2024 Trends in Asset Tokenization: Seven Major Outlooks

In the challenging financial environment of the past two years, the US inflation rate reached a peak of 9.1% in June 2022, prompting the Federal Reserve to implement a series of aggressive interest rate hikes. At the same time, the cryptocurrency industry also experienced the collapse of several major projects and banks.

However, amidst this turmoil, blockchain builders continue to move forward, with the realm of Real-World Assets (RWA) becoming a benchmark for innovation and resilience. The core of asset tokenization is to create investment instruments associated with tangible assets on the blockchain. Once ownership is recorded on the blockchain, assets can be traded, divided, or securely held.

Looking ahead to 2024, the following seven major RWA trends will reshape the financial landscape:

1. Stablecoin: The Cornerstone of Programmable Currency

With the approach of regulation, stablecoins, as representatives of programmable currency, are at the starting point of transformative growth, fundamentally changing our perception of money. The global market value of stablecoins is approximately $125 billion, providing infrastructure for the value internet. The stability and flexibility of stablecoins will fundamentally change fields such as global payments, remittances, e-commerce, and trade finance.

2. Tokenization of National Bonds: A Bridge Between Traditional Finance and Decentralized Finance

Tokenization of government bonds reflects the true integration of traditional finance and decentralized finance. As risk-free short-term government bond yields have significantly increased, multiple institutions have begun to tokenize short-term U.S. government bonds and bank deposits. According to data, this emerging asset class currently has a market value of approximately $700 million. Tokenized government bonds are opening new avenues for investment and financial inclusion.

3. Private Credit: Empowering SMEs through DeFi

The U.S. private credit market is valued at $1 trillion, while the global market is valued at $1.7 trillion. However, small and medium-sized enterprises (SMEs) have long struggled to access this market. Several DeFi lending protocols are changing this situation, opening up channels for SMEs to obtain debt capital. Currently, it is estimated that there are about $550 million in active loans in this market, which is expected to maintain its growth momentum in the coming months.

4. NFT: Completely Transforming the Financing Model for Collectibles

The global art and collectibles market is massive, but the traditional market faces issues such as lack of liquidity and high fees. Decentralized protocols are changing this model by bringing physical collectibles onto the blockchain, enabling lending against various types of collectibles. These initiatives democratize lending, allowing collectors worldwide to access financing opportunities.

5. Consumer Brand NFTs: Enhancing Customer Engagement

Leading consumer brands are embracing NFT technology. Whether on public blockchains or private blockchains, major brands are leveraging blockchain to enhance digital footprints, customer engagement, and entertainment experiences. By incorporating gaming and metaverse elements, these brands are shaping the future of consumer interaction.

6. Climate and Regenerative Finance in DeFi

Against the backdrop of increasing attention to ESG issues, blockchain technology is driving positive changes in the carbon market. Some companies are leveraging the potential of blockchain to enhance the transparency of this important market. The accuracy and transparency of blockchain at every stage of the carbon lifecycle are crucial for promoting a sustainable future.

7. Tokenization Deposits and Wholesale Banking Settlement: Transforming Cross-Border Transactions

Blockchain technology is reshaping the way banks handle tokenized deposits and wholesale settlements. While Central Bank Digital Currencies (CBDCs) may not be a priority in some countries, some banks are experimenting with blockchain technology for tokenized deposits and wholesale settlements either internally or between banks. Pilot projects from industry giants showcase the potential for instant cross-border transactions, a field that will continue to expand, thus enhancing global financial efficiency.

These RWA trends herald the arrival of a new financial era, providing innovative solutions to long-standing challenges. Although the current market capitalization may be small, its transformative potential cannot be underestimated. In 2024, these innovations will lead the way, bringing unprecedented opportunities for businesses and individuals, driving a more inclusive, efficient, and sustainable financial future.