Real-World Assets have reached a new all-time high in terms of total value locked, amounting to $10.68 billion. However, some traders have started questioning the value of RWAs on the blockchain.
According to data from DeFi Llama, the total value locked accumulated from on-chain real-world asset protocols has reached $10.68 billion. Most of the TVL comes from BlackRock’s tokenized fund, the BlackRock USD Institutional Digital Liquidity Fund or BUIDL, which contributes 15.44% of the total.
The surge in TVL came a day after it surpassed the $10 billion threshold for the first time. The massive increase in RWA on-chain value reflects a growing interest in real-world asset tokenization. Tokenized RWAs, including U.S. Treasuries and real estate, have lured investors in with stable yield options. In a volatile crypto market, these assets promise a relatively steady return, drawing more capital into the ecosystem.
Not only that, there has been a significant number of asset managers that have gravitated towards the appeal of tokenization and invested in the sector, including BlackRock, Fidelity, and Janus Henderson. Most recently, Ondo (ONDO) Finance entered the tokenization sector by launching a Layer 1 blockchain that is focused on RWAs in February.
Despite having just launched last month, Ondo Finance’s RWA protocol has already climbed to the fourth spot in terms of TVL.
More countries have also embraced tokenization of real-world assets through sandbox projects and regulatory guidelines. Hong Kong’s Secretary for Financial Services and the Treasury has already expressed that the region will be focusing on tokenization along with stablecoin.
Meanwhile, the Dubai FSA has launched a Tokenization Regulatory Sandbox program for crypto firms interested in delving into RWA-focused products and services.
The debate regarding RWA value on the blockchain
The rise in real-world tokenization has also sparked some debates in the crypto community about whether or not the value of real-world assets can be fully represented on-chain.
Attorney at SmithAmundsen and Bitcoin advocate, Joe Carlasare argued that real-world assets should not be counted on-chain. This is because he believes that the blockchain only holds a digital record of the asset, essentially an IOU that only serve as claims to the value of an asset.
Therefore, it cannot fully represent the value on-chain.
“You can only put IOUs for RWAs that need to be enforced by courts,” said Carlasare in his recent post.
Co-Founder and former CEO of CoinRoutes, Dave Weisberger, challenged Carlasare’s viewpoint by stating that although the value of the physical asset itself cannot be transferred on-chain, the title to said asset could be.
“At a minimum, the provenance of that TITLE could be significantly easier to verify than paper titles, but it could go a lot further,” said Weisberger, pointing out that tokenization can eliminate a lot of problems when it comes to ownership.
However, Carlasare disagrees, saying that the issue of titles can be solved without a blockchain. He still stands by his point that courts are still necessary to verify the value of real-world assets because essentially the TVL represented on-chain is just a promise that still needs to have court enforcement to be fully realized.
