• Advance to ‘Go’ and collect $200
• Bank pays you an interest of $50
• Xmas fund matures, collect $150,
• Receive rent from others - $25 each
• You’ve won $20 in a lucky draw, collect $100
• Dividend payout, collect $100 from bank

In Monopoly, ‘chance’ cards are game-changers. Even though you don’t exactly know what’s in store, you look forward to picking ‘em up. If probability - what people usually deem luck - favors you, then you’d get a card that has one of the above fortune-changing phrases printed on it. But knock-knock, we don’t live in a fictional world. Forget Monopoly, here’s what’s the actual deal: real world physical assets getting a digital makeover on the blockchain board and helping you fetch yields.

While tokenization of IRL assets is not a new narrative, it has people on the edge of their seats. Traditional financial institutions are getting accustomed and comfy on-chain. Several prominent names that your dad and probably even your granddad know about have already started placing real world assets {RWAs} on blockchain rails. Better returns, increased efficiency, enhanced liquidity, transparency, scalability, automation, reduced frictional costs, and faster settlements are what they get in return. In fact, assets that could only be bought by well-heeled peeps in the past can now be bought by literally anyone - as fractions, leveling the playing field for people with access to less capital.

Thanks to tokenization, anything that has monetary strings attached can be brought on-chain. They could range from real-estate, commodities, and money market instruments, to private equity, intellectual property, art, and everything else in between.

The process of tokenization is not rocket science. All institutions have to do is:

• Decide what asset they want to tokenize
• Take care of the tokenomics - whether they want it to be fungible or non-fungible, the standard they'd stick to, and other fundamentals
• Zero down on a blockchain network
• Deploy smart contracts, mint, and issue tokens

Trad-Fi institutions that have already stepped into our world:

1. BlackRock

“Tokenization” has been one of Larry Fink’s favorite trumpets to blow in recent times. The head honcho’s words about tokenization becoming the next generation for markets and securities are slowly becoming reality.

In March, his company launched its first ever tokenized fund on Ethereum, BlackRock USD Institutional Digital Liquidity (BUIDL) Fund. The fund is represented by the BUIDL token and is backed by repurchase agreements, T-bills, and cash. Its price is pegged 1:1 with the USD, with BlackRock paying accrued yields to investors every month. The launch of this fund is the actual litmus test to see whether or not tokenization appeals to the masses. A month back, BUILD boasted of a market cap of over $285 million. It has now already surpassed $460 million. *the masses are comin!*

Ondo Finance now hodls a 38% share on BUILD, making it the largest holder of BlackRock’s on-chain fund.

2. Franklin Templeton

They are the second-largest asset management player who has been tokenizing RWAs, behind Ondo’s new partner, Securitize. It commands nearly 1/4th of the market share, single-handedly. Its FOBXX fund - the first US registered mutual fund using blockchain - is worth more than $350 million already. It is based on Polygon and Stellar. Like other funds, even this intends to provide consistent income to you. It invests most of its assets in purchase agreements, and government securities.

Stat alert: Right now, more than $1.5 billion worth of tokenized United States Treasuries exist in aggregate on Ethereum, Polygon, Solana, Stellar, Avalanche and other public chains.

3. WisdomTree

This fund manager also has a handful of short, mid, and long term treasury funds on Stellar that you can choose from.

4. European firms/banks

Germany’s third largest public company - Siemens - launched a  60 million euro {$64 million} bond last year on Polygon. It matured in February this year. The European Investment Bank has also issued two blockchain bonds. The first one was deployed on Ethereum, while the second was issued on HSBC’s tokenization platform.

Société Générale and Santander have also issued bonds on Ethereum. In fact, the Deutsche Bank has also joined the Singapore central bank’s asset tokenization project. They’re in the architecture testing phase as of now, and intend to service tokenized and digital funds going forward. Talk about adoption.

5. Mirae Asset Securities

South Korea’s well-known financial group is also looking to tokenize RWAs. A few months back, it revealed that Polygon will be the technical consultant and help it and a couple of other companies create infra to issue, exchange, and distribute tokenized securities.

Blockchain Homies

When it comes to blockchain native firms, Ondo commands the numero uno position. It has multiple products including Ondo US Dollar Yield {USDY}, and Ondo Short Term US Government Bond Fund {OUSG}. Others like Maple Finance, Swarm, Backed Finance, and Matrixdock have also been going hard tokenization.

Circle and Tether have also started looking beyond stablecoins and are stepping into the trenches. The former has rolled out an open-sourced protocol - Perimeter - to help devs build products for tokenized credit markets. A host of credit use cases are supported by Perimeter, including invoice factoring, payroll advances, and credit trading. On the other hand, the latter’s digital asset service division - Tether Finance - is looking to create a digital asset tokenization platform.

T-REX - RWA Tokenized Standard {developed by Tokeny}

Nothing better than the T-REX {Token for Regulated EXchanges} platform to begin with. As an issuer, you can issue, manage, and transfer security tokens on this platform. The “compliance by design” model ensures that investors can’t buy tokens that ain’t compliant to laws. OnChain IDs, validation certificates, and transfer managers ensure so. Tokenizers can integrate their own KYC and AML parties to ensure compliance. Whenever regulators want, they themselves can authenticate the compliance by auditing smart contracts.  

