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RWA is Underrated
RWA Narratives & March Madness
It’s another edition on crypto narratives. Today, we’re shining light on the Real-World Asset narrative.
Enjoy the gems.
The Real-World Asset (RWAs) narrative in DeFi is grossly underrated.
The question is, are you paying attention?
This newsletter provides a deep dive into RWAs, some emerging players to add to your watchlist, and some Twitter alpha.
Let’s get in!
As the name implies, the RWA narrative aims to represent TradFi and physical assets as digital tokens on a blockchain.
The tokenization of these assets makes them easily traded, used as collaterals for credits, and much more.
Some asset examples are agriculture, real estate, contracts, company shares, insurance, private & public infrastructures, private equity, etc.
A study by Boston Consulting Group reveals that the tokenization of global illiquid assets is estimated to be a $16 trillion business opportunity by 2030.
Not just that, Blockworks, Messari, Binance Research, and a few other theses for 2023 cited RWA as one of the key themes for 2023.
Current State of RWA
The Real World-Assets DeFi narrative is heating up with lots of exciting projects in the space.
From energy to healthcare to revenue-based financing, DeFi founders are consistently bringing new markets on-chain.
RWA credit protocols have currently originated about $4.2 billion worth of loans to businesses and institutional investors.
Huge, isn't it? I bet it is.
DeFi users can earn decent yields on an average of 12.4% APR by contributing to these loans.
Quick facts from top players
• Recently, Block Tower and Maker DAO partnered to fund $220 million of Real-World Assets via Centrifuge.
• About 75% of MakerDAO's revenues are now RWA (incl. GUSD rewards).
• Ondo Finance recently announced a tokenized fund allowing users to invest in bonds and US Treasuries.
• There are currently about 1553 total loans on RWA credit protocols
• Mexico, Kenya, and Nigeria top the list as the highest loan recipients by country.
Today, we will not be looking at the big players like Maple, Truefi, Goldfinch, Centrifuge, Clearpool, Credix, and Ribbon, but instead, we'd be focusing on a few emerging players that are making waves.
1. LandX: Focusing on agricultural financing, LandX aims to create new yield-bearing digital primitives for retail investors while providing capital to real-world farmers.
2. HOME Coin: With a HOME coin, retail investors can get sustainable yields via a Stablecoin backed by home mortgages. HOME coins are revolutionalizing mortgages by making them cheaper, faster, and more flexible for homeowners.
3. Backed Finance: Backed Finance aims to expand access to financial assets by bridging equities into decentralized finance. They recently announced their first product- bCSPX, an ERC-20 tokenized tracker of iShares Core S&P UCITS ETF.
4. Securitize: Securitize enables private businesses to raise capital from investors. They're breaking the friction between Tradfi & DeFi. Of recent, Hamilton Lane tokenized their $2.1b fund through Securitize on Polygon.
Thanks for reading!
Until next Friday,
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