Author: Anne
Editor: Caiyun
introduction:
As the blockchain industry develops rapidly, asset tokenization is becoming a revolutionary force that cannot be ignored, especially for assets that are traditionally considered to have poor liquidity. This article will explore in depth how asset tokenization can inject new vitality into these assets, reshape the market landscape, and create unprecedented opportunities for investors.
The tokenized asset market could reach $10 trillion by 2030
Asset tokenization refers to the process of converting physical assets or financial assets into digital tokens on the blockchain. This process makes assets that were originally difficult to divide and trade more flexible and easy to circulate. According to Chainlink's latest report, the current value of tokenized assets is approximately US$118.57 billion, of which the Ethereum network accounts for 58% of the market share.
This number may seem considerable, but we have only scratched the surface. The World Economic Forum estimates that there are approximately $867 trillion in assets worldwide that have the potential to be tokenized. In addition, Chainlink predicts that by 2030, the global tokenized asset market size may soar to $10 trillion. The driving forces behind this growth trend include increased interest from institutional investors, the continuous improvement of blockchain technology, and the gradual improvement of regulatory frameworks in various countries.
Traditionally, assets such as real estate, private equity, and art are often considered to be illiquid assets. These assets usually have high barriers to entry, are difficult to divisible, and have long transaction cycles, all of which limit their liquidity. However, asset tokenization is completely changing this situation:
Traditionally, assets such as real estate, private equity, and art are often considered to be illiquid assets. These assets usually have high barriers to entry, are difficult to divisible, and have long transaction cycles, all of which limit their liquidity. However, asset tokenization is completely changing this situation:
a) Fractional ownership: Through tokenization, large assets can be divided into smaller units, lowering the investment threshold and enabling more investors to participate.
It breaks geographical restrictions and expands the potential investor group.
d) Smart contract automation: Through smart contracts, processes such as asset management and profit distribution can be automated, reducing operating costs and human errors.
Image source: analyticsinsight
Take real estate as an example. Traditionally, investing in a commercial building requires a lot of money, and once invested, the money will be locked for a long time. Through tokenization, the ownership of this building can be divided into thousands or even tens of thousands of tokens, and investors can buy any number of tokens according to their needs and abilities. This not only lowers the investment threshold, but also greatly improves the liquidity of assets.
Market growth drivers for asset tokenization
Image source: RWA.XYZ
Let's take a look at the current situation of the RWA sector. According to the latest data from RWA.XYZ, the on-chain real world assets (RWA) market is showing a remarkable growth trend. At present, the total asset size of on-chain RWA has reached 12.42 billion US dollars, and the number of asset holders is 63,216. In contrast, the scale of the stablecoin market is even larger, with a total value of 172.54 billion US dollars, and the number of holders has exceeded 122 million. As can be seen from the chart, the value of RWA assets has shown a slow growth trend since 2021, and after entering 2024, the growth rate has accelerated significantly, entering a rapid growth stage.
The rapid growth of the asset tokenization market is not accidental, but the result of multiple factors:
a) Increased institutional participation: A survey by Bank of New York Mellon and Celent showed that 97% of institutional investors believe that tokenization will "completely change asset management." This high level of recognition reflects the huge interest of traditional financial institutions in tokenized assets.
b) Technological progress: The Ethereum network has more than 6 million active users per day, providing strong technical support and market foundation for tokenized assets. With the continuous development of blockchain technology, the tokenization process will become more efficient and secure.
c) Regulatory support: Regulatory agencies in various countries have begun to actively explore and support asset tokenization. For example, the Project Guardian project of the Monetary Authority of Singapore (MAS) has piloted the tokenization of bonds and deposits based on blockchain with regulatory support, providing a strong institutional guarantee for the development of the industry.
d) Market demand: Investors are increasingly demanding more flexible and diversified investment tools. Asset tokenization meets this demand, providing investors with opportunities to access asset classes that are traditionally difficult to invest in.
Although asset tokenization has a bright future, there are still many challenges and opportunities to achieve the $10 trillion market size predicted by Chainlink:
Although asset tokenization has a bright future, there are still many challenges and opportunities to achieve the $10 trillion market size predicted by Chainlink:
1) Increased institutional participation:
In early 2023, financial giants such as BlackRock and Fidelity entered the blockchain economy, greatly enhancing the legitimacy of the crypto industry and narrowing the gap between traditional finance and the blockchain industry. This participation not only brought in funds, but more importantly, it brought confidence and recognition. For example, the digital liquidity fund "BlackRock USD Institutional Digital Liquidity Fund" launched by BlackRock in March 2024 quickly became the main force in the tokenized treasury bond market, fully demonstrating the enthusiasm of institutional investors for this emerging market.
Finding a balance between protecting the interests of investors and maintaining a sound financial system will be a challenge faced by both the industry and regulators. In particular, more unified and transparent standards are needed for cross-border transactions and asset valuations.
3) Technological innovation:
The continuous advancement of blockchain technology has provided a solid foundation for asset tokenization. However, how to ensure the security, scalability and interoperability of the system remains the key direction of technological development. The audit and optimization of smart contracts will also become the key to ensuring the security of tokenized assets.
4) Market education and popularization:
Although the participation of institutional investors is increasing, asset tokenization is still a relatively new concept for most individual investors. How to popularize relevant knowledge and increase investor acceptance and participation is the key to promoting market development.
5) Product innovation:
The explosive growth of the tokenized treasury bond market reveals investors’ strong demand for low-risk, high-liquidity tokenized assets. In the future, we may see more types of traditional assets being tokenized, such as commercial real estate, artworks, and even intangible assets such as intellectual property. This will provide investors with more diversified portfolio options.
6) Cross-chain interoperability:
With the increase of tokenized assets on different blockchain platforms, how to achieve seamless interaction and transfer of cross-chain assets will become an important issue. This involves not only technical issues, but also compliance issues under different regulatory systems.
Conclusion
Asset tokenization is injecting new vitality into low-liquidity assets and reshaping the global financial market. Although there are still challenges along the way, its potential is enormous. With the advancement of technology, the improvement of supervision and the maturity of the market, we have reason to believe that asset tokenization will become an important force in promoting financial innovation and inclusive finance, creating more value for investors and asset owners.
