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Real-world assets: 2024 will be the breakthrough year for tokenization

Published

6 months ago

26 May, 2024

Real-world assets: 2024 is the breakthrough year for tokenization

Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.

Integrating traditional real-world assets, or RWA, into blockchain is not a new topic of discussion. Major institutional players, from Euroclear to Goldman Sachs, have turned to tokenization to reduce transaction fees, execution times and database management costs, and to make provenance and proof-of-ownership processes much less tedious.

2023 became the year when theory finally started to turn into practice. The private credit market, destroyed by the ripple effects of the Earth-Moon collapse in 2022, recovered by 60%, and its main beneficiary base has shifted from crypto-native finance companies to the automotive sector (42% of tokenized private credit in 2023). Most important for the industry, however, has been the emergence of a completely new type of RWA products:tokenized treasures. Tokenized Treasuries aim to dethrone what currently makes up the largest share of RWA: stablecoins. Sought after by both retail and institutional investors and experiencing seven-fold growth in volume, Treasuries are bringing an integral ingredient for maturity to blockchain: stability. It appears we are approaching the most significant year for RWA tokenization.

The main blockchain technological advances in recent years have involved various types of transaction optimization, helping to bring greater efficiency, security and scalability. For example, developing level 2 solutions such as zero-knowledge proofs or optimistic rollups have helped increase the throughput of primary blockchains, reduce transaction execution times, and significantly lower and stabilize the networks’ gas fees.

While L2 has pushed forward the capabilities of individual blockchains, cross-chain communications projects have worked to create further network value. Improved ease and security of interoperability has brought greater usability to the web3 ecosystem as a whole.

In addition to these developments, new services have emerged, which have improved the efficiency of RWA tokenization. Maple, Centrifuge, Backed and many others have taken well-explored concepts of defi, liquidity pools and collateralized lending and applied them to traditional finance. This allowed their users to invest in real-world corporate bonds across different jurisdictions, get a share of the private credit pie, and engage in tokenized lending with institutional lenders.

In early 2023, Issued by Ondo Finance the Ondo Short-Term US Government Bond Fund (OUSG), which offers investors access to a tokenized version of BlackRock’s (NASDAQ: SHV) iShares Short Treasury Bond ETF. While OUSG only raised a little more than $110 million in total locked value in one year, this marked the start of a new, much more discreet trend: the rise of tokenized U.S. Treasuries.

According to Fed research and data from DeFi Llama, the total fraction of real-world assets in defi is greater than doubled over the last year. Although this can be partially attributed to the release of institutionalized infrastructure such as Goldman Sachs‘ Digital Assets Platform (GS DAP) e JP MorganThe Tokenized Collateral Network, tokenized private credit and digital bonds alone cannot explain the booming dynamics of the overall market. Rather, special attention should be paid to the issuance of tokenized US government short-term debt.

Investors may have been attracted to short-term risk-free debt following continued increases in federal funds rates, a natural market dynamic. Another part of the equation is the collapse of abnormal returns across the cryptocurrency landscape. Second compared to Coinchange’s Defi return benchmarks, minimum risk returns in Defi hovered around 4-5%. This not only significantly narrowed the spread with Treasuries, but was even pushed into negative territory at times.

Although tokenized asset markets have shown some signs of maturation in 2023, several unanswered questions continue to inhibit the transparent development of the RWA industry. The most important of these is, of course, regulation: until there is an unambiguous regulatory framework or a precedent of failure in a major jurisdiction, it cannot be said with certainty that tokenized assets represent the same right of first refusal on the underlying asset . from a legal point of view. Another degree of freedom concerns how the infrastructure will evolve to enable efficient access to tokenized asset markets.

However, the increase in broader RWA adoption is expected to continue into 2024, with tokenized Treasuries becoming the biggest beneficiaries of renewed attention. I see this asset class as a perfect product-market for risk-averse defi investors: unlike stablecoins, tokenized Treasuries are immune to changes in confidence, are absolutely safe as long as the underlying smart contract is diligently monitored, and generate yield. In fact, we’ve already seen the start of the overhaul. From April 2024, capital allocation to tokenized US Treasury securities passed $1.09 billion, nearly ten times more than the $114 million at the start of 2023.

