RWA market grows to $12 billion, with traditional firms leading the charge

Share this article

The real-world asset (RWA) market has reached an all-time high of $12 billion tokenized, according to a Binance Research report.

The sector comprises five main categories: tokenized treasuries, private credit, commodities, bonds and equities, and real estate.

Main categories of RWA

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 increase is attributed to the fact that US interest rates were at a 23-year high, with the target federal funds rate held constant in the range of 5.25 to 5.5% from July 2023.

Private credit, estimated by the International Monetary Fund (IMF) to be worth more than $2.1 trillion in 2023, has seen its on-chain market grow to nearly $9 billion, up 56 percent over the past year.

The commodity category is primarily dominated by tokenized gold products, with Paxos Gold (PAXG) and Tether Gold (XAUT) holding roughly 98% of the market share in the $970 million market.

According to the report, bond and equity tokenization is much smaller than the other RWA verticals as they have a market cap of nearly $80 million.

The tokenized bond market includes some non-US 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 that power tokenization

Institutional involvement was a key driver of growth. BlackRock’s tokenized treasury product BUIDL 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 .

In particular, the growth of the tokenized US treasury sector is also fueling integrations with decentralized finance (DeFi) protocols such as the Aave lending protocol. In an Aug. 26 proposal, the money market suggested using BUIDL shares to generate yield and help stabilize its GHO stablecoin.

The risks of a new industry

The report also addresses the risks in the RWA industry, starting with the centralization of smart contract protocols and their architecture. However, Binance Research analysts believe that this is inevitable given the regulatory requirements related to the underlying assets of the tokens.

A notable and recent example is the rebranding of the MakerDAO money market protocol to Sky, which includes the creation of a new stablecoin, the Sky Dollar (USDS), aimed at achieving regulatory compliance.

Sky co-founder Rune Christensen emphasized in his May blog post that this shift to a more centralized and regulatory-compliant model is necessary to deliver real utility and value to people at scale.

Additionally, the report found that reliance on third parties is also a risk for RWA architectures, as some aspects of these structures rely heavily on off-chain intermediaries, particularly for asset custody.

The failure of oracles could also pose a threat to tokenized assets, as price discrepancies can affect an entire RWA-based infrastructure.

Thus, the returns generated by RWA tokens may not always justify the complexity of the systems involved.

Share this article