Real Growth of RWA: The Industry Is Aware of the Facts

The impressive figures currently circulating about tokenized real-world assets (RWA) are often misleading. The risk the industry faces is undermining the institutional trust that has been built up over the years. Every week, we hear about billions in tokenized assets. However, when institutional investors ask for key information, the answers are often vague and evasive.

For example, OpenAI had to distance itself from Robinhood's claim that it offered access to tokenized stocks, clarifying that these were not real stocks. Also, the SEC Unicoin has been sued for misleading investors by exaggerating the value of its tokenized real estate deals. Incidents like these illustrate that the RWA revolution still faces significant hurdles to gain credibility.

The illusion of measurements

It's concerning that the industry's current focus on so-called "vanity metrics" (outwardly based figures based more on marketing than actual value) is detrimental to the institutional adoption they seek. As Ian Balina, CEO of Token Metrics, aptly notes, "the biggest risk today is the assumption that legal structure and blockchain alone create value." Without true interoperability, reliable secondary markets, and trusted custody, tokenized assets remain stuck in marketing pitches and are rarely considered in investment portfolios.

The very concept of blockchain is based on transparency and verifiability. Yet, we ask institutions to trust figures we ourselves cannot or will not prove. This not only undermines investor confidence but also traps an entire sector in a vicious cycle of uncertainty.

Chain protocols that cannot demonstrate verifiable activity or regulatory compliance not only endanger their own users but also undermine the integrity of the entire blockchain ecosystem. To truly realize the benefits of RWAs, urgency is required. We need transparent, regulated implementations that align with true adoption, rather than fabricated metrics.

Real adoption of RWAs can be seen in Wyoming, USA, where the first state-backed stablecoin, FRNT, was launched with full regulatory approval and verifiable reserves. JapanAs JPYC emerges as a legally compliant yen stablecoin, we see new demand for Japanese government bonds being created. These initiatives offer a real solution to payment problems and are more than just dashboards showing highs and lows.

The recent growth of BlackRock's BUIDL fund, with over $1 billion under management, and Apollo's ACRED, which brings blockchain efficiency to credit markets, are examples of regulated financial products delivering real value to investors.

The test of transparency

For blockchains presenting themselves as leaders in RWA, there's only one requirement: show us the numbers that provide hard evidence of their claims. Total Value Locked (TVL) figures are too simplistic and easily manipulated. For example, can they show regulatory approvals? Are there institutional partners willing to publicly confirm their involvement? And are there transactions that substantiate actual user experiences with these assets? Establishing this data is crucial to dispelling the doubts currently plaguing the sector.

There's certainly legitimate work happening within the RWA ecosystem, but without clear standards, it risks getting lost in the hype. The RWA revolution doesn't need advertising to be impressive. A municipal bond issue that saves a city 50 basis points, or a cross-border payment that settles in seconds, are examples of significant adoption. A small business gaining access to credit markets they previously couldn't access speaks volumes beyond the impressive figures on marketing materials.

It's crucial to understand that it's not just about the numbers. Surpassing the $1 billion mark in RWAs is meaningless if these assets can't be audited, settled, or traded. The next step for the sector is building trust. Projects focused on verifiability, legal clarity, and Composable Yield will define the new face of RWA 2.0 and attract the trillions of euros still sitting on the sidelines.

As an environment of transparency and accountability is built, the value of RWAs will increase exponentially, freeing up vast amounts of institutional capital.

Frequently Asked Questions

What exactly are 'real-world assets'?
Real-world assets are tangible assets, such as real estate or shares, that are converted into digital tokens on a blockchain. This process has the potential to increase the liquidity and accessibility of these assets, but requires careful regulation and accountability.

Why are 'vanity metrics' problematic in the crypto industry?
Vanity metrics are superficial figures that don't reflect real value or usage. They can be misleading and seem attractive to attract investors, for example, but they do nothing more than reinforce illusions, which is detrimental to long-term confidence in the sector.

How much institutional capital is currently not active in the crypto market?
It is estimated that trillions of dollars of institutional capital remains sidelined for the time being, largely due to the lack of transparency and trust in current crypto ecosystems.