKgyXcRoMU
— Messari (@MessariCrypto) April 30, 2024
These investments exclude fiat-backed stablecoins but include assets such as commodities, securities, and real estate tokenization protocols.
Messari’s estimates likely include a broader base of protocols involved in RWA tokenization, given that data from DeFiLlama puts TVL in RWA protocols at $6.09 billion. However, this figure has grown 700% since the beginning of February, 2023.
With institutional players like BlackRock and Franklin Templeton moving into this space, it’s easy to see why this space is picking up steam. Just six weeks after its launch, BlackRock’s tokenized asset fund BlackRock USD Institutional Digital Liquidity Fund (BUIDL) has become the largest fund of this nature, attracting $70 million worth of inflows last week to put its assets under management at $375 million.
Meanwhile, Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX), represented by the BENJI token, had $368 million in assets under management.
1/ Blackrock's BUIDL has surpassed Franklin Templeton's BENJI (FOBXX) in AUM and became the largest On-Chain Money Market Fund
– BUIDL has grown 36.5% MoM from $274M to $375M
– BENJI only grew 2.1% MoM from $360M to $368M pic.twitter.com/zcMzThfAAh— Tom Wan (@tomwanhh) April 30, 2024
Both funds are tokenized money market funds, although BUIDL is backed by U.S. Treasury bills, repo agreements and cash, while BENJI represents shares in FOBXX that can be minted on the Steller and Polygon blockchains.
21.co’s Tom Wan, on X, predicts that tokenized government securities will increase its dominance from 1% currently to over 10% in the years to come.
In his view, the key issue of tokenization is bootstrapping demand and liquidity — a gap which stablecoin issuers will be able to bridge.