Real world assets (RWA) - The next trend, narrative and meta
Hey, friends!
Some consolidating over the last weeks. The BTC.D (Bitcoin dominance) sits at 55% and it will probably continue until the halving.
My bet is that ETH soon will be the play though, but how long are they going to let a man wait? Haha.
Today’s newsletter is a look into crypto RWA coins. Enjoy ;)
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Real world assets (RWA) - The next trend, narrative and meta
In the past weeks, we’ve seen one sector outperform everything else, including memes, AI, and of course the majors - this sector being RWAs. In a groundbreaking move, tradfi giant BlackRock has shown support into this specific sector and announced the launch of the first ever tokenised fund on Eth mainnet, using Coinbase as the infrastructure provider.
It will not be a surprise to see the RWA sector grow exponentially throughout the upcoming months and after spending time looking into this sector, and reading all over CT on “the next RWA 100x” I’ve found some good candidates in this sector, which may continue to perform well - as we’ve all heard the saying “outperformers remain outperformers”. With that said I don’t think these will 100x from here, but a 5-10x? Maybe.
In this week’s newsletter feature, I want to discuss what the RWA narrative is, and projects I have considered to be top contenders in this heavily undervalued sector.
Let’s start by going through what RWAs are, well, imagine owning a physical, real world building or even art, but digitally. RWAs allow users to do that - fragmenting physical assets into tradeable tokens traceable on the blockchain. RWAs are tangible assets in the physical world introduced onchain. In layman's terms, RWAs fragment physical assets, allowing your generic retail market participants to participate in investments otherwise made for “big players”, RWAs do this by breaking down assets into smaller units making it accessible for everyone.
As mentioned above, BlackRock, arguably the largest wealth management fund decided to launch BUIDL, a digital asset fund on Ethereum - funny enough, this is and probably ever will be the largest indicator of the RWA sector, given that even memecoin projects are sending tokens to BlackRock’s mainnet address in an attempt to deceive market participants into thinking they have bought some.
BlackRock was also very early to adopt BTC ETFs, clearly cementing themselves as trendsetters for other tradfi institutions to follow in crypto. The RWA sector is estimated to be worth $16 trillion by 2030.
The collateralization of centralised stablecoins, like Tether’s USDT ($84B in market cap) and Circle’s USDC ($25B) with U.S.Treasuries served first as a precursor to the growing trend of asset tokenisation. Today, this bridging activity between TradFi and DeFi markets, extends to money market fund shares, securities ETFs, and reverse repo deals, enhancing global liquidity and accessibility to those financial instruments. Real World Asset (RWA) tokenisation also aims to unlock liquidity in emerging markets and promote financial inclusivity.
The biggest and most successful projects that today operate in the RWA niche are undoubtedly the likes of Maker DAO, Paxos and Frax Finance.
RWA tokenisation keeps up the growth pace. With the approval of the Bitcoin and Ethereum’s ETFs in the US, the capital flowing into the industry to build the rails connecting TradiFi and DeFi pushes innovation forward and sets the pace for other jurisdictions as well.
Let’s take a look at some data from the top data aggregators in crypto: CoinGecko (CG) and CoinMarketCap (CMC).
CoinGecko estimates the total mcap of RWAs to be approx. $8b with a total trading volume of just short of $1b
CoinMarketCap estimates the total mcap of RWAs to be approx. $50b with a total volume of above $3b
The impact RWAs have extends far beyond the crypto space, they bridge the gap between tradfi and crypto and here’s how:
Investment opportunity democracy: as mentioned above, RWAs allow retail market participants to gain access to “exclusive” asset classes
Tradfi integration: RWAs are the bridge to institutional and mainstream adoption into crypto.
By linking tangible real world assets with digital counterparts, RWAs facilitate an almost flawless meld of the physical and digital realm. Let’s take a look at some projects I have kept my eye on.
