According to CoinDesk, the asset tokenization and real-world asset (RWA) space attracted retail and institutional capital investors in 2023 due to its combination of professionally-managed products and digital asset mechanics. Key themes emerging in these markets in Q3 2023 include blockchain savings and bottom-line improvements, money markets and treasuries as low-hanging fruit, and tokenized product distribution through institutional client bases.
Investors entering the RWA space can achieve significant efficiencies through end-to-end digital systems, resulting in savings in dollars or manual labor time compared to traditional processes. Examples include Goldman Sachs Digital Asset Platform (GS DAP), J.P. Morgan's Onyx Digital Assets (ODA), Broadridge's Distributed Ledger Repo (DLR), Equilend's 1Source, Intain's structured finance servicing platform, Vanguard's partnership with Grow Inc., and Liquid Mortgage's use of the Stellar blockchain.
Asset managers and issuers are familiarizing themselves with tokenization workflows by trialing money market and treasury products. These tokenized assets generate a yield that can be passed on to clients, fully on-chain. This asset class accumulated almost $700 million in on-chain capital by the end of Q3 2023, up almost 520% YTD. Institutions are beginning to move beyond just tokenizing assets for operational uses and savings and are now placing tokenized products with their own client bases as buyers. Citi, UBS, JP Morgan, and Goldman Sachs are among the institutions leading this trend.