Author: Ryan Berckmans Compilation: Deep Tide TechFlow
Ethereum’s dominance in the field of tokenized assets (RWA) is growing. Recently, Avalanche's Avax Foundation announced that they will be purchasing $50M worth of tokenized physical assets on their chain. This may seem like trivial news, but I think it's actually one of the big signs of things to come. Let me try to explain why Ethereum has solidified its early dominance in this most important tokenized real world asset market.
First, it’s important to note that the tokenization of real world assets (RWA) is currently the most important growth area for cryptocurrencies. Every asset in the world will eventually be tokenized. The sector has already started to enter the vertical part of its S-curve. Market cap statistics for tokenized assets may soon be as important, if not more important, than DeFi TVL or stablecoin market cap when assessing the success of a particular chain.
In terms of tokenization platform market structure, the cost of building a tokenization platform/protocol is high. During the tokenization design process, a range of reasonable, asset-related choices are involved. This naturally leads to fragmentation of the market.
The large addressable market and fragmentation will ensure that there are many players in this highly competitive field.
Avalanche is buying $50 million in tokenized assets to help power their tokenization platform. This kind of subsidy may be important to them because, as far as I know, they have fallen behind in this extremely competitive market.
Another reason for Avalanche’s $50 million investment could be to stimulate a virtuous cycle of success by boosting their tokenized asset metrics. I don't think they will have much success competing with Ethereum. Of course, the industry is going to be huge, and even as a small part of the market, they may carve out significant business.
Several key indicators have emerged in the tokenized asset space. Let's explore them and see why Ethereum excels at this.
First, the market cap of on-chain tokenized assets will be similar to that of stablecoins. The higher the market cap, the better.
Currently, Ethereum has ~$300M in tokenized US Treasury T-Bills, as well as tokenized assets in other asset classes (this part is an uncertain amount. For example, you can buy Coinbase COIN shares on Ethereum).
Stellar also has an additional ~$300 million in tokenized T-Bills. But don’t get too excited about Stellar: probably the most important factor in the growth of tokenized assets is the on-chain market, and Ethereum dominates here.
For example, as far as I know, Stellar's T-Bills are tokenized through one platform (Franklin Templeton), while Ethereum's T-Bills are tokenized through 8 different competing platforms, including Franklin Templeton .
On-chain marketplaces are critical to the growth of tokenized assets because they drive the real benefit of tokenization: the ability to trade and exchange with other parties.
This summer, traditional finance and governments got excited about the inherent benefits of tokenization, including instant settlement, fractional ownership, and globality. That's a very good sign. But this is only the first stage.
Over the next few quarters or years, traditional finance will also be excited about the benefits of tokenization being enjoyed by as many parties as possible, mature money building blocks, and as many other liquidity as possible to minimize risk.
Herein lies Ethereum's strongest advantage in this vital market:
You can tokenize any asset on any chain, but only on Ethereum, these assets have:
Strongest property ownership (from our focus on maximum credible neutrality);
The most users and liquidity to trade with.
Compared to other L1s, Ethereum's ecosystem, users, integrations, tokens, chains, etc. are 10x to 1000x larger; 3) Best currency Lego blocks available. Compared with other L1s, Ethereum's applications and DeFi protocols are 10 to 100 times more mature, with more numbers, richer types, and better management.
I mentioned earlier several key indicators emerging in this space. The first is Market Cap.
The second indicator is the proportion of market capitalization used forDeFi**, that is, the subset of market capitalization used for DeFi. Ethereum has had great success with this and will continue to do so.
The third metric I want to highlight is the percentage of market capitalization of tokenized assets financed on chain. There is a world of difference between a company or an on-chain foundation investing $50 million to tokenize assets for themselves, and a client paying you $50 million USDC on-chain to tokenize assets on their behalf. One is inventory and the other is business.
The public chain is a big market. The trusted neutrality of Ethereum is like a market security team.
ETH's vast network of users, operators, and liquidity is like a thriving marketplace full of commodities. And top-notch money LEGO and infrastructure are there to minimize friction and make buying cheap and enjoyable.
As RWA becomes more popular globally, we can expect Ethereum and our L2 scaling to account for the vast majority of the growth. Not only because we are a great choice for tokenization, but because ETH is the best market in the world.
