TradFi Set to Become DeFi’s Largest Customer Through Tokenization[embed]https://www.youtube.com/watch?v=JDIiZdSKD8M[/embed]

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<p><strong>Sergey Nazarov, co-founder of Chainlink, believes that tokenized real-world assets (RWAs) will soon eclipse the value of cryptocurrencies. He cites the increasing engagement of traditional finance with decentralized finance, fueled by a rising interest in tokenization.</strong></p>
<p>Nazarov also pointed out that Chainlink is well-positioned to leverage this transformation within the blockchain domain.</p>
<h2 class="bic-gutenberg-heading wp-heading wp-block-heading" id="h-tradfi-interest-in-tokenized-rwas-to-alter-blockchain"><strong>TradFi Interest in Tokenized RWAs to Transform Blockchain</strong></h2>

<p>Nazarov envisions a connected ecosystem where decentralized finance (DeFi) and traditional finance (TradFi) seamlessly interact. Acknowledging the significant interest in tokenized RWAs, he asserts that TradFi is set to become DeFi’s largest partner.</p>
<p>While speaking at Token2049 in Singapore, Nazarov emphasized DeFi’s potential to yield returns and establish stable markets for RWAs. He encouraged the industry to brace for this transition, noting that it is already underway, driven by asset tokenization. According to Nazarov, blockchain technology is providing TradFi with precisely what it requires.</p>
<p>The Chainlink co-founder also highlighted how decentralized frameworks like Chainlink and smart contracts are revolutionizing the digital landscape by eliminating the necessity for conventional counterparty relationships. Automation through code supersedes human judgment, ensuring outcomes that enhance efficiency and mitigate risks commonly encountered in traditional finance frameworks.</p>
<p><strong>Read more: Real World Asset (RWA) Backed Tokens Explained</strong></p>

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</p><figcaption class="wp-element-caption">Chainlink co-founder discussing TradFi, DeFi, and tokenized RWA during Token2049 in Singapore</figcaption></figure>
<p>Nazarov stressed that this indicates a significant departure from the existing TradFi model, where human involvement introduces delays and risks.</p>
<p>His comments resonate with earlier predictions made in late August, where he forecasted that tokenized real-world assets (RWAs) would outpace the value of cryptocurrencies by 2027, propelled by institutional interest and TradFi's integration. Currently, the RWA market is on the rise, with RWA.xyz data showing it has reached a valuation of $2.22 billion.</p>
<figure class="wp-block-image size-full is-resized"><img decoding="async" width="1153" height="470" alt="Tokenized RWA" class="wp-image-572402 lazy" style="aspect-ratio:2.4566473988439306;width:1024px;height:auto" srcset="https://beincrypto.com/wp-content/uploads/2024/09/RWA.png.webp 1153w, https://beincrypto.com/wp-content/uploads/2024/09/RWA-360x147.png.webp 360w, https://beincrypto.com/wp-content/uploads/2024/09/RWA-850x346.png.webp 850w, https://beincrypto.com/wp-content/uploads/2024/09/RWA-768x313.png.webp 768w, https://beincrypto.com/wp-content/uploads/2024/09/RWA-150x61.png.webp 150w" sizes="(max-width: 1153px) 100vw, 1153px" loading="lazy" src="https://beincrypto.com/wp-content/uploads/2024/09/RWA.png.webp"/><figcaption class="wp-element-caption">Tokenized Securities Industry Valuation. Source: <a href="https://app.rwa.xyz/treasuries" target="_blank" rel="noreferrer noopener nofollow">RWA.xyz</a></figcaption></figure>
<p>This evolution coincides with blockchain technology’s ongoing efforts to address the infrastructural hurdles faced by traditional finance, while simultaneously unlocking new investment possibilities. The capacity of blockchain to enhance workflows and drastically reduce settlement durations is particularly attractive — reflecting what Sergey Nazarov articulated about the efficiency and reliability presented by decentralized systems.</p>

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<p>“TradFi needs all kinds of different data that allow those traditional finance smart contracts to function properly…the Net Asset Value (NAV) data of tokenized funds is an example of a dashboard live on production showing the proof of Reserves of one of the many ETF funds used to validate aspects about them,” Nazarov explained.</p>
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<p><strong>Read more: What is Tokenization on Blockchain?</strong></p>
<p>Nevertheless, the journey towards a comprehensive transition to digital infrastructure is fraught with challenges. These include legal complexities, identity standards, and data privacy considerations, all of which require thorough scrutiny alongside regulatory frameworks.</p>
<p>Therefore, both TradFi and DeFi stakeholders, as well as the broader financial services sector, must collaborate to establish infrastructures capable of supporting widespread tokenization adoption while ensuring security and compliance before Nazarov’s vision can come to fruition.</p>

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