December 31, 2023

2023 in Review: The Transformative Year for Real-World Asset Tokenization

5 min read

As the year comes to a close, it is important to review and highlight exciting trends and key developments within the RWA space. At a glance, we have witnessed tremendous, continued interest and exploration into tokenizing various financial products, as well as a growing appetite from investors who are eager to deploy capital on-chain in viable ways.

Main Takeaways:

  • RWA metrics show incredible growth towards the latter half of 2023 and are poised to accelerate further in 2024.
  • Milestone developments on the institutional side marks increasing interest in adopting RWAs for enterprise use-cases.
  • Holistic technology advancements regarding blockchains allow for more sophisticated and matured use-cases that are ready for go-to-market.

For a quick overview of what tokenization is please refer to our previous article on how tokenization transforms real world assets.

RWA Metrics

While still very early in its development the capital interest for RWAs increased dramatically from ~$1.3B TVL per Binance research as of September 5th 2023 to over $5.6B TVL as of time of writing, rocketing to 6th place in terms of overall DeFi sector ranking by DeFiLlama.

Research firm The Block has also put out a report showing impressive growth of the current major RWA investment products such as Ondo Finance OUSG, MatrixDock STBT (on-chain treasuries) and TVL growth in institutional lending platforms Maple Finance and Centrifuge.

DEX volumes of RWA tokens traded also reached all time highs this year passing 2B which further highlights the increasing interest and demand.

Coindesk recently published an article outlining 7 real world asset trends that will unlock the future of finance, the categories mentioned are:

  1. Stablecoins
  2. Tokenized treasuries
  3. Private credit
  4. Backed NFTs
  5. Consumer Brand NFTs
  6. ReFi
  7. Tokenized Deposits and Wholesale Bank Settlements

At Plume, we’ve identified the same trends as emerging narratives that will continue accelerating into 2024.

  • Stablecoins have continued proving their value in being the bedrock of DeFi at ~125B in market capitalization. New stablecoin primitives are continually being innovated upon due to demand such as USDLR by Stable backed by attested dollars and treasury bills.
  • Tokenized treasuries are increasingly popular due to high interest rates offered by treasury bonds from legacy markets and increased demand to bring that yield on-chain.
  • Protocols such as Centrifuge, Goldfinch, Huma are opening up access to debt capital from the banking system and public markets, SMEs are for the first time able to access these instruments and tap into this $1.7 trillion market globally.
  • NFT and collectibles have gone through the test of time as alternative assets, increasing interest in pegging real physical items to tokenized tradeables on-chain are picking up momentum from Pokemon cards to watches. Protocols such as enable new ways to engage and interact with brands through these NFTs and we’re excited to see its continued development.
  • ReFi has been exploding in popularity as more protocols emerge catering to the digitalization of energy certificates and enabling easier access to trade them, Flowcarbon, Klima, Jasmine Energy to name a few are paving the way for a rich ecosystem of new DeFi applications.
  • Central Bank Digital Currencies or CBDCs are still getting renowned interest from central banks around the world with 15 new CBDC projects launched in 2023 alone per CBDC tracker. Trade Finance remains a uniquely applicable use case for blockchain technologies as Citibank and JP Morgan both launch pilots in these verticals. Instantaneous cross-border transactions remain a growing field of interest in the development of blockchain adoption.

Accelerating Institutional Interest

Within the previous year we’ve seen tremendous milestones on the enterprise side of blockchain development. The transition from isolated enterprise blockchains to more interoperable networks and even testing of public protocols signifies the constant evolution and interest of institutions.

  • A growing number of enterprise-specific blockchain use cases are being deployed on public networks or private subnets of public networks.
  • initiatives to deeply investigate and understand blockchain solutions are being promoted from the government level (e.g. Project Guardian).
  • New consortiums such as Canton are being created now to expedite institutional use-cases between partner institutions.

Technological Progress

As the holistic cryptocurrency market matures there is a realization that a subset of standards will need to be adopted to serve specific needs pertaining to RWAs such that they fit within current regulatory frameworks and requirements.

  • New token standards such as ERC 3643 offers an open-source collection of smart contracts designed for issuing, managing, and transferring permissioned tokens, a great fit for the issuance of tokenized assets that require more security controls.

ERC 3643 leverages a built-in decentralized identity system called ONCHAINID to guarantee that only users who fulfill specific criteria can hold tokens and can maintain this standard across even permissionless blockchains.

Looking forward

Tokenizing real-world assets stands as a compelling application of blockchain technology, offering substantial possibilities. This approach enhances transparency and efficiency, positioning it as a practical substitute for conventional methods. Early indications of institutional engagement have emerged, with established companies investigating technological solutions to rectify existing inefficiencies.

Moreover, the expansion of RWAs has been a beneficial trend for cryptocurrency investors, granting them entry to prospects beyond the traditional crypto environment. Incorporating RWAs into DeFi has brought more stable assets into the mix and broadened the variety of collateral options available.

With Plume, we are constructing the platform layer for RWA mass adoption. Our approach, featuring an integrated end-to-end technology stack, positions us as the premier platform for asset issuers to deploy RWA projects seamlessly and efficiently onboard institutional capital. Our vision is for protocols to concentrate on building their best without concerns about regulatory hurdles or go-to-market funnels, while investors benefit from a streamlined and secure environment, enabling them to deploy capital with peace of mind.

If you’re building in the RWA space we’d love to speak about how we can enable you and your team.