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7 Real Asset Trends in 2024 That Will Lead the Way for the Future of Finance
In the ever-changing financial landscape, the past two years have presented us with a unique set of challenges. Chief among them was US inflation – which peaked at 9.1% in June 2022 – which prompted the Fed to implement a series of aggressive (and still ongoing) rate hikes.
At the same time, the crypto industry has weathered its own storm, marked by the fall of major projects such as Terra/Luna, Celsius, Voyager and FTX, as well as a group of supporting banks – Silvergate, Signature and Silicon Valley Bank, among others.
This article is part of CoinDesk “Crypto2024” prediction package.
Amid this turbulence, blockchain builders have continued their inexorable march, with the real-world assets (RWA) field emerging as a beacon of innovation and resilience. At its core, tokenizing real-world assets creates an investment vehicle on the blockchain that is tied to tangible assets such as real estate or automobiles, or anything else that can exist in physical form. Once ownership is registered on-chain, the asset can be traded, split, or held securely.
As we approach 2024, here are seven RWA trends poised to reshape the financial landscape:
1. Stablecoins: the foundation of programmable money
As federal regulation looms, stablecoins – the epitome of programmable money – are poised for transformative growth, fundamentally changing our perception of what money looks like. In the United States, two issuers dominate this space: Circle (which issues USDC as a multi-chain solution) and Paxos (which offers labeled solutions such as Paypal’s PYUSD). Globally, stablecoins have a market capitalization of approximately $125 billion and are the foundational infrastructure layer that will power the Internet of Value. Providing stability and flexibility, stablecoins are set to revolutionize global payments, remittances, e-commerce, trade finance, and more.
2. Tokenized treasures: connecting traditional and decentralized finance
The true convergence of traditional finance and decentralized finance is embodied in symbolic treasuries. As yields on risk-free short-term Treasury bonds have fallen from near zero in early 2022 to around 5.4% in October 2023, companies like Franklin Templeton, Ondo, Backed, Maple, Open Eden and Superstate have been pioneers in the tokenization of short-term US Treasury bonds and bank deposits. Depending on data token and analytics platform RWA.xyz, this new asset class now has a market capitalization of $700 million. Tokenized treasures break down barriers, providing new avenues for investment and financial inclusion.
3. Private credit: empowering SMEs with DeFi
The private credit market, valued at $1 trillion in the United States and $1.7 trillion globally, has long eluded small and medium-sized businesses. DeFi lending protocols such as Centrifuge, Goldfinch, Credit, Maple, Huma and others are game-changers and open the floodgates of access to debt capital from public markets, the banking system and traditional markets.
private credit initiators. Focused on specific sectors or geographic areas, RWA.xyz currently estimates the market has approximately $550 million in active loans, with momentum continuing in the coming months.
4. Backed NFTs: revolutionizing collectible financing
With annual global sales of over $65 billion ($30 billion in the United States alone), it’s easy to see that art brings in a lot of money. But traditional art and collectibles markets lack liquidity and are burdened by exorbitant fees (auction houses often add 15 to 20 percent fees on small items). The global market for collectibles (coins, stamps, books, comics, artwork, toys, etc.) is estimated at around $400 billion and is also cash-starved. Marketplaces like eBay and some smaller bespoke marketplaces cater to this industry, while lending options are generally limited to pawn shops which have high rates.
Fortunately, decentralized protocols like 4K and arcade.xyz paradigm shift. By bringing physical collectibles to the blockchain, borrowing and lending against assets like Supreme T-shirts and comic books became a reality. These initiatives democratize lending, making it accessible to collectors around the world.
5. Consumer Branded NFTs: Increase Customer Engagement
Major consumer brands including Nike, Adidas, Louis Vuitton and Coca-Cola are adopting NFTs. From Starbucks on Polygon to Amazon’s private blockchain efforts, brands are leveraging blockchain to improve their digital footprint, customer engagement, and entertainment experiences. Whether on public (Starbucks on Polygon) or private (rumors revolve around Amazon) blockchains, by integrating gaming and metaverse elements, these brands are shaping the future of interaction with consumers.
6. DeFi in climate and regenerative finance
Amid growing ESG concerns, blockchain technology is catalyzing positive change in the growing $2 billion carbon market. Companies like Flowcarbon are harnessing the potential of blockchain to improve transparency in this important market, which is expected to grow 15-fold by 2030 to meet the goals of the Paris Agreement. Blockchain’s accuracy and transparency at every stage of the carbon lifecycle is integral to promoting a sustainable future.
7. Tokenized deposits and wholesale banking settlements: revolutionizing cross-border transactions
Blockchain technology is reshaping the way banks manage token deposits and wholesale settlements. While a central bank digital currency (CBDC) may not be a pressing issue to solve in the United States, particularly if private issuers can be regulated at the federal or state level, several banks are experimenting with them. blockchain technologies on symbolic deposits and wholesale intra or inter-bank settlements. Pilots by industry giants like Citi and JP Morgan Chase demonstrate the potential of instant cross-border transactions. This area will continue to grow in the coming months, improving the efficiency of global finance.
These RWA trends herald a new era in finance, offering solutions to long-standing challenges. Even if their market capitalization may seem modest today, their transformative potential is immeasurable. Stablecoins, tokenized treasuries, decentralized private credit, physical-backed NFTs, consumer-branded NFTs, DeFi in climate and regenerative finance, and tokenized deposits/wholesale banking settlements are not simple trends; they are the building blocks of a more inclusive, efficient and sustainable financial future. Looking ahead to 2024, these innovations will undoubtedly lead the way, paving the way for unprecedented opportunities for businesses and individuals.