The mechanics:

• P2P transactions take place only after passing through security checks
• You, the token holder, execute a transaction => checks are initiated and the on-chain identity is verified
• If all-clear, the request is executed and tokens are transferred
• If there are red flags, the request gets rejected, an error message is delivered explaining what needs to be fixed before re-trying

Security tokens being permissioned adds an extra layer of credibility, if not, it’d become synonymous with the Wild West. T-REX tokens’ blueprint revolves around ERC-20, with just a few add on functions. One major difference between the ERC-20 standard and the T-REX standard is the transfer function being made conditional.

For T-REX transfers to get through, the transfer manager needs to give the stamp of approval after examining the governance criteria that’s pre-defined for that particular token. The complete on-chain identity management and verification allows issuers to take charge of transfers by themselves.  

Linking also brings along an added advantage of recovering tokens if you lose access to the wallet. The data linked to the on-chain ID contract will be matched with the info provided by you during the recovery phase. Once the identity is confirmed, the issuer can initiate the recovery function, whereby security tokens in the lost wallet will be burnt and new tokens will subsequently be minted and sent to your new wallet. Data on the on-chain ID contract + identity registry will be simultaneously updated.

The T-REX on-chain ID isn’t linked to any specific token and you need to deploy it only once.

Our take:

T-REX establishes a standard for managing and transferring RWAs on public blockchains. It has a separate suite of smart contracts to make sure the compliance box is also checked - another positive takeaway.

Only authorized individuals can participate in token buy and sales, while the doors are directly shut on the faces of bad actors, inflating the trust factor.

If you’re wondering why you’ve never heard about T-REX so far, then consider this: 100% of the equity of the Enegra Group, worth more than $28 billion, has been tokenized. The EXG tokens use the T-REX standard and are issued on Polygon. It can be traded on exchanges like BigOne.

Another exhibit: CoFund also tokenized a $10 million hotel in Bali a few months back using this standard. Security tokens were issued on Polygon, opening the doors for investors to own a piece of the hotel starting with a minimum investment of $1,000. There is proof of adoption + everything’s meticulously designed. Game-changer IMO.

Mantra -  L1 Blockchain dedicated to RWAs

This is an RWA-inclined L1, again focused on compliance. The SEC has already been targeting crypto firms left, right and center, but hasn’t yet stepped into the RWA territory, and thus, by being regulatory compliant, the Mantra team calls its protocol “forward-thinking.” Via regulations, the regulatory bodies try to protect {air quotes} investors, so retrospectively, the rules would focus more on the user-front i.e. the application layer, instead of the protocol layer.

The Cosmos ecosystem intends to be an internet of blockchains, by helping devs deploy independent chains called “zones”. Capitalizing on this, the Mantra blockchain is built on Cosmos SDK. The Cosmos ecosystem still doesn’t have a dedicated app-chain for trading RWAs, and Mantra claims to be the torch-bearer of the same. Key features of the blockchain:

• On-chain identification
• Permissioned access to products
• Connectivity to the offchain world via ramps

Issuers can tokenize their assets using the Mantra Assets platform. Tokenized assets are usually distributed to people via security token offerings {STOs}, and then can be traded via DEXes or other secondary markets. The decentralized IDs ensure one-time permissionless onboarding. The Mantra Token Creation Service helps biz create and manage their own assets on Mantra. Even this project uses a permissioned model i.e. issuers have the ability to destroy, freeze, seize and transfer tokens. Simultaneously they’ll also be able to fine-tune yields and royalties.

Mantra already has a functional ecosystem. Soma Finance, a joint venture between Tritaurian Capital and Mantra recently issued its first legal security to US investors. The platform is basically a DEX for tokenized assets, NFTs, and other digital assets. In mid-Jan this year, it announced the launch of its preferred stock on the blockchain, depicted by the SOMA ticker. The token allows users to invest in SOMA’s platform. The SOMA token signifies, both, a financial instrument of the company and the platform token for SOMA.finance. SOMA Finance reports to FINRA and the SEC => offerings on the platform are regulatory compliant.

The Mantra chain also raised $11 million in April to build its ecosystem. Being a project that’s targeting the Middle East markets, Mantra is in the last leg of obtaining its license from Dubai’s VARA => this will clear the path for it to build and host other projects on its chain. As of now, the mainnet launch is scheduled for H2 2024 and will be followed by the launch of Mantra’s native DEX.

Recently, a proposal to make OM the main token of the Mantra network was proposed and approved by the community.

The team has started laying the foundation stones to make the transition from Ethereum to the Mantra Chain. The team has put forth another proposal outlining the plan of action. At the moment, 888,888,888 OM tokens exist and more than 90% of them are in circulation. The team wants to mint an additional 888,888,888 tokens and divert them towards the genesis of the Mantra chain.

Stakers - who will have an opportunity to earn 1.35x on their stake - will also receive airdrops upon the launch of the mainnet. Furthermore, the doors to an elastic issuance of new OM tokens would also be open. This is being done to make room for the increasing complexity of OM as a chain token. The team plans to reduce OM inflation over time, by transitioning to real yield staking once its RWA ecosystem has been developed. On the price front, OM scripted its ATH a couple of weeks back and continues to hover around its peak.