Ondo Finance ($ONDO)
The Ondo ecosystem has one main aim: to make institutional-grade financial products and services available to anyone and everyone at all financial levels. $ONDO is also known to be the first mover in this sector and is also on the most used chain in the entire crypto ecosystem: Solana. Ondo Finance provides a number of pools:
a) $USDY a pool secured by short term US treasuries and bank deposits (5% APY)
b) $OUSG provides exposure to ETF of short-term US treasuries (4.6% APY)
c) Ondo token bridge - allowing the seamless transfer of $ONDO across differing blockchains.
Taking a brief look at their tokenomics, they have a circulating supply of around 1.5b over a max supply of 10b - this on face value is pretty scary, with a ton of supply being locked (assumption here is that these tokens were sold at a very low price), meaning price could stagnate at some point. The next big unlock is in January 2025 whilst there is around 50,000 $ONDO being unlocked daily.
Being backed by the likes of Coinbase and Pantera whilst also being the first mover in the RWA sector, it is very likely to continue to outperform the markets.TokenFi ($TOKEN)
TokenFi is essentially building an all-in-one platform for creating tokens and tokenising RWAs without coding. This sector as mentioned above is projected to be $16 trillion by 2030. A very important factor to the price rise of $token is the fact that it is also backed by BlackRock and is the sister company to $floki - arguably one of the largest meme coins. As such, it is also a strong buy for a ton of meme supporters. This is also evident via its relative strength throughout any pullbacks against other RWA tokens.
$Token has a variety of features, the first key one being a token launcher. This feature allows any user to seamlessly launch a token, with features and tokenomics customisation, liquidity setups on major DEXs, and also a bot for instant token deployment via Telegram and Discord.
Holders are also able to stake $token for rewards on both BNB and ETH chains - with duration options ranging from 3 months to 4 years, this feature was launched at the end of Q4 2023.Mantra Chain ($OM)
Mantra chain - something that has really caught my attention. This is a coin that was in the top 10 searches on CoinGecko and has little to no info at all about it on crypto twitter (the homebase of information for crypto natives). This is a coin which has surged extremely heavily in price so what exactly is it, and why is no one talking about this?
Mantra fundamentally is a security first RWA L1 blockchain, which is capable of adherence and enforcement of real world regulatory requirements (making them compliant with regulatory bodies). In relation to RWAs, the main feature is called the Assets Module. Mantra enables businesses and individuals alike to launch tokens which represents real-world assets - including but not limited to art, commodities and property. Users of this specific feature would be able to customise token characteristics ie: name, symbol, supply, etc and this flexibility extends even to yield and royalties configuration and much more.
Mantra’s assets module acts as a bridge - facilitating the representation of RWAs such as securities in the digital realm of crypto, which opens up a large stream of avenues for efficient management and trading of tradfi instruments. It is a huge mystery as to why there are little to no info on $OM or Mantra on crypto twitter, but with large tradfi names backing them, and the tech they are building? It will be no surprise to see this 600m mcap coin trade at 100x its current price.
4. DUSK
Dusk is in essence a permissionless, ZK-friendly L1 blockchain focused on both compliance and privacy to tokenise RWAs. They are what is known as “FMI” - financial market infrastructures. Dusk acts as a clearance and settlement layer for exchanges, primary market platform for regulated entities to issue securities and P2P trading.
These are facilitated through smart contracts outside a centralised entity because Dusk has privacy which is the reason Dusk can be neutral - as such the privacy features make it an ideal choice. As such, Dusk becomes a global settlement layer and global depository which multiple exchanges can connect to - with privacy and compliance, Dusk becomes the single source of truth that the market cannot achieve otherwise.
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I hope I gave you a little sneak peak into RWA.
You can check out all RWA coins here:
https://www.coingecko.com/en/categories/real-world-assets-rwa
Also, some parts of this newsletter post are made in collaboration with Impossible Finance. Check them out here: https://twitter.com/impossiblefi
That’s it for today!
Happy trading and good luck with buying all the dips in 2024!
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