The past two years have presented us with unique challenges in an ever-changing financial landscape. Chief among them was U.S. inflation, which peaked at a staggering 9.1% in June 2022, prompting the Fed to implement a series of aggressive (and ongoing) interest rate hikes. This was the trigger.
At the same time, the cryptocurrency industry weathered its own storm, marked by the collapse of major projects such as Terra/Luna, Celsius, Voyager, and FTX, as well as supporting cast banks such as Silvergate, Signature, and Silicon Valley Bank.
This post is part of CoinDesk’s coverage “Crypto 2024” Prediction package.
Amidst this turmoil, blockchain builders have relentlessly forged ahead, with the realm of real-world assets (RWA) emerging as a beacon of innovation and resilience. At its core, the tokenization of real-world assets creates investment vehicles on the blockchain that are linked to tangible assets such as real estate, cars, or anything else that might exist in physical form. Once ownership is recorded on-chain, assets can be traded, divided, or securely held.
Here are seven RWA trends that are reshaping the financial landscape into 2024.
1. Stablecoins: The foundation of programmable money
With federal regulation looming, stablecoins, the poster child for programmable money, are on the brink of transformative growth that could fundamentally change our perception of what money is. Masu. In the US, his two issuing companies dominate the space: Circle (which issues his USDC as a multi-chain solution) and Paxos (which offers labeled solutions such as his PYUSD for Paypal). Globally, stablecoins have a market capitalization of up to $125 billion and form the fundamental infrastructure layer that powers the Internet of Value. Offering stability and flexibility, stablecoins will revolutionize global payments, remittances, e-commerce, trade finance, and more.
2. Tokenized Treasury: Bridging traditional finance and decentralized finance
The true fusion of traditional and decentralized finance is embodied in tokenized treasuries. As risk-free short-term Treasury yields rise from near zero in early 2022 to around 5.4% in October 2023, companies such as Franklin Templeton, Ondo, Backed, Maple, Open Eden and Superstate are leading the way. We have been promoting tokenization. Short-term U.S. Treasury bills and bank deposits.Through data tokens and analytics platforms RWA.xyz, this new asset class currently boasts a market capitalization of $700 million. Tokenized treasuries are removing barriers and providing new avenues for investment and financial inclusion.
3. Private Credit: Empowering small businesses through DeFi
The private credit market, valued at $1 trillion in the United States and $1.7 trillion worldwide, has long been avoided by small and medium-sized businesses. DeFi lending protocols such as Centrifuge, Goldfinch, Credit, Maple, and Huma are game-changing, opening the floodgates to access debt capital from public markets, the banking system, and traditional markets.
Private credit originator. Focus on a specific industry or region RWA.xyz There is currently approximately $550 million in active loans in the market, and we estimate that momentum will continue over the coming months.
4. Backed NFTs: A revolution in collectible finance
With annual global sales of over $65 billion ($30 billion in the US alone), it’s easy to see that there’s a lot of money in the arts. However, the traditional market for art and collectibles lacks liquidity and incurs exorbitant fees (auction houses can add their 15-20% commission on small-value items). (often). The global collectibles market (coins, stamps, books, comics, art, toys, etc.) is estimated at approximately $400 billion and is similarly illiquid. Marketplaces such as eBay and some smaller custom marketplaces cater to this industry, but financing options are typically limited to pawnshops with high interest rates.
Fortunately, 4K and arcade.xyz We’re changing the paradigm. By bringing physical collectibles onto the blockchain, lending and borrowing assets like Supreme’s T-shirts and comic books became a reality. These efforts will democratize lending and make it available to collectors around the world.
5. Consumer Brand NFTs: Improving Customer Engagement
Major consumer brands such as Nike, Adidas, Louis Vuitton, and Coca-Cola have adopted NFTs. From Starbucks on Polygon to Amazon’s rumored private blockchain efforts, brands are leveraging blockchain to enhance their digital footprints, customer engagement, and entertainment experiences. Whether it’s a public blockchain (Starbucks on Polygon) or a private blockchain (rumors swirling around Amazon), these brands are shaping the future of consumer interaction by incorporating gaming and metaverse elements. It’s shaping.
6. DeFi in climate change and regenerative finance
As ESG concerns grow, blockchain technology is driving positive change in the $2 billion and growing carbon market. Companies like Flowcarbon are leveraging the potential of blockchain to increase transparency in this important market, which is expected to grow 15x by 2030 to meet the goals of the Paris Agreement. Blockchain accuracy and transparency at every stage of the carbon lifecycle is essential to fostering a sustainable future.
7. Tokenized deposits and wholesale bank payments: revolutionizing cross-border transactions
Blockchain technology is reshaping the way banks process tokenized deposits and large-scale payments. Central bank digital currencies (CBDCs) may not be a pressing problem to solve in the United States, especially if private issuers can be regulated at the federal or state level, but some banks have been tokenized. are experimenting with blockchain technology in deposits and wholesale, both internally and between each other. Bank payment. Pilots by industry giants like Citi and JPMorgan Chase are demonstrating the potential for instant cross-border transactions. This sector will continue to expand in the coming months, increasing the efficiency of global finance.
These RWA trends usher in a new era in finance and provide solutions to long-standing challenges. Their market capitalization may seem modest now, but their transformational potential is immense. Stablecoins, tokenized treasuries, decentralized private credit, physically backed NFTs, consumer branded NFTs, DeFi in climate change and regenerative finance, and tokenized deposits/wholesale bank payments. It’s not just a trend. They are the building blocks of a more inclusive, efficient and sustainable financial future. As we move into 2024, these innovations will undoubtedly lead the way, creating unparalleled opportunities for both businesses and individuals.