Our take:

The ecosystem is designed to support compliance. Having a native customized chain to cater to all the specifics is another win. However, when it comes to tokenomics, the team has chosen an unorthodox path to tread on. More than 90% of the OM supply is already distributed, and that value will be around ~50% at mainnet genesis block. A significant part of this has been diverted towards community allocations, leaving a 7-10x bigger float than most new L1s. The team has “intentionally” done this.

By choosing the larger float and reasonable FDV path from the start, Mantra’s OM has room for organic growth, provided the inflation is offset by the growth of the network + demand of the token. It’s a slippery slope. Also, in a candid thread on Twitter explaining about the project’s tokenomics, Mantra’s founder emphasized, “People have to be able to make money after all,” and that’s where he kinda lost another brownie point for me. Also, the ecosystem is home to Soma Finance - another protocol co-founded by the same executive and that’s being used to sell the adoption narrative. Maybe after the mainnet launch, we’ll see others onboarding, but for now, I am not overly optimistic and stand at 65-35.

Polymesh - Permissioned blockchain network to trade regulated tokenized securities

Financial institutions have been kinda inclined towards permissioned environments so that they get to call the shots when it comes to control and privacy. Polymesh is yet another project that has been heading down this path. In mid-March, it launched a new private blockchain dedicated to tokenization. It’s more like a testnet with extra privacy and control. It can be used to try and test out upgrades, decide whether to launch a separate token for the network, experiment with the network fee fluctuations, etc.

Once the base is ready, they can move to the public permissioned version of Polymesh. That has been operational for more than a couple of years now. It's been dealing with regulated assets, and all participants - may they be node operators, issuers, stakers, or investors - first have to get themselves verified using a customer due diligence {CDD} provider before getting the ball rolling.

The project is based on the ERC-1400 standard, but has its own add-ons in terms of compliance and governance. Under ERC-20 and the T-REX standard, off-chain authorization isn’t possible, but Polymesh gives issuers that flexibility.

POLYX is the native token. You’ll need it to create and manage assets on the network. As per Swiss regulations, POLYX is labeled as a utility token that doesn’t have a capped supply. It has its own algorithmic supply schedule in play, whereby new tokens keep getting created to fund block rewards. To put a cap on inflation, the newly minted tokens for block rewards will be capped at 14% of the total supply. After the supply crosses the 1 billion mark, the number is capped at 140 million per year.

Price wise, it peaked in April. It has retraced significantly since then, but it continues to stay above its average 2023 price. In fact, POLYX is the fifth largest RWA token at the moment

You can also stake your Polymesh easily and fetch around 22% APY. As of the end of Feb, more than 500 million tokens were already locked up on-chain.

Our take:

• Regulated assets: Green flag
• Devs get access to both private and public network versions: Smooth af
• Customizable features: Check
• Token config at blockchain layer: Check
• Efficiency: Needn’t integrate third party smart contracts
• Settlement Engine: Reduces counterparty risk
• Multi-faceted partnerships are being raked in: GG - Latest exhibit: REtokens is looking to tokenize $30 million in real estates via Polymesh - A church, alongside an apartment building, a townhouse project, and a multi-family fund are being tokenized

All I’d say is don’t sleep on Polymesh.

Kinto - L2 on Ethereum focused on compliance

• 3 words to describe the project: L2-rollup, finance, safety
• Based on Arbitrum Nitro, settles on Ethereum
• Focal points: KYC, insurance, fraud monitoring, AML

Only verified participants can perform transactions on Kinto. Unverified transactions would end up getting reverted. Identity related info is stored only on identifiers chosen by you {Plaid/Synaps/Onfido}. Wallet address related data ain’t collected => your account won’t come into limelight in case of any security breach

Kinto ID NFT Contract: Sans the NFT, you can’t indulge in transactions on the network; Once you submit your identity, a Kinto node is triggered to mint an NFT to your wallet. Similar to T-REX’s blueprint, if NFTs need to be moved when a wallet has been stolen, the KYC will be verified, the old NFT will be burned and the new one will be minted and sent to the new address. Nifty, innit.

Right from building AMM protocols, to secondary markets, and investment clubs - you can do it all on Kinto. It has a simplified process: Any financial asset/service can be issued/traded/provided on-chain. Kinto has tied up with Celestia for DA and scaling its throughput.

With respect to a token, the team has a plan in place, and it’s slowly being set into motion

• When launched, KINTO will be the governance/utility token of the network; 15 million capped supply
• 10 million tokens will be minted during the TGE, with a 2% annual inflation target
• 55% will be earmarked for the community - treasury, liquidity events, app deployers, mining program
• 25% for pre-seed/seed investors, giga brain advisors; Vesting period: 3 years
• 20% of the pie will be reserved for the team members; Same 3 year vesting period

Egen is Kinto’s pre-launch program - it was soft-launched at the end of November and ran until mid-May. The actual mainnet launch is imminent. The project managed to amass more than $10 million in TVL by the end of March itself, thanks to its budding active user base of >25k.

Locking capital in the form of sUSDe, weETH, wstETH, or sDAI directly helps multiply credits, giving you benefits like slashed fees & other discounts, taking part in early governance, and getting priority access to other Kinto products. Here’s what Engen members are entitled to:

Our take:

In most cases, wallet compromises tend to be chaotic. But, if anything goes downhill under Kinto’s regime, you’ll be made back whole in most cases. Account abstraction at chain level is quite important for any protocol to on-board the normie masses.

