Real-World Asset protocols outperform DeFi blue-chips due to tokenization wave

Real-world asset (RWA) protocols have become a hot trend within DeFi circles.

A real-world asset (RWA) protocol is a decentralized application that allows entities to tokenize and trade real-world assets. These assets range from stocks and government bonds to real estate and commodities. They are also known as asset tokenization protocols.

DeFi provides certain advantages over TradFi by making the smart contracts transparent and enabling a wide degree of financialization of these assets by making them divisible, transferable, and tradable on decentralized platforms.

The top uncollateralized lending protocols for institutions in TrueFi and Maple increased by 26.6% and 117.8% in 2023. Centrifuge, a real-world asset tokenization platform, surged by 32% year-to-date.

In comparison, the gains recorded by the DeFi pulse index (DPI) in the same period was 13%. Whereas, Glassnode’s index of DeFi blue-chip tokens lost 7% since the year’s start.

Recent data from Nansen found that the governance tokens of RWA protocols surged significantly in January and April thanks to the rising interest in them.

Previously, experts had suggested that many “DeFi veterans have already implemented RWA-based strategies, however, the lack of sufficient RWA on-chain severely hinders the ecosystem development.”

This is changing due to increased tokenization of real-world assets.

TradFi interest boost RWA activity

The top RWA protocol by total locked value, Ondo Finance, is a DeFi platform that enables stablecoin holders to directly invest in exchange-traded funds (ETFs) managed by top-tier asset managers like BlackRock and Pimco. U.S. bonds of more than $100 million have been issued via Ondo, per DeFiLlama data.

Goldman Sachs, Microsoft and Deloitte have eyed digital asset tokenization by partnering with the blockchain startup Digital Asset. German technology giant Siemens issued a digital bond on a public blockchain worth $64 million in February 2023.

The RWA assets account for 25% of the…