In
the
ever-shifting
landscape
of
finance,
the
past
two
years
have
provided
us
with
a
unique
set
of
challenges.
Chief
among
them
was
U.S.
inflation
–
peaking
at
a
staggering
9.1%
in
June
2022
–
which
prompted
the
Fed
to
implement
a
series
of
aggressive
(and
still
ongoing)
rate
hikes.
Concurrently,
the
crypto
industry
weathered
its
own
storm,
marked
by
the
downfall
of
major
projects
like
Terra/Luna,
Celsius,
Voyager,
and
FTX,
along
with
a
supporting
cast
of
banks
–
Silvergate,
Signature,
and
Silicon
Valley
Bank,
among
others.
This
post
is
part
of
CoinDesk’s
“Crypto
2024”
predictions
package.
Amid
this
turbulence,
blockchain
builders
have
continued
their
inexorable
march
forward,
with
the
realm
of
real-world
assets
(RWA)
emerging
as
a
beacon
of
innovation
and
resilience.
At
its
core,
real-world
asset
tokenization
creates
an
investment
vehicle
on
the
blockchain
that
is
linked
to
tangible
assets
such
as
real
estate
or
automobiles,
or
anything
else
that
could
exist
in
physical
form.
Once
ownership
is
recorded
onchain,
the
asset
can
be
traded,
fractionalized,
or
held
securely.
As
we
step
into
2024,
here
are
seven
RWA
trends
poised
to
reshape
the
financial
landscape:
1.
Stablecoins:
The
Bedrock
of
Programmable
Money
As
Federal
regulation
looms,
stablecoins
–
epitome
of
programmable
money
–
are
on
the
brink
of
transformative
growth,
fundamentally
altering
our
perception
of
what
currency
looks
like.
In
the
US,
two
issuers
dominate
this
space
–
Circle
(which
issues
USDC
as
a
multi-chain
solution)
and
Paxos
(which
offers
while
labeled
solutions
such
as
Paypal’s
PYUSD).
Globally,
stablecoins
have
~$125B
in
market
capitalization
and
form
the
foundational
infrastructure
layer
that
will
power
the
value
internet.
Offering
stability
and
flexibility,
stablecoins
are
set
to
revolutionize
global
payments,
remittances,
e-commerce,
trade
finance,
and
more.
2.
Tokenized
Treasuries:
Bridging
Traditional
and
Decentralized
Finance
The
true
convergence
of
traditional
finance
and
decentralized
finance
is
embodied
in
tokenized
treasuries.
As
risk-free
short-term
treasury
yields
have
gone
up
from
near
zero
at
the
beginning
of
2022
to
about
5.4%
in
October
of
2023,
companies
like
Franklin
Templeton,
Ondo,
Backed,
Maple,
Open
Eden,
and
Superstate
have
pioneered
the
tokenization
of
short-term
US
Treasuries
and
bank
deposits.
According
to
data
token
and
analytics
platform
RWA.xyz,
this
new
asset
class
now
boasts
a
market
capitalization
of
$700
million.
Tokenized
treasuries
are
tearing
down
barriers,
offering
new
avenues
for
investment
and
financial
inclusivity.
3.
Private
Credit:
Empowering
SMEs
Through
DeFi
The
private
credit
market,
valued
at
$1trillion
market
in
the
US
and
$1.7
trillion
globally,
has
long
eluded
small
and
medium
enterprises.
DeFi
lending
protocols
such
as
Centrifuge,
Goldfinch,
Credit,
Maple,
Huma,
and
others
are
changing
the
game
and
opening
up
the
floodgates
of
access
to
debt
capital
from
the
public
markets,
the
banking
system
and
traditional
private
credit
originators.
Focused
on
specific
industries
or
geographies,
RWA.xyz
currently
estimates
the
market
to
have
about
$550M
in
active
loans
with
a
continuation
of
momentum
in
the
coming
months.
4.
Backed
NFTs:
Revolutionizing
Collectible
Financing
With
yearly
global
sales
of
over
$65
billion
($30
billion
in
the
U.S.
alone),
it’s
easy
to
see
there
is
a
lot
of
money
in
art.