Kinto ensures that: Accounts can be created using usernames & passwords, protected using 2FA, eliminating the seed phrase/private key hassle. Another interesting aspect, you do have to complete the KYC, but the protocol continues to uphold the “permissionless” spirit, i.e. the entry into the Kinto ecosystem ain’t gated, you don’t need to get permission from a single person/entity. The insurance and underwriting system in-place is also siccc and 70% of the tokens being dedicated for the community is the icing on the cake.

Swarm Markets - Platform to mint & trade asset-backed tokens

• The “compliant” buzzword is yet again associated with this project also; It adheres to EU’s MiCA
• All tokens on this platform claim to be 100% asset-backed & self-custodied
• Both retail and institutions can participate @ a 0.25% fee
• SMT is the project’s native ERC-20 token; Like most tokens from this sector, even SMT peaked in April. It briefly corrected right after, but is now making amends
• Holders can earn by staking; LP-ing on one of the pools; If you hold RWA related tokens, you’ll be eligible for additional rewards
• Unallocated rewards are burnt  

• dOTC - the project’s native RWA trading platform - went live in Feb
• It supports 3 networks - Ethereum, Base, Polygon
• Tokenized stocks, bonds, ETFs can be traded

Platform’s UI is simple - It’s similar to any e-commerce website; You just have to connect your wallet and you can start trading. That being said, you need to set up your passport and verify your identity before starting to buy/sell.

You can tamper around by checking out other people’s offers, creating your own offer, and listing out tokens. However, the asset options are kinda limited right now.

Market participants from the US currently cannot transact here 😟

• Coinbase, Apple, Tesla have been the most prominent assets being traded on this platform, followed by US Treasury Bond ETFs, MicroStrategy, and BlackRock
• Chainlink price feeds are used to procure data for off-chain listed assets
• Crypto-friendly bank Meld got into a partnership with Swarm and is currently using its platform to offer on-chain lending and borrowing and foster cross-asset margining opportunities of

Our take:

Swarm’s marketplace was set up in December last year and it'll be interesting to see how things unfurl as we step into the next bull run. Use cases are vast. Say, people can lend against their stocks to ape into more crypto or they can just buy and hold onto tokenized assets. Plus, with a bank now in the picture, retail users can be strategically targeted. UX is pretty smooth, but it’s just that the team needs to add on more assets going forward, else users will slowly start feeling handicapped because of the lack of options to choose from.

IX Swap - Hybrid exchange

• The platform fosters listing, trading of security tokens, and fractionalized NFTs via AMMs and liquidity pools; LPs receive swap fees.  
• IXS is the native token of the platform; ERC-20 compliant; Capped supply - $180 million; The token is currently a part of the top 500 list.

At the time of writing, there was just one active staking campaign in play on the Polygon network, with an impending expiry; The pool was already running at full capacity; Over 1 million total tokens had been staked; APY - close to 32%. Not too shabby.

• Any business can list their STOs after submitting docs, completing the “Know Your” and AML formalities, illustrating the security token deets, and creating a simultaneous wrapped version
• The OG tokens are held by the custodian, but the wrapped version will serve as a proxy when it comes to rights and obligations
• After the details provided by you are verified, and you get a green flag, you get to mint the wrapped tokens and subsequently create a pool citing 2 pairs {one wrapped + one stablecoin} for users to start pouring in funds

IXS is based out in Singapore and thus has an MAS license right. The team also has a license in the Bahamas to be able to cater to retail demand over there.

The project has another product - Onchain Tokenized Portfolios - that it recently launched to streamline focus towards liquid tokens, the gaming sector, and private deals. Pretty straightforward: You’ve to sign up, connect your wallet, complete KYC to be eligible to send and receive tokens. Additionally, you can also register for interest and be eligible to take part in pre-sales of upcoming deals if you get shortlisted.

Our take:

Being a hybrid exchange gives IX Swap an extra edge over others. It's been building its own ecosystem, and has several product suites already. Complies with CeFi regulations, merges DeFi and tokenization - making it another worthwhile competitor. Lot of sector-wise token options for users to choose from revolving around finance, energy, technology, medicine, commodities, healthcare, and gaming. Instead of investing or getting exposure to equity via Trad-Fi institutions, you can now directly do it all on the blockchain, and IX Swap seems to have it all covered.

Ondo - Securities tokenization platform

Can’t just go on to write an RWA report without mentioning Ondo Finance. Standing right beside Franklin Templeton, Ondo is the one of the largest RWA issuers at the moment. It very recently integrated with the Cosmos ecosystem => its offerings would be integrated with 90+ blockchains within the “internet of blockchains” ecosystem.

Ever since Ondo stepped foot into this industry, it has been able to amass more than $500 million worth deposits and is backed by Coinbase, Pantera Capital, and Founders Fund among others.  

Ondo’s product offerings branch out into money market funds, tokenized notes, and treasuries. The capstone: Ondo also has its own Global Market that’s in the works and will enable users to transact with tokenized securities. On the price front also, Ondo has been making northward strides. From its early Jan’s low of $0.2, the token is now already exchanging hands around $1.4. Adoption is also clearly on the rise. Consider this:

On Feb. 26, the number of non-empty Ondo wallets revolved around 5,110. Fast forward to May 26, the number is up 550% to 33,225 already. Clearly, I don’t have to elaborate further.