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Why Ethereum will eat most of the RWA market?
Author: Ryan Berckmans Compilation: Deep Tide TechFlow
Ethereum’s dominance in the field of tokenized assets (RWA) is growing. Recently, Avalanche's Avax Foundation announced that they will be purchasing $50M worth of tokenized physical assets on their chain. This may seem like trivial news, but I think it's actually one of the big signs of things to come. Let me try to explain why Ethereum has solidified its early dominance in this most important tokenized real world asset market.
First, it’s important to note that the tokenization of real world assets (RWA) is currently the most important growth area for cryptocurrencies. Every asset in the world will eventually be tokenized. The sector has already started to enter the vertical part of its S-curve. Market cap statistics for tokenized assets may soon be as important, if not more important, than DeFi TVL or stablecoin market cap when assessing the success of a particular chain.
In terms of tokenization platform market structure, the cost of building a tokenization platform/protocol is high. During the tokenization design process, a range of reasonable, asset-related choices are involved. This naturally leads to fragmentation of the market.
The large addressable market and fragmentation will ensure that there are many players in this highly competitive field.
Avalanche is buying $50 million in tokenized assets to help power their tokenization platform. This kind of subsidy may be important to them because, as far as I know, they have fallen behind in this extremely competitive market.
Another reason for Avalanche’s $50 million investment could be to stimulate a virtuous cycle of success by boosting their tokenized asset metrics. I don't think they will have much success competing with Ethereum. Of course, the industry is going to be huge, and even as a small part of the market, they may carve out significant business.
Several key indicators have emerged in the tokenized asset space. Let's explore them and see why Ethereum excels at this.
First, the market cap of on-chain tokenized assets will be similar to that of stablecoins. The higher the market cap, the better.
Currently, Ethereum has ~$300M in tokenized US Treasury T-Bills, as well as tokenized assets in other asset classes (this part is an uncertain amount. For example, you can buy Coinbase COIN shares on Ethereum).
Stellar also has an additional ~$300 million in tokenized T-Bills. But don’t get too excited about Stellar: probably the most important factor in the growth of tokenized assets is the on-chain market, and Ethereum dominates here.
For example, as far as I know, Stellar's T-Bills are tokenized through one platform (Franklin Templeton), while Ethereum's T-Bills are tokenized through 8 different competing platforms, including Franklin Templeton .
On-chain marketplaces are critical to the growth of tokenized assets because they drive the real benefit of tokenization: the ability to trade and exchange with other parties.
This summer, traditional finance and governments got excited about the inherent benefits of tokenization, including instant settlement, fractional ownership, and globality. That's a very good sign. But this is only the first stage.
Over the next few quarters or years, traditional finance will also be excited about the benefits of tokenization being enjoyed by as many parties as possible, mature money building blocks, and as many other liquidity as possible to minimize risk.
Herein lies Ethereum's strongest advantage in this vital market:
You can tokenize any asset on any chain, but only on Ethereum, these assets have:
Strongest property ownership (from our focus on maximum credible neutrality);
The most users and liquidity to trade with.
Compared to other L1s, Ethereum's ecosystem, users, integrations, tokens, chains, etc. are 10x to 1000x larger; 3) Best currency Lego blocks available. Compared with other L1s, Ethereum's applications and DeFi protocols are 10 to 100 times more mature, with more numbers, richer types, and better management.
I mentioned earlier several key indicators emerging in this space. The first is Market Cap.
The second indicator is the proportion of market capitalization used for DeFi**, that is, the subset of market capitalization used for DeFi. Ethereum has had great success with this and will continue to do so.
The third metric I want to highlight is the percentage of market capitalization of tokenized assets financed on chain. There is a world of difference between a company or an on-chain foundation investing $50 million to tokenize assets for themselves, and a client paying you $50 million USDC on-chain to tokenize assets on their behalf. One is inventory and the other is business.
The public chain is a big market. The trusted neutrality of Ethereum is like a market security team.
ETH's vast network of users, operators, and liquidity is like a thriving marketplace full of commodities. And top-notch money LEGO and infrastructure are there to minimize friction and make buying cheap and enjoyable.
As RWA becomes more popular globally, we can expect Ethereum and our L2 scaling to account for the vast majority of the growth. Not only because we are a great choice for tokenization, but because ETH is the best market in the world.