Why Crypto Bigwigs Like Avalanche and Chainlink are Jumping On The RWA Bandwagon

Tokenization of real-world assets is a blue ocean opportunity for TradFi and crypto to capitalize on rising yields. The RWA TVL on chains stands close to US $6 billion today. Meanwhile, the US government receives $600 million from the tokenized treasury market alone, and by 2030, the tokenized asset market is touted to reach $16 trillion.

RWA tokens are the convergence point for traditional assets like stocks, bonds, real estate, etc., and blockchains. Bigwigs like Centrifuge, Propy, Landshare, Rio, Polymesh, etc., are killing it in the current RWA landscape. Conversely, blockchains like Avalanche, Chainlink, ICP, and Ethereum provide the infrastructure to tokenize such assets.

Have we arrived then?

RWAs are the latest sensation on the DeFi scene, offering volatility-free returns and formidable use cases for both TradFi and DeFi. It’s time we learned the why behind the Midas Touch.

Why Traditional Real-World Assets and Blockchains are Finding the RWA Narrative Lucrative

RWA entities are attempting to tokenize ‘everything from money market funds to large but illiquid private markets and areas like real estate,’ adding cost efficiencies, transparency, and traceability to TradFi and bringing more use cases for DeFi.

One of the foremost scalable layer-1s, Avalanche has invested US $50 million via its foundation to bring more real-world assets on-chain. Financial institutions can test RWA’s capabilities on its subnets. Chainlink’s oracles are the interconnecting links between the outside world and blockchain infrastructure.

For public blockchain ecosystems, RWAs are the key to asset diversification beyond the scope of crypto markets.

Sergey Nazarov, the co-founder of the decentralized oracle network Chainlink, says,

“Eventually, the biggest market for real-world assets from banks will be public blockchain protocols that need diversified collateral. The yield from the public blockchain world will be very attractive to banks, and public chains will greatly benefit from the assets that the banks tokenize and put into their protocols, making those protocols more resilient and reliable.”

Citibank’s pilot for tokenized deposits and trade finance application and institutional custody firm Taurus, which has begun working with Deutsche Bank.

Tyrone Lobban, JPMorgan’s head of Onyx Digital Assets, said,

“You still get the benefits of having a highly redundant, ever-persistent settlement rail in the public blockchain, but you can operate in a more controlled environment with AML KYC [anti-money laundering, know-your-customer] requirements, for instance.”

How RWAs are Deriving the Use Cases and Utilities

TradFi sees RWAs as an opportunity to expand its user base, while blockchains attempt to find new use cases via RWAs.

Also, traditional asset backing gives RWAs the sustained value and growth for which TradFi is known. If Bitcoin turns zero (a far-fetched possibility), RWAs will remain SAFU. RWAs can be used to tokenize artworks, collectibles, stocks, bonds, loans, market instruments, etc.

Let’s ask you something. What do you do with your stablecoins?

— Ward off volatility during crypto’s ups and downs, or put your money to work in yield-bearing DeFi platforms?

99% of the projects in the space are junk that don’t even launch a product. USDT staking gives less than 6% on top Defi platforms such as Coinloan, Nexo, and Crypto.com. They’re scams, speculation, and empty hype.

That’s not the case with RWAs. But USDT staking in RWA can make you as high as 20%. Take a look at Landshare.

The project has gained enormous traction as a tokenized real estate platform. You can purchase a fraction of a property and earn capital appreciation and yield, use your RWA tokens as collateral to borrow loans, or become an investor in liquidity pools to earn interest on them.

Led by an expert team and strong community, Landshare is a US-regulated asset-backed platform offering multiple utilities and income streams via capital appreciation, secondary market sales, staking, and lending. Here’s a comparative outlook for the top players in the RWA sector:

How does the outlook for the RWA sector look?

Ryan Rugg, a former executive at IBM and banking blockchain specialist R3 to head up CitiBank’s new token services unit, further elaborates on RWA utilities,

“We recognize that clients want multi-bank, multi-jurisdiction, cross-border liquidity. They don’t want a siloed system; they want to be able to move liquidity freely across a multitude of banks and to streamline that operational process and optimize their liquidity across their markets.”

The RWA market is set to explode and fuel the next phase of adoption in crypto. TradFi seems starstruck, while DeFi is attempting to cash on the opportunity. With Bitcoin halving around the corner, the market is looking up, and so are the prospects for RWAs as a sector driving the next bull run in crypto.