Jamie Coutts, Chief Crypto Analyst at Real Vision, offers a critical view on the future of real-world asset (RWA) tokenization. Wall Street forecasts that $10 to $30 trillion in traditional assets could be tokenized within the next decade. However, Coutts views these numbers as overly ambitious, especially when considering that BlackRock, the second-largest asset manager, currently holds $10 trillion in assets under management (AUM). Instead, he suggests that if the current two-year compound annual growth rate (CAGR) of 121% continues, a more plausible estimate might see around $1.3 trillion in tokenized assets by 2030.
Coutts further examines what this level of tokenization could mean for blockchain ecosystems, particularly in terms of fee revenue. He draws a parallel with the S&P 500, which saw $130 trillion in trading volume in 2023 against a $40 trillion market cap, implying a turnover rate of 317%. He uses this as a reference to project potential turnover rates for tokenized assets on blockchains. However, Coutts acknowledges that this estimate might be conservative, given the typically higher velocity of assets in decentralized finance (DeFi) ecosystems. He imagines a scenario where assets like Apple stock could be pledged as collateral for loans, converted into Ethereum, and then staked for yield on DeFi platforms, highlighting the integration possibilities between traditional finance and DeFi.
When it comes to transaction fees, Coutts predicts that blockchains will significantly undercut traditional equity commission rates, suggesting that a one basis point (bp) rate on traded volume is more likely. Even at this lower rate, the potential fee income for blockchains could be substantial. Moreover, Coutts argues, the tokenization of traditional assets could create a “flywheel effect” on other parts of the blockchain ecosystem, including non-fungible tokens (NFTs), social platforms, and gaming, further driving adoption and revenue.
Coutts also dives into the implications for Ethereum, which remains the platform of choice for early issuers of tokenized traditional assets. He notes that BlackRock and Franklin Templeton have already tokenized over $900 million of U.S. treasuries on Ethereum, underscoring the platform’s current dominance. However, he warns of an emerging “Ethereum dilemma,” where Layer 2 (L2) solutions might capture the lion’s share of revenue, leaving Ethereum’s Layer 1 (L1) with only settlement fees. Permissioned rollups, such as those potentially developed by companies like Robinhood or Interactive Brokers, could take 95-99% of the revenue, limiting the value accruing to Ethereum unless it can scale its L1 effectively.
Coutts also speculates on the future of L2s, suggesting that in non-permissioned environments, L2s could eventually activate a fee switch, allowing token holders to benefit from the revenue generated. In this context, he believes that L2s act as a call option on the possibility of capturing significant value in the future. Yet, according to Coutts, this raises the question of how much market share will ultimately be captured at the L1 versus L2 level, a crucial factor in determining Ethereum’s long-term value proposition.
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