In today's dealings, blockchain has won a lot of attention from public and private companies, and even more, people have started to join the space as Bitcoin and other Altcoin reveal some amazing utilities that connect with the real-world situation in this economy. Just like how social media usage in Africa, especially Nigeria has increased, the majority still don't know about SocialMining which allows users to earn income daily when they post content through X(formally known as Twitter). This is a solution DAOLabs released and top blockchains like Polygon, Avalanche, WAX, TON, and KAVA are using this to reward interested individuals. Find more about this in the reference link below.
The Future Of Real World Assets & Its Benefits
The financial system evolution is driven by technological advances and tokenization of assets, that is, representing their ownership and properties in the form of secure digital bearer instruments is fundamentally transforming the process of trading, custody, and settlement. According to coinmarketcap, the general market cap of RWA sits at $25.11B as of today which is 0.001% of the global crypto market cap of $2.09T what a big room to explore and Avalanche is leading in this category with $8,156,909,451.
As BlackRock, the world's largest asset manager entered the RWA tokenized space with its tokenized fund, called BUIDL, on the Ethereum network, the beginning of a new era emerged and this stimulated the interest in the RWA tokenization sector of the crypto market. As large-scale automation of financial services through smart contracts and the creation of more efficient and liquid markets are coming in, asset tokenization is lowering the costs of market infrastructure, enabling trade with new markets, and making previously illiquid and hard-to-access markets more accessible.
Four Major Ways Of Tokenization
The methods listed below vary in the directness of the link they establish between the token and the underlying asset starting from the approach that offers the most direct connection between the token and the asset to the one that provides the least direct link.
- Direct title: In this tokenization method, the digital token serves as the record of the title, eliminating the need for custodial arrangements.
- 1:1 asset-backed tokens: In this method, a custodian holds an asset and issues a token representing a claim or right to the underlying asset. This token may have the right to be swapped for the underlying asset (redemption) or the cash equivalent of the asset.
- Collateralized tokens: This method involves issuing an asset token backed by assets different from the intended represented asset or associated rights. Typically, the token is over-collateralized to account for potential fluctuations in the value of the asset backing relative to the token's intended asset value.
- Under-collateralized tokens: This method involves issuing a token intended to track the value of an asset that is not fully collateralized. Similar to fractional reserve banking, maintaining the token value requires active management of the fractional reserve asset portfolio and open market operations.
Examples of Projects In This Category
- ONDO Finance:
This stands as the leading Real World Asset tokenizing project with a solution that bridges traditional finance with decentralized finance (DeFi). It creates a seamless platform for tokenizing real-world assets, making them accessible and liquid on blockchain networks. Check with its OUSG, the world's first tokenized US Treasuries product and Flux Finance.
- MANTRA:
This is one of my favorites as stated with the project in 2020 it launched on Ethereum Network as a community-governance DeFi project before its upgrade and rebrand launching its layer 1 blockchain soon. It has successfully raised an $11 million funding round led by Shorooq Partners, a notable investor in the MENA region, and MANTRA has positioned itself as a major player aiming to mainstream RWA tokenization through its governance token called *OM token. You can check out with its https://mantra.zone/.
- Pendle:
This is a project with a decentralized protocol revolutionizing how yield-bearing assets are managed within the DeFi ecosystem. A user can easily tokenize these assets and separate them into Principal Tokens (PT) and Yield Tokens (YT), which enables advanced yield management strategies. Hence, trading future yields and principal separately is achievable and novel investment opportunities and flexibility in handling yield-bearing assets make it easy for all.
Closing Remark
In conclusion, there is a lot to discuss when digging inside the Real World Assets ecosystem as this is just the beginning of the new era, as a social miner who understands how #SocialMining has paved the way for many in generating income with ease through DAOLabs solution, diving into RWA ecosystem might be another opportunity as this the tokenizing it is becoming the forefront of revolutionizing the investment landscape. The world of RWA tokenization seems promising with improved market liquidity, advancement in DeFi, and many other opportunities that integrating real-world data into blockchain networks set to bring, dive in, and explore this opportunity thereof.
Disclaimer: I am not a finance advisor, kindly do your own research and act according to your understanding.
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