Sergey Nazarov, co-creator of Chainlink (LINK), believes that the tokenization of real-world assets (RWAs) will become a significant trend in the blockchain industry. Speaking to his 150,000 followers on the social media platform X, Nazarov highlighted the potential of RWAs to surpass cryptocurrencies in on-chain value.
Tokenizing Traditional Assets
The RWA trend aims to bring assets from traditional markets, such as real estate, loans, and bonds, onto the blockchain. Nazarov emphasised that the value of assets that can be tokenized is in the tens of trillions, though currently, only a small fraction is in RWA format. Major institutions like Blackrock and Fidelity are already participating in this trend through tokenized funds.
Real World Asset (RWA) tokenization is the next big trend in the blockchain industry and I believe it is on track to hold more onchain value than cryptocurrencies.
More in the presentation linked here https://t.co/cAkBYPnPt0 , with some key points below.
RWAs have already… https://t.co/Wsts4aXoxn
— Sergey Nazarov (@SergeyNazarov) July 11, 2024
Moreover, people can make purchases and transfer across different countries and financial systems much easier with less friction compared to traditional infrastructure. This enhanced liquidity access has been a driving factor in the growth of cryptocurrencies.
Nazarov also cited Chainlink’s role in putting net asset value (NAV) data on-chain for large central securities depositories (CSDs) and providing proof of reserve for underlying assets to show that RWAs can hold critical data about underlying assets more effectively than traditional systems.
“RWAs have the ability to hold critical pieces of data that prove important things about the underlying asset much quicker and more effectively than traditional systems. Good examples are Chainlink’s usage to put NAV data on-chain for large CSDs and proof of reserve about the current state of an underlying asset.”
As more administrative and operational functions of funds move on-chain, Nazarov envisions substantial increases in efficiency and reductions in operating costs. For instance, placing NAV data on-chain more quickly could reduce the redemption timeline from months to minutes, yielding significant economic benefits.
In summary, Nazarov sees the tokenization of real-world assets as a transformative trend in the blockchain space, with the potential to revolutionize asset management and transfer, thereby driving substantial value and efficiency.
