Outlier Ventures: A comprehensive look at RWA tokenization and its significant impact

Author: Jasper De Maere, Head of Research at Outlier Ventures; Translation: Golden Finance xiaozou

1. Summary

Tokenization of Real World Assets (RWA) is not The unexpected impact will be transformative, ranging from investment and asset management to manufacturing, real estate and even the arts.

It is estimated that the total addressable market (TAM) for RWA tokenization will reach $10 to $15 trillion by the end of this decade, and now that major institutional players are focusing on these markets, we Think this is an undervalued area.

Converting tangible or intangible assets into digital tokens that can be traded on the blockchain can improve the liquidity, accessibility, and efficiency of multiple asset classes. There are already some use cases emerging for this, such as tokenized bonds. But this is just a drop in the ocean compared to the flood of digital assets that can be transferred on-chain, such as real estate, carbon credits, and corporate assets such as inventory and intellectual property.

This article is intended to help founders and investors gain a comprehensive understanding of RWA tokenization, an area we expect to have a significant impact on many industries over the next decade.

2. Two major trends

There are two main trends in the tokenization of real-world assets (RWA): digitalization and financialization. The former converts physical assets into digital form, while the latter gives them financial instrument properties. Blockchain-based tokenization is accelerating innovative developments in both trends, such as token programmability.

3. The right time

The strong interest in RWA tokenization can be traced back to 2019. However, we believe the current environment is significantly different from previous cycles. Institutional investors, hedge funds and asset managers are now driving market participation, pointing to a shift from previous cycles dominated by retail investors. Today’s mature market players are experimenting with new tokenization projects by leveraging blockchain’s advantages in scalability, security, and interoperability. They are marketing these products to customers and creating discussions around the changing regulatory environment.

A strong regulatory framework to facilitate institutional engagement is being rolled out. An example of this is the UK’s Electronic Trade Documents Act, which seamlessly integrates with blockchain applications for tokenization of RWA. The synergy of progressive regulation, technological advancements, and enhanced transmission mechanisms such as central bank digital currencies (CBDCs) and stablecoins signals a bright new era in the RWA tokenization space.

4. Undiscovered potential

We believe that by the end of 2030, the total TAM (addressable market) of RWA tokenization will be far Exceeding current estimates of approximately US$15 trillion. Estimates do not take into account the potential increase in asset value after tokenization. A more accurate assessment should include new markets that facilitate healthy price discovery for tokenized assets. Additionally, tokenization can enable further price discovery by dividing assets into different elements, creating separate liquid markets for these elements.

5. Final outcome

Without RWA tokenization, the computing power of blockchain smart contracts will be limited to the on-chain world. Through tokenization, off-chain assets or real-world assets are brought into the world of smart contracts, expanding computing power. This is the "computing economy". Under this new economic paradigm, Web3 technology promotes the development of the "computing economy", significantly enhances economic complexity, and creates wealth. RWA tokenization is a critical step in unlocking the computing economy, which we believe is the endgame for blockchain technology.