The market capitalization of tokenized real-world assets (RWAs) is projected to reach staggering heights in the coming decade, according to a recently released report by digital asset management company 21.co. In a bullish scenario, it could balloon to as much as $10 trillion, while even in a bearish scenario, it is expected to reach $3.5 trillion by 2030.
Rapid Growth in Tokenized RWAs
The current market cap of tokenized RWAs stands at approximately $116 billion, with USD-pegged stablecoins making up 97% of this figure. The majority of tokenized RWAs, around 60%, are issued on the Ethereum blockchain, which remains the most widely used layer-1 protocol in the Decentralized Finance (DeFi), Non-Fungible Token (NFT), and web3 worlds.
“These digital dollars mark the ‘first successful tokenization implementation’.”
– 21.co
USD-pegged stablecoins like Tether’s USDT and Circle’s USDC have played a significant role in facilitating the transfer of assets with a value equivalent to that of an actual US dollar in a permissionless, censorship-resistant, borderless, and near-instant manner.
Growth in Asset Tokenization
21.co highlights the rapid growth in other areas of asset tokenization, particularly the tokenized US government bond market, which has seen a remarkable 450% growth rate. The rise in US bond yields to multi-decade highs this year has further fueled this growth.
“The convergence between crypto and traditional asset classes, including fiat currencies, equities, government bonds, and real estate, is experiencing an unprecedented growth.”
– 21.co
As the crypto sector matures, 21.co predicts that traditional institutions will increasingly build their own blockchain-based products, ushering in the integration of real-world assets on-chain through tokenization.
Nevertheless, 21.co acknowledges that regulatory barriers and the lack of standardized processes could hinder the widespread adoption of tokenized RWAs.
The Potential Impact on Ether (ETH)
If Ethereum continues to dominate as the preferred blockchain for issuing tokenized RWAs, the demand for its native cryptocurrency, Ether (ETH), is expected to surge. Ether’s market cap currently stands at around $188 billion, significantly higher than the $60 billion worth of tokenized assets directly issued on its blockchain.
“Assuming blockchains like Ethereum are able to maintain a dominant position as a place to issue tokenized RWAs, this could substantially bolster the demand for Ether (ETH) in the years ahead.”
– 21.co
Should Ethereum host 60% of the projected $10 trillion in tokenized RWAs by 2030, Ether could potentially become a multi-trillion dollar asset, potentially rivaling the market cap of gold, which currently stands at approximately $12.8 trillion.
However, it is important to note that Ether has recently experienced poor performance, with a decline of over 6% in the past month and a 25% drop from this year’s highs. A weak demand for recently launched Ether futures ETFs in the US and low on-chain activity have contributed to this slump. Moreover, falling yields on staked ETH and relatively high transaction fees continue to pose barriers to adoption.
As of now, Ether is trading around the $1,570 mark, with potential downward pressure that could lead to a break below a key long-term support level in the low $1,500s and a subsequent drop towards the sub-$1,400 March lows.
