The global race to tokenize real-world assets (RWAs) has gained significant momentum, yet the market remains in its infancy. Chris Yin, co-founder and CEO of Galaxy-backed RWA platform Plume, shared valuable insights on the current state of the RWA market at the recent Token2049 conference in Dubai. Despite increasing interest, institutional capital is still hesitant to dive into a sector that has not yet demonstrated its full potential.
Yin stated, “These things move incredibly slowly; you have to show value and adoption first.” He compared the nascent RWA market to the earlier days of Bitcoin and stablecoins, indicating that it may take years for institutions to recognize the value of tokenized assets.
The Market Size Debate
Current estimates suggest the RWA sector is worth over $21 billion. However, Yin challenges these figures, asserting that the actual market cap is closer to $10 billion, predominantly consisting of Treasury bills and gold, with limited private credit.
According to RWA.xyz, the market capitalization amounted to approximately $17.4 billion, with private credit making up nearly 60% of all RWAs. Yin and other industry experts emphasize the challenge in sizing the global RWA market, especially on the private side, which is often difficult to access and analyze.
The Role of Institutional Capital
Institutions, driven by profit potential, tend to enter markets when they have reached a significant scale. Yin describes this perspective, stating, “Institutions are looking for angles to make more money, not for cost savings or efficiency.” With a current modest RWA market size, he suggests that the industry should rely more on its native community for growth.
“There are zero institutions putting money on-chain. They are trying to actually suck money out of the ecosystem.”
Stobox co-founder Ross Shemeliak echoes Yin’s sentiment, admitting that while the innovation may originate from startups and Web3 protocols, serious volume will require institutional participation. Tokenized assets are inherently institutional, providing regulated securities and financial contracts that demand legal compliance and governance.
The Path Forward
In conclusion, while the potential for tokenized RWAs is vast, the journey towards widespread institutional adoption appears slow and cautious. With significant hurdles to overcome in terms of market perception and actual size, the future of RWAs will heavily depend on community-driven initiatives and eventual engagement from institutional players. The landscape may evolve, but it remains essential to build a foundation that aligns with both innovation and regulatory frameworks.
Related: Deloitte predicts $4T tokenized real estate on blockchain by 2035
