Tokenized real-world assets (RWAs) represent a $30 trillion market opportunity globally, Colin Butler, Polygon’s global head of institutional capital, told Cointelegraph in an interview.
Adoption will largely be driven by high-net-worth individuals dramatically increasing portfolio allocations to alternative assets — such as private credit — as tokenization brings liquidity and accessibility to historically illiquid asset classes.
“The idea is that there are $300 trillion in global assets, half of which—$100 trillion—are owned by individuals with net worths between $1 million and $30 million” whose portfolio allocations to alternative assets are often negligible, Butler said.
“So in the future, and probably not too far off, you’ll go to your JP Morgan private banker, and he’ll say, 'I see you have 0% allocated to this. I’d recommend more like an endowment model of 20%.' If you extrapolate that 20% to everyone else, it’s a $30 trillion opportunity globally.”
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Approximately $9 billion has been invested in tokenized private credit instruments so far, according to data from RWA.xyz. That figure is set to grow dramatically as large private equity funds enter the space, Butler said, adding that this is already starting to happen.
“The big examples so far are KKR, which was the first on Avalanche, and then Hamilton Lane… Brevan Howard was the first big hedge fund example, and these are all tokenized on Polygon,” Butler said.
Butler expects this trend to continue, with tens of billions of dollars of additional tokenized private asset issuance in the coming years.
“The heads of digital at these places, they’re thinking this way,” he explained. “If a private equity company with $500 billion AUM is modeling raising $500 billion more in the next five years, they’re modeling 10% growth, or $50 billion, from this vertical.”
Excluding stablecoins, approximately $11.6 billion in tokenized RWAs are currently held on blockchain networks. The most popular RWAs are currently tokenized money market funds such as BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and Franklin OnChain U.S. Government Money Fund (FOBXX). They manage some $520 million and $420 million, respectively, according to RWA.xyz.
Polygon Technology develops blockchain scaling solutions and operates an Ethereum scaling chain with a total value locked (TVL) of approximately $850 million, according to data from DefiLlama.
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