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Real world asset tokenisation could attract more investors

GrafaGrafa2024/09/09 04:25
By:Mahathir Bayena

A recent report by McKinsey & Co suggests that the tokenised real-world asset (RWA) sector could grow to nearly $4 trillion by 2030.

The digital representation of physical assets on blockchains, like real estate, precious metals, and artwork, is expanding into traditional finance products such as private credit, bonds, and treasury bills.

Notably, major financial institutions such as BlackRock, Goldman Sachs, and Franklin Templeton are leading the way in this space, with the RWA sector outperforming other crypto sectors in asset growth during Q2 2024, as per data from Artemis.

RWAs, which are rooted in traditional finance principles, are gaining traction among investors looking for more stable, risk-adjusted returns compared to volatile cryptocurrencies.

According to Alex Palmer, Head of Product at Plume Network, the RWA industry is rapidly evolving, attracting both institutional and retail investors who seek high-yield products built on solid fundamentals.

However, despite its growth potential, the RWA sector is still in its early stages and is influenced by external market factors.

There is an estimated $1.5 trillion in tokenised securities processed on private blockchains each month, which adds to the sector's growing prominence.

Yet, the industry's full potential remains tied to improving liquidity and user experience.

For the RWA market to flourish, it is essential to educate investors about the benefits of tokenised assets, such as risk-adjusted yields and non-correlation to the volatile crypto market.

Integrating traditional accounting methods, like credit risk ratings, could enhance investor confidence by providing transparent and verifiable asset pricing.

To drive sustainable growth, the RWA industry must attract fresh capital from traditional Web2 markets rather than relying solely on fragmented Web3 liquidity pools.

As the sector matures and adopts prudent strategies, it could witness widespread adoption by a broader range of investors looking for stability and diversification.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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