Key takeaways
- Tokenized Treasuries rose from $769 million to $2.2 billion in 2024 due to high interest rates in the United States.
- BlackRock’s BUIDL leads the tokenized Treasury bond category with a market cap of over $500 million.
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The real-world asset (RWA) market has reached a record high of $12 billion tokenized, according to a report from Binance Research.
The sector comprises five main categories: tokenized Treasuries, private credit, commodities, bonds and stocks, and real estate.
Main RWA categories
Tokenized Treasuries have seen explosive growth in 2024, rising from $769 million at the start of the year to over $2.2 billion in September. This surge is attributed to U.S. interest rates being at their highest level in 23 years, with the federal funds rate target held in a range of 5.25% to 5.5% since July 2023.
Private credit, estimated by the International Monetary Fund (IMF) to be worth more than $2.1 trillion by 2023, saw its on-chain market grow to nearly $9 billion, up 56% from last year.
The commodities category is primarily dominated by tokenized gold products, with Paxos Gold (PAXG) and Tether Gold (XAUT) holding approximately 98% market share of the $970 million market.
According to the report, bond and stock tokenization is much smaller than other RWA verticals as they have a market cap of nearly $80 million.
The tokenized bond market includes a few non-U.S. products, such as European debt and corporate bonds. In addition, the tokenized stock market is marked by digital representations of Coinbase, NVIDIA, and the S&P 500 on the blockchain, all issued by the company RWA Backed.
Institutions fueling tokenization
Institutional engagement has been a key growth driver. BlackRock’s BUIDL tokenized treasury product leads the category with a market cap exceeding $500 million, while Franklin Templeton’s FBOXX is the second largest, with a market cap of $440 million.
Notably, the growth of the tokenized U.S. Treasury sector is also fueling integrations with decentralized finance (DeFi) protocols, such as lending protocol Aave. In an August 26 proposal, the money market suggested using BUIDL shares to generate yield and contribute to the stability of its GHO stablecoin.
The risks of a new industry
The report also addresses the risks inherent in the RWA sector, starting with the centralization of the protocols’ smart contracts and their architecture. However, Binance Research analysts believe that this is inevitable, given the regulatory requirements related to the tokens’ underlying assets.
A notable recent example is the rebranding of money market protocol MakerDAO to Sky, which includes the creation of a new stablecoin, the Sky Dollar (USDS), aimed at achieving regulatory compliance.
Sky co-founder Rune Christensen stressed in a May blog post that this shift to a more centralized, regulatory-compliant model is necessary to deliver real utility and value to people at scale.
Additionally, the report reveals that third-party reliance also poses a risk to RWA architectures, as some aspects of these structures rely heavily on off-chain intermediaries, particularly for asset custody.
Failure of oracles could also pose a threat to tokenized assets, as price discrepancies can harm an entire RWA-based infrastructure.
Thus, the returns generated by RWA tokens do not always justify the complexity of the systems involved.
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