Traditional finance companies are showing increased interest in Ethereum-based real-world asset (RWA) protocols, resulting in RWAs outperforming DeFi blue chips. RWA protocols allow entities to tokenize and trade real-world assets, from stocks and government bonds to real estate and commodities. The top uncollateralized lending protocols for institutions, TrueFi and Maple, have increased by 26.6% and 117.8%, respectively, in 2023, while Centrifuge, a real-world asset tokenization platform, has surged by 32% year to date.
Key points:
– RWA protocols have become a hot trend within decentralized finance (DeFi) circles
– DeFi provides certain advantages over TradFi by making smart contracts transparent and enabling financialization of assets
– RWA protocols are gaining institutional support, with traditional finance companies such as Goldman Sachs, Microsoft, and Deloitte showing interest in digital asset tokenization
– The top RWA protocol by total locked value, Ondo Finance, enables stablecoin holders to directly invest in exchange-traded funds managed by top-tier asset managers like BlackRock and Pimco
– MakerDAO has approved the conversion of centralized stablecoins like USD Coin (USDC) to U.S. Treasury bonds, and accepts tokenized government and corporate bonds and commodities as collateral for minting DAI
– Debt market protocols like Maple Finance, TrueFi, Goldfinch, and Clearpool have led the price action and activity among RWA protocols, enabling non-collateralized lending for institutions
– Non-collateralized lending protocols carry the risk of debt default, but the increasing tokenization of real-world assets and their financialization through DeFi is gaining positive momentum with institutional support.