Also, we’re seeing the shift from CeFi to DeFi. Ian De Bode who was associated with blue chip company McKinsey’s digital asset department, shifted boats and joined Ondo as its Chief Strategy Officer. In fact, people from Goldman Sachs, BlackRock, and Circle have also joined the Ondo team as top execs. It’s great that they’re trying to get ahead of the mainstream crowd by adopting a forward-thinking approach to on-chain finance. But it’d be interesting to see if they’re able to get people to switch boats along with them or not.

We recently covered a Ondo in a parallel report. We feel it’s sticky and is one of the most important RWA players this cycle. So go quickly, hop on there, get into the weeds, and then get back here to continue!

HiFi Finance - Ethereum-based fixed-rate, fixed-term lending protocol

• It’s a lending protocol; hTokens represent the underlying RWA assets
• You deposit collateral {like ETH} -> mint your hAsset ->  hold/stake/lend -> after expiration, you can sell your hAsset back and redeem your Asset
• Other than collateral withdrawals, the protocol has the ability to pause most other operations; Going forward the team will loosen strings
• The monthly TVL remained stagnant in H2 ‘23; However, the state of affairs started improving this year and the number has already notched up to $6.3 million  

Even the price of the asset witnessed a similar trajectory. HiFi peaked earlier than the rest of the RWA clan, but endured the same fate. It corrected steeply, and is now in its recovery phase.

• The project has a few very interesting partnerships - the one with Crown Ribbon gives users exposure to the horse-racing industry {I know, right?}. They can partially/fully invest in horses or a collection of horses {Horses are added on the CR, the protocol tokenizes the horses, they compete against each other, they breed, and ultimately token holders earn dividends}
• Likewise, the one with Pooled NFTs will keep the passive income stream flowing for NFT holders. You just need to lock-up your NFTs in pools -> You’ll get pool tokens {ERC-20} -> You can then pair them against other assets on DEXes and earn from swap fees
• HiFi has also managed to loan out more than $1 million against Real Estate RWA. At the moment, members are voting on a ruleset improvement proposal that touches base on both real estate and horse assets

Our take:

Horses, per se, aren’t traditional assets and finding entities that could provide underwriting services IRL is kinda difficult and that’s where HiFi comes into the picture. What it’s doing via partnerships is pretty cool - making users earn by betting on horses, rewarding them when they breed.

It hasn’t yet become a mainstream name, but fundamentals seem to be improving, funds are being poured into the ecosystem, indicating that a fresh wave of interest might sweep across the HiFi market. However, the project needs to become more decentralized with time, because the team has the ability to pause most operations whenever they want to.

Carbify - Carbon credit tokenization platform

For all the environment and sustainability freaks out there, this project is for ya. It’s very thematic - these guys have a green paper instead of a whitepaper. The goal of the project is quite simple - help people fetch bucks while contributing to the environment. You can invest in trees that are grown by peeps in the Amazon. Partners who sign up to plant trees need to keep showing that the plants are indeed growing as per plan and will live for at least twenty years. This will be coupled with on-site audits.

The mechanics:

• NFTrees are associated with real trees. The CO2 that’s absorbed will be rewarded to you in the form of aCO2 {a carbon debit token}. The math - 1 kg of CO2 benefit = 1 aCO2 token.
• 1 Carbify NFTree = a 12m² plot {that includes trees, plants, bushes, flowers, fruits, etc.}; On every plot, around 6 trees can be planted => Carbify ain’t planting 1 tree for every NFTree sold. It's 6 trees + other vegetation.
• Last year, Carbify planted 250k of these 12m² plots = 250,000 NFTrees; In Q1 this year, around 400k plots were ordered.
• How it works: Purchase a tree from Carbify => receive an NFTree => One NFTree absorbs between 150-200 kg of CO2 each year =>This tree will generate aCO2 tokens {carbon debit} for 20 years => Carbon Debits can be sold based on the CO2 voluntary market prices. Instead of selling, you can also hodl them and benefit from a speculative price rise in the future.
• Tree owners can also stake trees on Carbify land plots - this will 2x the yield.
• The project also has a gamification tangent. The online game - Eco Empires: Battle for the Earth - where you’re task is to build a carbon neutral environment.

CBY is the native token of the project + the in-game token that has a capped supply of 50 million. The fee received from unstaking is burned. Even market buy tokens are burned.

When you buy trees, you’ll also have to pay and buy $2.5 worth of CBY tokens. Carbify will use these funds for R&D and roadmap implementation. NFT trades also fetch the company 7.5% per txn.

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Our take:

I’m not here to give a lecture on global warming and its impact, but I do know that this project has been instigating change. You join them on their mission, buy/sell/stake, you’ll also be entitled to rewards. People are actually having a ball by being associated with this project for the long run.

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That being said, making people mandatorily buy CBY tokens with every purchase just to make sure the project is able to fund itself seems unjust. But again, it’s just a couple of dollars, and would not technically drill a hole in degens’ pockets, right?

Homebase + Realio + Other real-estate projects

You can invest in home assets starting with just $100 by sitting on your couch; VC firm Techstars backs this Solana-based project.

