RWA Market Hits $12B; Traditional Firms Drive Growth

Key Takeaways

Tokenized treasuries expanded from $769 million to $2.2 billion in 2024, driven by elevated US interest rates.
BlackRock’s BUIDL dominates the tokenized Treasury space with a market cap exceeding $500 million.

The real-world assets (RWA) market has reached a new peak of $12 billion in tokenized assets, as stated in a Binance Research report.

The sector comprises five primary categories: tokenized treasuries, private credit, commodities, bonds and stocks, and real estate.

Main RWA categories

Tokenized treasuries have experienced remarkable growth in 2024, increasing from $769 million at the year’s start to over $2.2 billion by September. This increase is attributed to US interest rates hitting a 23-year high, with the federal funds target rate remaining stable in the range of 5.25 to 5.5% since July 2023.

Private credit, valued by the International Monetary Fund (IMF) at over $2.1 trillion in 2023, has seen its on-chain market Almost reach $9 billion, reflecting a 56% increase over the past year.

The commodities segment is mainly driven by tokenized gold products, with Paxos Gold (PAXG) and Tether Gold (XAUT) accounting for about 98% market share of the $970 million market.

The tokenization of bonds and stocks, according to the report, remains relatively minor compared to other RWA sectors, with a market cap of nearly $80 million.

The tokenized bonds market consists of a few non-US offerings, such as European debt and corporate bonds. Additionally, the tokenized stocks segment features digital representations of Coinbase, NVIDIA, and S&P 500 shares on the blockchain, all issued by the RWA company Backed.

Institutions boosting the tokenization

Institutional participation has been a significant catalyst for growth. BlackRock’s BUIDL tokenized Treasury product heads the category, boasting a market cap of over $500 million, while Franklin Templeton’s FBOXX follows as the second-largest with a $440 million market cap.

Importantly, the growth in the tokenized US Treasuries sector is likewise fostering integrations with decentralized finance (DeFi) protocols, such as the lending platform Aave. In an August 26 proposal, the money market suggested utilizing BUIDL shares to generate yield and enhance the stability of its stablecoin GHO.

Risks in a nascent industry

The report also highlights risks within the RWA sector, beginning with the centralization of protocols’ smart contracts and their underlying architecture. However, Binance Research analysts regard this as inevitable, owing to regulatory requirements concerning the tokens’ foundational assets.

A notable recent instance is the rebranding of the money market protocol MakerDAO to Sky, which includes creating a new stablecoin, the Sky Dollar (USDS), designed for regulatory compliance.

Sky’s co-founder, Rune Christensen, emphasized in a May blog post that this transition to a more centralized and compliant model is essential to provide utility and meaningful value to the public at scale.

Moreover, the report found that reliance on third parties poses a risk for RWA architectures, as many elements of these frameworks depend heavily on off-chain intermediaries, particularly for asset custody.

Failing oracles could also threaten tokenized assets, as price discrepancies can damage an entire infrastructure based on RWA.

Therefore, the yields offered by RWA tokens may not always justify the complexity of the systems involved.