Securitization on Steroids – Real World Asset Tokenization (RWA)
Q4 2023 is going to be a big quarter for us! There is an incredible amount of development going on in and around our space, so this is a long one, stick with us. In today’s update, we run through the latest on the rapid rise of Real World Asset (RWA) Tokens and why Banking Giants […]
12 min read
CEO and Co-founder InvestaX and IX Swap. Host of the Infinity and Beyond Podcast.
Q4 2023 is going to be a big quarter for us! There is an incredible amount of development going on in and around our space, so this is a long one, stick with us. In today’s update, we run through the latest on the rapid rise of Real World Asset (RWA) Tokens and why Banking Giants Abuzz About Tokenization of Real-World Assets as DeFi Craves Collateral, as well as the LATEST platform releases.
Before we get started, it is worth listening to a 2 minute video below on “Securitization on Steroids and Why Bitcoin is the Greatest Distraction from the Greatest Disruption to Financial Services”, Franklin Templeton CEO, Jenny Johnson. We have gone from, literally, being laughed out of crypto events in 2018, to having the largest financial institutions in the world validating the Tokenization of all assets, LFG.
With more validation above, and another 7 Must Read Tokenization Reports we summarized for you here, let’s get started.
After the 2022 meltdown in Decentralized Finance (DeFi) with the collapse of many lending and borrowing platforms, coupled with the brutal crypto bear market, investors in the space have had nowhere to earn yield. Many crypto investors want to remain in stablecoins and not cash as they want the ability to redeem or trade daily so as to not miss a quick change in the market, which often happens in crypto. Hundreds of billions of dollars worth in stablecoins have been sidelined waiting, earning no yield. Fun fact – stablecoins are one of the most profitable business models in the digital asset industry – investors send $100 USD to Circle, Circle mints $100 USDC for investors, Circle invests $100 into T-bills and other financial yield earning instruments and keeps all returns, investors get $0 interest. This is worse than the standard bank interest rate, but the value and importance of stablecoins to the ecosystem of crypto investors, traders and projects, means it has been accepted. Tether (USDT), love it or hate it, is the largest stablecoin and 3rd largest coin by market cap, and claims it made $850M USD in profit in Q2 alone.
Today stablecoins occupy 2 of the top 6 coins by market cap and are hugely important for the ecosystem, it used to be 3 when Binance BUSD was in action.
So what is the point of this story and how does this relate to Real World Asset (RWA) tokens?
First, it is important to note RWA is the latest acronym for asset backed tokens that have been (predominantly) called Security Token Offerings (STO) since 2018. Unlike cryptocurrency, they are securities and (typically) you need securities licenses and technology to legally issue, invest or trade in STOs.
We have spent 5+ years securing all the necessary licenses for this exact moment, and in 2023, we have seen the birth and rapid rise of the RWA terminology driving adoption, volume and quality of deal flow.
The reason this has happened is because as DeFi yield all but dried up, the interest rates on Traditional Finance (TradFi) money market instruments soared. So the industry started offering a way for stablecoin holders to invest in tokenized T-Bills paying 5% interest. These tokenized T-Bills and other similar instruments have been coined RWAs because they are considered securities and are therefore “real world” versus many other digital assets like crypto/utility tokens which reside in the “digital world only and where there is no paper reference”, and whose value is mainly determined by the belief of a community and utility on the platform. RWAs are just the latest assets to hit the STO market and both DeFi and TradFi investors alike are excited by these developments. So for the first time since the STO industry began in 2018, crypto investors are investing into STO and they can see the use case and value. Our friends at Coingecko break down RWA quite nicely here.
The majority of licensed RWA/STO platforms have built their own private chains. In our humble opinion, this is completely missing the value proposition of digital assets and blockchain. Every innovation (think Uniswap) and every asset (BTC) that matters has been issued on public protocols/blockchains. Most of the engineering and finance talent only want to work on public protocols where all the innovation is happening. That is where finance (DeFi) is being redesigned.