• Listings are regulatory compliant; Its offerings fall under SEC’s “security token” division.
• KYC is mandatory; Once that’s done, your wallet will get whitelisted and become eligible to hold security tokens.
• You’ll get fractional shares and receive rent.
• People usually co-invest with others when they buy properties IRL; But now, on-chain has made it all trustless; Homebase does the major chunk of due diligence other dry stuff by itself and then sets up an SPV - Special Purpose Vehicle -> then it issues a public/private fund via the STO route.
• After getting the green flag from the SEC, Homebase issues NFT security tokens; Per house, only a finite number of tokens are issued - they remain constant and won’t change.

• The project recently tokenized a multi thousand dollar property and raised funds from investors within two weeks; Interestingly, close to 4/5th of them were retail individuals

• Homebase uses the Metaplex NFT Standard that’s native to the Solana ecosystem; Overall monthly Metaplex mints have spiked in 2024, indicating brewing interest, despite being under the radar

• What you have to do from your end is quite simple: Create an account -> take part in the home offering {txns take place in USDC} -> collect NFTs, become an owner -> claim rent {USDC via Solana wallet}

Lofty and Vesta Equity are two other names that have been dealing in the on-chain real estate niche. They have their base camps set on Algorand - a chain picked because of its reasonable fees and almost instant sale finality. The fact that Algorand is immune to forks was another cherry on the cake. As real estate token holders, you’ll be subject to usual expenses that come along with house ownership - tax, maintenance, insurance, utilities, etc.

Like Homebase, Lofty targets the rental market, where you can buy stakes in properties with just peanuts. Decisions related to the property are jointly taken by all investors - like a DAO. Vesta, on the other hand, tries to help owners who want to sell a part of their property for cash. Tokens sold can be rebought by them later, if need be. Else, the holder will relish the future appreciation.  

Roofstock onChain - the Web3 subsidiary of real estate company Roofstock -  is another project that has its toes immersed in this sector. You need to have an Ethereum based custodial wallet to own property using their offerings. Their NFTs follow the usual ERC-721 blueprint. USDC is the crypto used for settlements. However, if you wanna settle via fiat, even that’s possible. You’ll just have to contact the team and they’ll get things sorted. Propy, another real estate blockchain company, has been leveraging on the RWA narrative by selling properties in the US. The team behind the protocol is currently working on features like automated payouts, governance and instant loans, and will be rolling them out this year.

Ethereum-based Realio also helps you trade RWA assets ranging from venture debt and private equity to real estate. You, the owner, can tokenize your assets on Realio and then use them to trade, transfer, or use as loans within the ecosystem. You can also earn by providing liquidity on the platform. Realio uses a mix of both on-chain and off-chain methods to cater to compliance.

RIO is the native token, while RST is the project’s hybrid equity token. The team has ambitious plans and are looking to opening up new real estate investment opportunities and refine things w.r.t. insurance going forward.  

Our take:

The average American citizen slogs for years together to become financially stable to become eligible to receive mortgage loans to buy a house. Then their prime life passes away within the snap of a finger re-paying back the debt, installment by installment. The blockchain-gen has managed to iron out all the wrinkles and present a simplified solution on the average citizens’ plate.

The Realio network fosters P2P transactions, slashing intermediary costs. Projects like Vesta also sneak in fiat into the picture to bolster the chain abstraction narrative, while the likes of Homebase make it easy for users to receive rent via investing without much of a hassle. It is going to take time before people get accustomed to the on-chain way of things, but progress is progress.

Goldfinch - Ethereum-based credit protocol

This Ethereum-based project erases the need for excessive collateral to secure loans. Overcollateralization is clearly a hindrance in the path of loan borrowing in the DeFi world. Goldfinch uses the “Trust through Consensus” mechanism where borrowers like you can prove if they are credit worthy or not based on the collaborative judgment of others.  

Typically, there are 4 core categories of participants within the Goldfinch economy: Auditors, Backers, Borrowers, LPs. If you’re seeking a loan, all you have to do is file on the platform for it, and you’ll receive funds in no time. Auditors vote and give the stamp of approval to borrowers via votes. To come to a judgment, they can review off-chain documents, talk to ‘em directly via channels, mail/video calls. The protocol doesn’t stick its nose into how verification is done, it only gives importance to the last yes/no say of auditors. Borrower pools are assessed by backers and accommodate details like the repayment schedule, the rate of borrowing, payment period, late fee, term etc.

The mechanics:

• LPs invest funds into senior pools -> from there, capital is automatically allocated to borrower pools
• When liquidity is provided to the senior pool, LPs receive a proportional amount of FIDU, an ERC-20 token. Whenever LPs wish to, they can redeem their FIDU for USDC
• Liquidity to fund people is provided by lenders -> lenders earn interest
• As an LP, you can choose individual loan petitions or to fund a pool. The risk involved in the first option is higher, while it is much more balanced and spread out in the second
• Overall loss rate w.r.t. writedowns is under 3% {2.78%, to be specific}
• Backers can also choose to back other backers by staking their GFI, giving them leverage {both literally and metaphorically}. Say, if a backer has a leverage ratio of 10x based on who has staked GFI on them, then whenever they supply to a borrower pool, the senior pool will allocate 10x of that amount. The staked GFI acts like collateral against defaults that could arise from the backer’s positions in borrower pools. To incentivize and reward backers for having other backer’s back, the protocol gives them GFI periodically