In my opinion, such a warm welcome requires urgently expanding the scope beyond the most obvious solution, especially since tokenized Treasuries are not a one-size-fits-all tool. A market worth almost a trillion dollars growing with a compound annual rate of 19.1%, Sukuk, the closest analogy to bonds in Islamic finance, will be next to appear on the chain. Islamic law prohibits investments in interest-bearing securities as they are considered usury, a haram activity, so traditional bonds are not available to religious Muslim market participants. Instead, Sukuk circumvents the ban by providing fractional ownership of the asset and a right to a portion of the cash flow generated. I think the potential tokenization of Sukuk will offer the Muslim community the opportunity for secure, transnational halal on-chain investment, taking digital Islamic finance to a new level. With the gradual growth of regional crypto markets in the MENA region and the continued involvement of companies and governments in infrastructure investments, I believe that a potential on-chain Sukuk has a well-matched target audience.

Anticipating the rise of digital bonds does not mean that stablecoins have already vanished. On the contrary, 2024 may finally bring competition and diversification to a market that, for a long time, was effectively divided between Tether and Circle. From controversial concepts like USDe to new entrants with confidence models such as the Ripple stablecoin, the sleepy stablecoin market is experiencing a shakeup. In this regard, I believe the most underrated opportunity that deserves special attention is gold-backed stablecoins, considering that gold is in the media spotlight after reaching an all-time high price level. While not an entirely new concept, its previous efforts lacked technical excellence and liquidity and attempted to enter an inconvenient market. In a turbulent reality where Costco gold bars are located swept off the shelves, I think it’s only a matter of time before the promising idea gets a new iteration.

Overall, it appears that tokenized real-world assets have successfully passed the initial phase. In my opinion, 2024 will likely lead to more widespread adoption of existing instruments, particularly tokenized Treasuries, and spur competition and innovation, particularly in the Sukuk, fiat, and gold-backed stablecoin markets.

Alex Malkov

Alex Malkov is co-founder of HAQQ, a blockchain platform with an ethical approach, which emphasizes real-world assets. He brings extensive legal consulting experience from his work with leading blockchain and fintech companies, including AAVE, Bequant, Scalable Solutions and Nebula. His legal and regulatory knowledge ensures that HAQQ aligns with broader legal frameworks. With over a decade of experience in legal practice, Alex has spent seven years focusing on web3 projects. His experience is fundamental for navigating the complex legal landscape of blockchain technology.

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News

Cryptocurrency Price August 1: Bitcoin Dips Below $65K; Solana, XRP Down Up To 8%

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Major cryptocurrencies fell in Thursday trading following the Federal Reserve’s decision to keep its key interest rate unchanged. Overnight, the U.S. Federal Reserve kept its key interest rate at 5.25-5.5% for the eighth consecutive time, as expected, while also signaling the possibility of a rate cut at its next meeting in September. The unanimous decision by the Federal Open Market Committee reflects a continued wait-and-see approach as it monitors inflation trends.

CoinSwitch Markets Desk said: “Bitcoin has fallen below $65,000 after the US Federal Reserve announced it would keep interest rates unchanged. However, with markets now anticipating rate cuts at the next Federal Reserve meeting in September, the outlook for a Bitcoin rally by the end of the year has strengthened.”

Meanwhile, CoinDCX research team said: “The crypto market has plunged after the Fed decision. Tomorrow’s US unemployment rate announcement is expected to induce more volatility, with the ‘actual’ figure coming in higher than the ‘expected’ one, which is positive for cryptocurrencies.”

At 12:21 pm IST, Bitcoin (BTC) was down 3.2% at $64,285, while Ethereum was down nearly 4.5% at $3,313. Meanwhile, the global market cryptocurrency The market capitalization fell 3.6% to around $2.3 trillion in the last 24 hours.