BTC, ETH, 20,000+ altcoins, NFTs, DAOs, Stablecoins….and the RWA and STOs that matter, are all issued on public protocols.
With public chains, issuance of Real World Assets on InvestaX allow assets to truly go global (not sit in a silo on one platform), delivering the most expansive distribution channels the world has ever seen and connecting these assets to the power of all the digital assets and innovations in the market (e.g. IX Swap). But it is easier to get a license on a private chain/private database. We went the other way 5 years ago, many said we were wrong, finance companies won’t issue on public protocols many said, but this is technology, it is evolving daily, there are layer 2 solutions reducing gas fess, there are privacy applications well underway and much more, and so today, we are proud to support 5 public protocols today with 4 more in the pipeline. The public vs private blockchain debate here.
Don’t believe us, see what the biggest companies in finance are now saying.
“Franklin Templeton (Publicly listed $1.5TUSD financial institution) says private blockchains will fade next to fast-innovating public utility chains.”
The purpose and value of tokenizing real assets goes far beyond fundraising and liquidity. Tokenization is simply converting analog to digital and there are 101 reasons why digital is better than analog, which we break down here and below. When you bring RWAs onchain in a tokenized format, you have just made this asset multi-dimensional, allowing for onchain settlement, and connecting it to the multitude of DeFi services such as staking and liquidity pools which exist on our automated market maker (AMM) IX Swap purpose-built for security tokens/RWAs.
What is interesting now is that the market is jumping up and down about 5% tokenized T-bills due to everything we talked about above, but just wait for those interest rates to eventually drop lower and for 10-15% earning real estate and private equity RWA/STO to become more easily accessible and in higher volumes. We have always believed stablecoins (fiat backed) will be an integral part of the ecosystem, but RWA/STOs earning much higher yield, in a tokenized format built on the rails that bring it all together (public protocols), will become the real stablecoins (with no debasement of currency issues), welcoming TradFi and DeFi investors alike.
Latest Feature and Product Releases
InvestaX team is excited to share the latest feature and product releases.
What you can find in our latest Tokenization Software-as-a-Service (SaaS) platform demo video here:
- Integration with Coinbase Wallet, used by 15,000 Financial Institutions
- Integrated with BASE, Coinbase powered EVM blockchain protocol
- New Co-branding Section and Optionality
- Upgraded Wallet Features
- Multiple Issuance Functionality
And coming on next release:
- Fund Management Admin Role
- Fund Administrator Admin Role
- Managed Accounts Investors
For the detailed platform demo, please fill out this Tokenization Enquiry Form and we will get the right people in our team to get back to you ASAP.
Why we offer the Superior Model for Tokenization of Real World Assets (RWA)
Our Tokenization SaaS platform is a software-as-a-service solution that enables the issuance, trading, and custody of RWA/STO. We have been granted a Capital Markets Services and Recognized Market Operator licence by the Monetary Authority of Singapore to deal in and operate an organised market for RWA/STO respectively. Our service offers a one-stop solution for all your security token needs, including seamless banking integration, thorough user verification with a KYC module, flexible OTC trading options, primary issuance services, cutting-edge blockchain technology, and smart contract deployment.
We break down in more detail “Why our Tokenization Software-as-Service (SaaS) is the Superior Model”
We also have the only automated market maker in the industry, IX Swap, so you can start your first liquidity pools, the killer app for the RWA/STO industry.
At InvestaX, we offer the leading Singapore Licensed Tokenization Service-as-a-Software (SaaS) platform for Real World Asset Tokens (RWA) and Security Token Offerings (STO). We provide a one stop shop for tokenized assets for global investors, including real estate, private equity, venture, ESG, startup, private credit/debt and more. We also provide IX Swap, the first legal and compliant Automated Market Maker (AMM) for RWA and STO.
If you are interested to learn more about how you can build your business on top of our infrastructure and what we can offer you as your tokenization partner, then contact us here. Thank you.
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