• GFI is the native token. It’s mainly used for governance, auditor vote rewards, auditor staking, early backer rewards - it’s basically like the reward token of the ecosystem - as highlighted above
• Value locked on the platform is close to $83 million, while the active loans currently stand around $79 million, bringing the utilization rate close to 96%

Our take:

It is not always safe for lenders to indulge in loans that are not fully collateralized. If you haven’t been living under the rock, you must have heard that a $20 million tokenized loan on a Goldfinch pool was at risk of losing $7 million because the borrowers’ bet {Stratos} on a real estate company {REZI} and POKT {something it labeled digital asset investments} didn’t essentially work out. The tech firm focusing on apartment rentals in the US, stopped distributing payouts and wrote-off the position to zero. Warbler Labs was one of the underwriters and backers of the loan. It ensured to backstop all losses to investors in the pool. Private credit can be a tricky game, and there are downsides to everything.

Even before that, African motor vehicle financing company Tugende failed to honor its $5 million loan. In fact, it also breached the contract rules by financially choking its sister company with intercompany loans. The point I’m trying to make is don’t get carried away by the highs always, have to have room for the lows as well. It’s always a two-way street.

TrueFi - Lending protocol

• TrueFi helps you secure loans against receivables and other credit instruments after they’re verified
• Loans are handed out in TrueUSD {TUSD}, while staked TRU {stkTRU} is the governance token
• TRU’s price has significantly risen on the one-year timeframe; From a low of $0.029 registered in August ‘23, the price went on to claim a local-high of $0.174 in March this year

• To gain access to permissioned pools, ID verification via an external provider is mandatory
• To date, TrueFi has handed over $1.7  billion, out of which $1.66 billion has been repaid already; In addition to this, $40 million worth interest paid has also been registered

To get on-board as a borrower, you’ll first have to get in touch with a portfolio manager within or outside the TrueFi ecosystem. Get done with the KYB, agree to the T&C. Once that’s done, your loan will be sanctioned and eventually, you’ll have to repay that using the same rails to close the chapter.

• TrueFi also very recently introduced its lending platform for RWA assets - Trinity; This was done in a move to lay a cushion to its tokenized treasury offering; The team plans to launch it on Base; The initial rollout would be conservative, won’t be available for US users;
• Native coin TRI would be rolled out
• The protocol is live on Optimism’s Sepolia testnet
• Using tokenized RWAs - like the Treasury Bill Token {tfBILL} -  as collateral, users can secure crypto loans
• You can mint TRI on Trinity against tfBILL as collateral; Borrow up to 92% of the loan-to-value ratio in TRI; That can then be swapped for stablecoins on AMMs
• You can then mint TRI via smart contracts {vessels}, borrow up to 92% of the LTV in TRI, again swap that for stables, mint additional TRI
• You can do this back to back to back; Ultimately, you’ll end up fetching net yields in the 15-20% bracket
• Alongside, you can also swap stables for TRI and then lock it up in the sTRI vault; Doing so would fetch you staking yields that’d be around/above the usual T-bill rates

Also, sidenote: TrueFi was one of Kinto’s first ever ecosystem partners. Upon Kinto’s launch, TrueFi will set afloat US Treasuries to Kinto’s institutional users.

Our take:

TrueFi caters to both borrowers and lenders. Everyone right from individual crypto users, whales, institutional investors are covered in its ambit. You can lend on independently managed vaults or invest in individual funds based on your risk appetite, need for stability, etc.

Funds operate on a daily liquidity basis. All redemption requests are usually catered to on the same day. To ensure optimal utilization, almost all of the funds’ assets are invested at any given time. Investor interest is gravitating towards on-chain yield, and the rising handouts and investments are a testament to that.

Recently-funded RWA projects

In this last section, we will focus on protocols that have been funded recently. Funding is quite an important yardstick when it comes to evaluating how smart money perceives certain narratives. More often than not, it acts like your second brain.

Alongside Mantra, a handful of companies have raised funding over the past few months:

• Usual Labs - $7 million in April ‘24
• Zoth - $2.5 million in April ‘24
• Dinari - $10 million in Jan ‘24 + 7.5 million in August ‘23

Few have backers like Balaji Srinivasan, Wormhole, 500 Global, Kraken, Circle, Matrixport Ventures, Caladan, etc., making the tale even more interesting.

Usual Labs - RWA stablecoin developer

Along with the funding money, Usual Labs also managed to bag $75 million in commitment {from the company’s investors and entities within the ecosystem} towards the TVL of its to-be-launched permissionless RWA stablecoin - USD0. The launch is scheduled on the mainnet for this quarter. The company has been wrapping up the testnet phase, and is focussing on partnerships and audits at the moment.

USD0 will be backed by RWAs, and if you hold the coin, you’ll earn returns based on how the underlying assets perform. Degens are pretty stoked about the launch and have already started equating USD0 to Tether.

Also, Tether generated more revenue than BlackRock in 2023 {$6.2 billion in profit vs. $5.5 billion net income}. This clearly shows that fiat-based stables have started becoming cash machines. But the profits in Tether’s case is privatized. USD0 is looking to change this by handing over a piece of pie to you as well.