“Bitcoin needs to clear its 200-day EMA at $64,510 to consolidate further. Otherwise, a retest of $62,000 could be in the cards,” said Vikram Subburaj, CEO of Giottus.

Altcoins and meme coins, such as BNB (3%), Solana (8%), XRP (5.7%), Dogecoin (5%), Cardano (4.6%), Avalanche (4.3%), Shiba Inu (3.8%), Polkadot (3.4%), and Chainlink (4%) also saw declines.

The volume of all stablecoins is now $71.64 billion, which is 92.19% of the total cryptocurrency market volume in 24 hours, according to data available on CoinMarketCap. Bitcoin’s dominance is currently 54.99%. BTC volume in the last 24 hours increased by 23.3% to $35.7 billion.

(Disclaimer: Recommendations, suggestions, opinions and views provided by experts are personal. They do not represent the views of the Economic Times)

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Altcoins WIF, BONK, RUNE, JUP Down 10% While Bitcoin Drops 4%

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Altcoins WIF, BONK, RUNE and JUP drop 10% as Bitcoin recedes 4%

Altcoins dogwifhat, Bonk, THORChain, and Jupiter have suffered losses of more than 10%, while Bitcoin is down 4% in the last 24 hours.

After a period of relative calm yesterday, July 31, Bitcoin (BTC) price action has seen a drastic change as the cryptocurrency dropped by more than $3,500, bringing its value to $63,300. At the same time, altcoins mirrored this trend, with the total value of liquidated positions rising to nearly $225 million over the course of the day.

Initially, the week started on a positive note for Bitcoin, which reached its highest point since early June, hitting $70,000. However, this peak was short-lived, as it was quickly rejected, leading to a substantial decline, with Bitcoin falling below $65,500.

The cryptocurrency managed to regain some stability, trading comfortably at around $66,800. However, following a Press conference According to Federal Reserve Chairman Jerome Powell, the value of Bitcoin has fallen again to $64,300, down more than 3% in 24 hours.

BTC Price Chart 24 Hours | Source: crypto.news

The recession coincided with a relationship from the New York Times stating that Iran had called for retaliatory measures against Israel following the assassination of Hamas leader Ismail Haniyeh in Tehran, increasing the risk of further conflict in the region.

Meanwhile, on the economic front, the Federal Reserve decided to keep its benchmark interest rates in place, offering little information on a planned September rate cut. Powell also hinted that while no concrete decisions have been made on the September adjustment, there is growing consensus that a rate cut is likely.

Amid Bitcoin’s decline, altcoins have suffered even more significant losses. For example, dogwifhat (Wife) saw a 12.4% drop and (DISGUST) has suffered a 10% drop. Other altcoins such as THORChain (RUNE) also fell by 10%, while Jupiter (JUPITER) and the Ethereum naming service (ENS) decreased by 8% and 9% respectively.

Among the largest-cap cryptocurrencies, the biggest losers are Solana (SOL) with a decrease of 8%, (Exchange rate risk) down 6%, Cardano (ADA) down 4%, and both Ethereum (ETH) and Dogecoin (DOGE) recording a decrease of 4.4%.

Data from CoinGlass indicates that approximately 67,000 traders have been negatively impacted by this increased volatility. BTC positions have seen $61.85 million in liquidations, while ETH positions have faced $61 million. In total, the value of liquidated positions stands at $225.4 million at the time of writing.

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Riot Platforms Sees 52% Drop in Bitcoin Production in Q2

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Riot Platforms posts 52% decrease in Bitcoin production for Q2

Bitcoin mining firm Riot Platforms has released its second-quarter financial results, highlighting a decline in cryptocurrency mined due to the recent halving.

Colorado-based Bitcoin (BTC) mining company Riot platforms revealed its second quarter financial results, highlighting a significant reduction in mined cryptocurrencies attributed to the recent halving event that took place in early April.

The company reported total revenue of $70 million for the quarter ended July 31, a decline of 8.7% compared to the same period in 2023. Riot Platforms attributed the revenue decline primarily to a $9.7 million decrease in engineering revenue, which was partially mitigated by a $6 million increase in Bitcoin extraction income.