But
traditional
markets
for
art
and
collectibles
lack
liquidity
and
are
burdened
by
exorbitant
fees
(auction
houses
often
add
15-20%
fees
onto
small-ticket
items).
The
global
collectibles
market
(coins,
stamps,
books,
comics,
art,
toys,
and
more)
is
estimated
to
be
around
$400
billion
and
similarly
lacks
liquidity.
Marketplaces
like
eBay
and
some
smaller
bespoke
marketplaces
cater
to
this
industry,
while
lending
options
are
generally
restricted
to
pawn
shops
that
have
high
rates.
Luckily,
decentralized
protocols
like
4K
and
arcade.xyz
are
shifting
the
paradigm.
By
bringing
physical
collectibles
onto
the
blockchain,
borrowing
and
lending
against
assets
like
Supreme
T-Shirts
and
comic
books
have
become
reality.
These
initiatives
democratize
lending,
making
it
accessible
to
collectors
worldwide.
5.
Consumer
Brand
NFTs:
Elevating
Customer
Engagement
Leading
consumer
brands,
including
Nike,
Adidas,
Louis
Vuitton,
and
Coca-Cola
among
others,
are
embracing
NFTs.
From
Starbucks
on
Polygon
to
Amazon’s
rumored
private
blockchain
endeavors,
brands
are
leveraging
blockchain
to
enhance
digital
footprints,
customer
engagement,
and
entertainment
experiences.
Whether
on
public
blockchains
(Starbucks
on
Polygon)
or
private
blockchains
(rumors
swirl
around
Amazon),
by
incorporating
gaming
and
metaverse
elements,
these
brands
are
shaping
the
future
of
consumer
interaction.
6.
DeFi
in
Climate
and
Regenerative
Finance
Amidst
growing
ESG
concerns,
blockchain
technology
is
catalyzing
positive
change
in
the
$2
billion
and
growing
carbon
market.
Companies
like
Flowcarbon
are
harnessing
blockchain’s
potential
to
enhance
transparency
in
this
important
market,
which
must
see
a
15-fold
growth
by
2030
to
achieve
the
Paris
Agreement’s
goals.
Blockchain’s
accuracy
and
transparency
at
every
stage
of
the
carbon
lifecycle
are
integral
in
fostering
a
sustainable
future.
7.
Tokenized
Deposits
and
Wholesale
Bank
Settlements:
Revolutionizing
Cross-Border
Transactions
Blockchain
technology
is
reshaping
the
way
banks
handle
tokenized
deposits
and
wholesale
settlements.
While
a
Central
Bank
Digital
Currency
(CBDC)
may
not
be
a
pressing
issue
to
solve
in
the
U.S.,
especially
if
private
issuers
can
be
regulated
at
Federal
or
state
levels,
several
banks
are
experimenting
on
blockchain
technologies
on
tokenized
deposits
and
wholesale
intra
or
inter-bank
settlements.
Pilots
by
industry
giants
like
Citi
and
J.P.
Morgan
Chase
demonstrate
the
potential
for
instantaneous
cross-border
transactions.
This
area
will
continue
to
expand
in
the
coming
months,
enhancing
efficiency
in
global
finance.
These
RWA
trends
herald
a
new
era
in
finance,
offering
solutions
to
longstanding
challenges.
While
their
market
capitalization
may
seem
modest
now,
their
transformative
potential
is
immeasurable.
Stablecoins,
tokenized
treasuries,
decentralized
private
credit,
physical
backed
NFTs,
consumer
brand
NFTs,
DeFi
in
climate
&
regenerative
finance,
and
tokenized
deposits/wholesale
bank
settlements
are
not
merely
trends;
they
are
the
building
blocks
of
a
more
inclusive,
efficient,
and
sustainable
financial
future.
As
we
navigate
2024,
these
innovations
will
undoubtedly
lead
the
way,
unlocking
unparalleled
opportunities
for
businesses
and
individuals
alike.
