As crypto matures, the idea of tokenizing real-world assets is gaining traction. This process involves creating a virtual investment vehicle on the blockchain derived from tangible items such as homes, gold, art, and even intangible instruments like U.S. Treasuries and contracts. Wall Street and crypto advocates alike argue that tokenization is more efficient and cheaper than traditional methods, allowing for tokenization of smaller value items and theoretically making it accessible to broader swaths of the population.
CoinDesk contributor Jeff Wilser interviewed the CEOs of four startups that tokenize real-world assets, plus financial advisers and blockchain experts about the ideas and theories behind this burgeoning sector. Wilser noted that the impacts of tokenization could be huge: Maybe tokenizing stocks will just be a novelty. But if it’s truly cheaper and more efficient, and if it eventually scales to become the new normal, the impact could change Wall Street in ways it’s hard to imagine. Stocks could be traded 24/7, like cryptocurrency.
Enrico Rubboli, a software developer turned CEO of a Bitcoin sidechain, makes the case for tokenization. He believes that to scale, DeFi platforms need to attract institutions keen to trade tokenized bonds, equities, and debt, and physical assets such as gold, real estate and art. He argues that the way forward is a marriage of TradFi and DeFi, noting that DeFi protocols have already proven their worth in the digital asset markets.
The surge in tokenized U.S. Treasuries is the latest sign of adoption in the growing movement to tokenize real-world assets. Ondo’s OUSG token, one of the largest on-chain tokenized Treasury products, has accrued $134 million of assets under management on Ethereum.
A direct way to invest in this emerging space is to find a fund that gives you broad exposure to millions of dollars of tokenized assets. Data analytics firm RWA.xyz released a report analyzing the emergence of investment vehicles for tokenized Treasuries. MakerDAO, a peer-to-peer lending platform on the Ethereum blockchain, is the third-largest DeFi protocol by total value locked and now earns the vast majority of its fees from the tokenization of real-world assets.