During the quarter, the company mined 844 BTC, representing a decline of over 50% from Q2 2023, citing the halving event and increasing network difficulty as major factors behind the decline. Riot Platforms reported a net loss of $84.4 million, or $0.32 per share, missing Zacks Research forecast a loss of $0.16 per share.

Halving increases competitive pressure

The Colorado-based firm said the average cost of mining one BTC in the second quarter, including energy credits, rose to $25,327, a remarkable 341% increase from $5,734 per BTC in the same quarter of 2023. Despite this significant increase in production costs, the firm remains optimistic about maintaining competitiveness through recent deals.

For example, following the Recent acquisition Cryptocurrency firm Block Mining, Riot has increased its distributed hash rate forecast from 31 EH/s to 36 EH/s by the end of 2024, while also increasing its 2025 forecast from 40 EH/s to 56 EH/s.

Riot Platforms Hashrate Growth Projections by 2027 | Source: Riot Platforms

Commenting on the company’s financials, Riot CEO Jason Les said that despite the halving, the mining company still managed to achieve “significant operational growth and execution of our long-term strategy.”

“Despite this reduction in production available to all Bitcoin miners, Riot reported $70 million in revenue for the quarter and maintained strong gross margins in our core Bitcoin mining business.”

Jason Les

Following its Q2 financial report, Riot Platforms shares fell 1.74% to $10.19, according to Google Finance data. Meanwhile, the American miner continues to chase Canadian rival Bitfarms, recently acquiring an additional 10.2 million BITF shares, increasing its stake in Bitfarms to 15.9%.

As previously reported by crypto.news, Riot was the first announced a $950 million takeover bid for Bitfarms in late May, arguing that Bitfarms’ founders were not acting in the best interests of all shareholders. They said their proposal was rejected by Bitfarms’ board without substantive engagement.

In response, Bitfarms She said that Riot’s offer “significantly understates” its growth prospects. Bitfarms subsequently implemented a shareholder rights plan, also known as a “poison pill,” to protect its strategic review process from hostile takeover attempts.

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News

Aave Price Increases Following Whales Accumulation and V3.1 Launch

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Aave price surges amid whale accumulation and V3.1 launch

Decentralized finance protocol Aave is seeing a significant spike in whale activity as the market looks to recover from the recent crash that pushed most altcoins into key support areas earlier this week.

July 31, Lookonchain shared details indicating that the whales had aggressively accumulated Aave (AAVE) over the past two days. According to the data, whales have withdrawn over 58,848 AAVE worth $6.47 million from exchanges during this period.

In one instance, whale address 0x9af4 withdrew 11,185 AAVE worth $1.23 million from Binance. Meanwhile, another address moved 21,619 AAVE worth over $2.38 million from the exchange and deposited the tokens into Aave.

These withdrawals follow a previous transfer of 26,044 AAVE from whale address 0xd7c5, amounting to over $2.83 million withdrawn from Binance.

AAVE price has surged over 7% in the past 24 hours amid buy-side pressure from these whales. The DeFi token is currently trading around $111 after jumping over 18% in the past week.

Recently, the price of AAVE increased by over 8% after Aave founder Marc Zeller announced a proposed fee change aimed at adopting a buyback program for AAVE tokens.

Aave v3.1 is available

The total value locked in the Aave protocol currently stands at around $22 billion. According to DeFiLlamaApproximately $19.9 billion is on Aave V3, while the V2 chain still holds approximately $1.9 billion in TVL and V1 approximately $14.6 million.

Aave Labs announced Previously, Aave V3.1 was made available on all networks with active Aave V3 instances.

V3.1 features improvements that are intended to improve the overall security of the DeFi protocol. The Aave DAO governance has approved the v3.1 improvements, which also include operational efficiency and usability for the network.

Meanwhile, Aave Labs recently outlined a ambitious roadmap for the projectwith a 2030 vision for Aave V4, among other developments.

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