Real World Assets in Crypto: Insights from RWA Report 2024

March 26, 2024

By Anjali Kochhar

Real-world assets (RWAs) in crypto have a history that began with fiat-backed stablecoins like Tether (USDT). However, things changed with the introduction of DeFi in 2020 and the bear market of 2022. This led to a wider range of RWAs being tokenised to meet the needs of on-chain investors. While RWAs mainly focus on debt and credit, they now also include assets like real estate, art, and collectibles, attracting investor interest.

RWA projects essentially bridge the gap between the real world and blockchains, as well as between issuers and investors. Their success depends on how well they can navigate these intersections. Although they rely on third parties like oracles, custodians, and credit assessors, how efficiently they use and manage these services is crucial for their ongoing success.

Real world Assets(RWA)

Real World Assets (RWA) in crypto are tangible things from the real world that are turned into digital tokens and used on blockchain platforms. This includes things like real estate, art, commodities (like gold or oil), and even stocks. People can buy and sell these tokens on special platforms.

One of the first types of RWAs were stablecoins. These are digital tokens that represent real money, like the US dollar or euro. They help keep the value stable, especially when the crypto market is very volatile. Companies like Tether and Circle created stablecoins backed by real assets like money in banks or even gold.

In 2021 and 2022, a new kind of lending market emerged where big institutions could borrow money without needing to provide collateral. Platforms like Maple, Goldfinch, and Clearpool offered these loans based on the borrower’s trustworthiness. However, some of these platforms faced problems and had loans that were not paid back.

When DeFi (Decentralised Finance) profits went down in 2023, more people started investing in tokenised treasuries. These are tokens representing government debts (like US Treasury bills). Providers like Ondo Finance and Franklin Templeton saw a huge increase in people investing in these tokens, which led to a big jump in the total value of tokenised treasuries on the market.

Key Highlights of Real World Assets report 2024:

1. USD-Pegged Assets Dominate Fiat-Backed Stablecoins

USD-pegged stablecoins dominate the real-world assets (RWA) market, constituting 95% of it. Tether (USDT) leads with $96.1 billion, followed by USDC at $26.8 billion and Dai (DAI) at $4.9 billion, collectively holding 71.4% of the market. Despite a brief depegging during the US banking crisis in March 2023, USDC hasn’t fully recovered. Other stable assets like Euro Tether (EURT), CNH Tether (CNHT), Mexican Peso Tether (MXNT), EURC, Stasis Euro (EURS), and BiLira (TRYB) make up just 1% of the market.

The market cap of stable assets surged from $5.2 billion in early 2020 to a peak of $150.1 billion in March 2022, declining during the bear market but growing by 4.9% in 2024 to reach $134.6 billion as of February 1.

2. Commodity-Backed Tokens Hits $1.1B in Market Capitalisation, Gold Remains Most Popular Commodity 

Tokenised precious metals like Tether Gold (XAUT) and PAX Gold (PAXG) make up 83% of commodity-backed token market cap. These tokens are backed by one troy ounce of physical gold. Others like Kinesis Gold (KAU) and VeraOne (VRO) are pegged to one gram of gold. 

Despite their dominance, tokens tied to other commodities are emerging. For instance, the Uranium308 project offers tokenised uranium pegged to 1 pound of U3O8 uranium compound’s price. It’s redeemable, but strict compliance protocols must be met.

Commodity-backed tokens hold a $1.1 billion market cap, but this is just 0.8% of fiat-backed stablecoins’ market cap.

 3. Tokenised Treasury Products Have Grown 641% in 2023, Worth Over $861M Now

During the bear market tokenised US treasuries became popular, growing by 641% in 2023 from $114 million to $845 million. However, growth slowed to 1.9% in January 2024, reaching a market cap of $861 million. Franklin Templeton leads with $332 million in tokens issued, capturing 38.6% of the market. Yield-bearing stablecoin issuers like Mountain Protocol and Ondo Finance are also popular. Mountain Protocol has minted $154 million USDM tokens, while Ondo has a $132.4 million market cap for USDY tokens. Most tokenised treasuries are on Ethereum (57.5% market share), but Franklin Templeton and Wisdomtree Prime issue on Stellar (39% dominance).

4. The Demand for Private Credit Is Largely Concentrated in the Automotive Sector, Comprising 42% of All Loans

Private credit protocols have issued loans totalling $470.3 million, with 42% ($196.0 million) allocated to car loans. Fintech and real estate sectors account for 19% and 9% of debts, respectively. In 2023 auto loans surged reaching $168.0 million across 60 loans, while fintech took no new loans. Real estate and crypto trading received 840 loans, but only 10% remain active with the rest repaid or defaulted. Notably, 13 defaults occurred in crypto trading post the Terra and Three Arrows Capital collapse.

Demographically borrowers are mainly from emerging markets like Africa, South-East Asia, Central America, and South America. African firms alone received 42 loans comprising 40.8% of all loans.

About the author

Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.

Translate Now