By 2030, the market value of real-world assets is projected to reach $16 trillion. Binance takes stock of this year's progress in Risk-Weighted Assets (RWA).

The representation of Real World Assets (RWA) through tokenization has been a focal point this year, with major financial and crypto institutions providing regular updates on the progress each quarter. Binance's recent release of "Real-World Assets: State of the Market" not only takes stock of the progress of real-world assets this year but also forecasts that the tokenized asset market will reach $16 trillion by 2030.

What are Real World Assets (RWA)?

Real World Assets (RWA) refer to tangible assets that exist in the physical world, such as real estate, cars, artwork, and more. These assets typically have stable value and income potential, and can be used as collateral for loans or as investment instruments.

In the blockchain world, RWA specifically refers to assets that exist off-chain, are tokenized and brought onto the chain, and are used and traded in DeFi. Assets like real estate, gold, traditional financial instruments such as stocks, bonds, or even trending assets like carbon credits can be tokenized and brought into the blockchain realm.

RWA Still in Early Stages, Currently at $10 Billion

A report indicates that the RWA market is still in its early stages of development, but there are signs of increasing adoption rates and growing Total Value Locked (TVL). According to protocols tracked by DeFi Llama, RWA has become the 10th largest sector in DeFi, rising from 13th place just a few weeks ago by the end of June. One significant contributor is the introduction of stUSDT in July, allowing USDT holders to earn returns based on RWA.

Among these, the tokenized U.S. Treasury market accounts for $603 million, with major players being traditional financial giant Franklin Templeton and decentralized investment platform Ondo Finance.

RWA Market Expected to Reach $16 Trillion by 2030

Binance cites a report from Boston Consulting Group, projecting that the tokenized asset market will reach $16 trillion by 2030, a significant increase from $310 billion in 2022. This estimate includes tokenization of on-chain assets and is more relevant to the blockchain industry, as well as tokenization of traditional assets like ETFs, real estate investment trusts. Given the potential market size, even capturing a small portion of the market is promising for the blockchain industry.

Binance Reviews RWA Projects This Year

RWA, dubbed by JPMorgan as a killer app, is set to become a popular term in 2023. Here are the RWA projects reviewed by Binance this year:

• Goldman Sachs launched its new digital asset platform GS DAP, which is based on the Daml smart contract language and its privacy-supporting blockchain Canton. The platform aims to digitize assets and automate workflows within the ecosystem. The Hong Kong Monetary Authority issued an $800 million tokenized green bond in February using Goldman Sachs' GS DAP.
• Intain introduced the IntainMARKETS solution on Avalanche, providing a tokenized market for structured financial products.
• Europe's largest industrial manufacturer Siemens issued a one-year $64 million digital bond on Polygon, with investors including DZ Bank and Union Investment. The goal is to streamline processes and eliminate the need for central clearinghouses.
• Franklin Templeton announced bringing its OnChain U.S. Government Money Fund to the Polygon blockchain. The fund, with assets totaling $272 million, primarily invests in government securities and repurchase agreements.
• The Canton Network launched a financial institution alliance on its blockchain, including BNP Paribas, Cboe, Goldman Sachs, and Microsoft, providing decentralized infrastructure for tokenization and blockchain interoperability.
• MakerDAO has opened its RWA vault for its assets, USDC and DAI, to generate returns, such as setting up a vault at Coinbase Custody and approving the transfer of up to $500 million USDC stablecoin at a 2.6% yield. Monetalis vault investments in short-term U.S. Treasuries have reached a limit of $1.25 billion.
• Centrifuge introduced the new product Centrifuge Prime, offering technical and legal frameworks for DAOs to invest in RWA. Previous partners include Aave and MakerDAO using the Centrifuge platform.
• The Monetary Authority of Singapore (MAS) collaborated with the Bank for International Settlements (BIS) to propose an open and interoperable network for tokenized digital assets, known as Project Guardian.
• Japan's largest bank MUFG is discussing using its blockchain platform Progmat to mint stablecoins with institutions.
• Compound founder proposed launching the Superstate Fund, creating a government bond fund on the Ethereum blockchain investing in ultra-short-term government securities.
• Maple Finance launched the new lending arm Maple Direct, providing over-collateralized loans to Web3 enterprises.
• The European Central Bank outlined exploring wholesale CBDCs and other options to support DLT transaction settlements, including experimenting with central bank funds starting in 2024.
• Mastercard is piloting an experiment called the "Multi-Token Network," starting with exploring tokenized bank deposits. The goal is to transition to CBDCs and regulated stablecoins in the future.
• Tron's first RWA product, stUSDT, officially launched. Users can pledge USDT on the platform to receive stUSDT and invest in RWA for rewards.
• The Financial Stability Board (FSB) announced a work plan to explore asset tokenization projects and assess their vulnerabilities and policy impacts on the financial system. This progress follows discussions by the Payments Committee and Market Infrastructure Board on the benefits, risks, and challenges of the tokenized financial ecosystem for central banks.

Looking ahead, it is hoped that continued innovation and development in the RWA sector will bring more applications and contribute to the adoption of cryptocurrencies.