Tokenizing Real World Assets (RWAs) will unlock a new “Golden Age” in blockchain and traditional finance, according to British-Venezuelan researcher and lecturer Carlota Perez.

Boston Consulting Group projects the growing RWA market to reach up to $16 trillion by 2030​​.

The tokenization of assets is impacting numerous sectors including real estate, equity, treasury bills, and even fine art, offering enhanced liquidity and fractional ownership models.

Navigating an unpaved path

However, adopting RWA presents several challenges. The rapidly evolving technologies surrounding the novel industry, including blockchain, make it difficult for businesses to choose the right solution.

Diverse legal frameworks across different jurisdictions create more friction, coupled with a lack of regulatory clarity in many countries. This complexity is compounded by the broad nature of RWAs, where tokenizing different types of assets requires use-case-specific compliance​.

Three defining trends shaping RWAs

While there are important hurdles to adopting RWAs, enterprise solutions are emerging too. Here are three key ways that are catalyzing the institutional adoption and effectiveness of RWAs.

1. Interoperable supply chains

Supply chain management is a crucial pillar to effectively utilize tokenized assets. For instance, the pandemic has exacerbated risks within gold supply chains, magnifying human rights violations in mining operations across Africa, Asia, and South America. Efforts to tokenize gold are tackling these issues, reinforcing the traceability and verification of the gold’s journey from mine to market.

One example solution is the supply chain SaaS by Taiboku Capital. It leverages Distributed Ledger Technology (DLT) to integrate various blockchains into a unified global supply chain system. It aims to track RWAs, including precious metals like gold, silver, and platinum, bringing a new level of transparency to the entire supply chain process.

“Real world assets are reshaping the core process of how assets are created and transferred. This requires many integrations between the highly dynamic components of DLT technologies into a globally interoperable supply chain system,” says Erik Ramos-Paice, Co-Founder and Partner of Taiboku Capital.

2. End-to-end RWA solutions

The next solution streamlining the adoption of RWAs involves end-to-end services that simplify the process for businesses. They are similar to the widely adopted SaaS and cloud service models like AWS or Google Cloud.

Despite the push for innovation, mainstream businesses are facing complexities keeping up with the rapidly evolving landscape of RWAs.

“Many organizations need to learn about blockchain, all of the technical differences between the existing solutions, and build out a team to ideate and execute on that vision. A Cambridge University study found that this typically can take upwards of 25 months,” says Jay Kurahashi-Sofue, VP of Marketing at Ava Labs.

Drawing upon the successful SaaS model, end-to-end RWA platforms are streamlining various aspects of asset tokenization. It includes simplified services for the initial stages of RWA issuance, to the intricacies of custom blockchain integration, and modular supply chain management.

Built by Ava Labs, the AvaCloud solution provides a comprehensive blockchain infrastructure platform that integrates key services needed for real-world assets. This includes capabilities like tokenizing assets on the enterprise-grade Avalanche Subnet network, Wallet-as-a-Service and compliance tools for KYC/AML.

This all-in-one solution simplifies the otherwise complex process of integrating tokenized assets, especially for businesses that lack technical resources. “Instead of putting the burden of research and development on businesses, AvaCloud takes care of it all with an expertly managed blockchain service. Businesses can simply share their objectives, and these services ensure those needs are met,” says Kurahashi-Sofue.

3. Borderless on-chain marketplaces

On-chain marketplaces are a transformative solution for unlocking global asset liquidity. By facilitating borderless trading, they enable access to billions in untapped liquidity across various markets.

“In the commodities sector, trading tokenized oil or precious metals can streamline delivery settlements, enhance logistics control, and open up micro investment products to a broader range of investors,” says Mr. Ramos-Paice.

For consumer fashion, this approach can revolutionize how unique or limited-edition items are traded, creating a new dynamic in value appreciation and digital ownership. Dubbed “phygitals,” tokenized fashion items are tradable on NFT marketplaces.

These marketplaces also play a crucial role in sectors focusing on Environmental, Social, and Governance (ESG) initiatives. Trading tokenized ESG-related assets, such as carbon credits or renewable energy certificates, contributes to the development of entirely new financial markets.

By 2027, the global carbon credit trading platform market is expected to reach $201 billion. Within this growing industry, companies like Ikigai Pacific Northwest are turning viable woody biomass waste into high-end ESG-focused products.

HSBC, one of the largest financial institutions, announced its $1 billion funding initiative for early-stage climate-tech companies.

Blurring lines, broadening horizons

As the burgeoning RWA solutions evolve, the world is witnessing an era where tokenized assets are no longer a niche idea, but a fundamental part of the global asset trade.

Seamlessly blending the digital with the physical, real-world assets are unlocking unprecedented opportunities for virtually any kind of asset.

The Human & Machine podcast is dedicated to inform and demystify the crypto, DeFi, GameFi, NFTs, and blockchain industries for the average person.

Tlahui is a man in love with words and blockchain. His storytelling and passion to communicate led him to co-host The Human & Machine, a podcast and YouTube channel. Where he rightfully plays the role of an average-minded Human trying to understand and explain in layman terms, the lingo and complexities thrown at him by The Machine, his heartless, yet brilliant co-host.

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