Zoth - RWA infra company

Zoth’s funding will be used to build a multi-chain RWA ecosystem that'll be powered by stablecoins. Ultimately, your portfolio will be exposed to yields backed by RWAs if you choose to ride Zoth’s wave. The project is prepping for the public launch of its ERC-20 token, ZOTH, as well. The tokenomics and other details haven’t been revealed yet, but it’ll primarily be used to reward both LPs and borrowers.  

Zoth has also tied-up with the XDC network to harness ecosystem support. Zoth’s maiden product, Zoth-Fi {Zoth Finance}, is already live on multiple chains including Ethereum, Celo, Boba, Polygon, XDC, and Metis. You can earn yields by staking stables on the marketplace. Signing up is pretty simple: just connect your wallet, get yourself verified, and start investing.

Now, Zoth is eying to add on more products that are regulated like money market funds that are backed by assets like T-bills, CPs and Bonds. As far as compliance is concerned, the project has been adhering to Luxembourg and UAE regs.

Dinari  - Securities-backed token issuing platform/exchange

This is a platform that provides real world access to RWA backed tokens. It secured its first round of funding right before the launch of its dShare platform. It intends to provide on-chain access to corporate equity via dShare. The platform offers access to shares via a wallet on Arbitrum. The idea is quite logical - you want exposure to shares like Tesla and Nvidia, but want to pay for them in stables. Dinari’s Securities Backed Token offering helps you do just that.

Once you are verified by Dinari and complete the “know your client” procedure, you can start buying and selling. Important point to note, token holders earn dividends, but they cannot vote directly as shareholders. Owing to regulatory concerns, it is accessible only to users out of the US.

Every dShare ERC-20 token is backed 1:1 to the underlying asset. The minimum order is just $1, but you have to bear an additional gas fee + platform fee on top of it. Orders get placed and filled during the US market trading hours.

Coinbase is Dinari’s largest holding [48.5%] and is followed by WisdomTree’s Floating Rate Treasury Fund [26%]. Apple, Nvidia, Tesla and GameStop follow along next, commanding a share ranging in the 1.8% to 7% bracket. You can purchase these tokens directly from Dinari or procure them via platforms like Camelot DEX and Anja where DeFi liquidity pools have been set up.

Dinari also launched on the Blast network in May. The launch opened the doors for users to mint and burn dShares on both Arbitrum One and Blast L2. The team has more integrations lined up on the horizon.

USD+ is Dinari’s yield-bearing stablecoin. You'll be able to directly purchase dShares using USD+. Each USD+ is 100% backed by cash and short-term US Treasuries. USD+ yields a 5.36% APY. In fact, this stablecoin has become the default stablecoin across the dShares platform => You’ll buy and sell using a stablecoin that automatically fetches yield.

Dinari also took another step ahead in the cross-chain capability front by integrating Chainlink CCIP. The team is also expanding its ecosystem with the launch of - SolidViolet - an exchange designed for RWAs. You can start staking ETH or stETH here to receive a share of the early access token staking allocation.

Recently, Jupiter kickstarted the Giant Unified Market initiative [GUM], in an effort to bring all assets into a single market. Whether it is meme coins, RWAs, stocks or forex, the team looks to bring everything to Solana, and index them on Jupiter. Via this initiative, Dinari’s dShares have been added, paving way for further adoption.

Maple Finance, Centrifuge, Figure, Ribbon Lend, Parcl, Pendle, Truflation, Intain, and Dusk are a few other projects that are on my radar and have stepped up their game of late.

Verdict

From the first stablecoin concept to the launch of BlackRock’s tokenized fund - we’ve evolved by leaps and bounds as an industry. Yet, as ironic as it may sound, this is just the beginning.

Blockchains came into existence to help people resist censorship and foster pseudonymity. Degens aren’t a fan of KYC, and that’s why they’ve embraced the whole DeFi system. We value the tech for these very characteristics. There is an oil-water difference between Trad-Fi and DeFi. But if you want institutions to park or borrow capital from our industry players, the creases need to be ironed. Regulators around the world keep pointing out that the crypto industry is unhinged and unregulated, so with KYC and AML regs in play, the playing field would only get wider and make the environment more trustable.

In fact, it seems like most RWA projects are targeting investors outside of crypto too. Believe it or not, those lousy boomer pant-suit shoe-sock guys command a whopping 95% of the market share. So, there is leg space for growth. This ain’t a dead end, the path will eventually lead to mainstream adoption, blurring the lines. Our RWA projects have a USP, they have a protocol-market fit, they are distinguishable, and lo and behold, they are bound to emerge victorious.  

The TradFi x DeFi {so-called CeDeFi} sector is getting wider and wider: new projects are launching, existing ones are stabilizing themselves, novel users are onboarding, partnerships are being fostered - all signs of growth and adoption.

Tokenized assets are appealing enough from both the risk and return perspective, and the AUM amassed to date is a testament to the same. Several forecasts by asset managers have pointed out that this is just the dawn of a new era. According to 21.co’s forecast, for starters, the market for tokenized assets has the potential to reach ~$10 trillion in a bullish scenario and ~$3.5 trillion in the bearish scenario.

The Boston Consulting Group, on the other hand, expects this industry to reach a valuation of $16 trillion by 2030.

What I infer: There is scope. There is conviction. There will be further advancement and adoption. So, as that keeps happening in the background, make sure you make your picks, so that you can lean back and enjoy the show when the firecrackers start bursting!

Source: 21.co