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Everything Will Be Tokenized: Exploring the Future of Tokenized Real-World Assets

If predictions about the potential scale of the tokenization opportunity are accurate everything will be tokenized and we can expect to see trillions of dollars of assets on-chain in the coming years.

If predictions about the potential scale of the tokenization opportunity are accurate we can expect to see trillions of dollars of assets on-chain in the coming years.
Credit: Foretoken Media 2024

“Everything will be tokenized” or so goes the mantra that accompanies much of the speculation about the potential scale of the markets for tokenized real-world assets (RWAs). So far, much of the headway into tokenization has been strictly institutional, with banks and financial firms experimenting with the tokenization of assets like stocks, funds, and derivatives.

However, the idea of tokenizing “everything” encompasses far broader potential – and financial opportunity. Last year, Boston Consulting Group (BCG) predicted that the markets for tokenized RWAs could extend to $16 trillion within the next six years, estimating that just under one-third of that would come from “other tokenizable assets” – a potentially vast category that includes anything non-financial or non-real-estate.

Tokenizing Exotic Assets: A Glimpse into the Future

We don’t have to wait around to see the potential of tokenization, as several noteworthy instances involving the tokenization of so-called “exotic” assets have already emerged. These instances are opening up novel sources of value for holders and creating new investment channels for interested buyers.

Yesterday, Watford FC, an English professional football team, announced it is selling 10% of the equity in the club to investors in the form of on-chain tokens. Watford is partnering with tokenization platform Republic, which is handling the token share sales via its online platform. This move allows fans who meet the investment criteria to participate, representing an intriguing new source of revenue for football clubs, particularly those without access to top-tier finance. In Watford’s case, the shares also pay dividends – an unusual move for a football club.

Interest in British grassroots football is currently sky-high thanks to the Hollywood makeover of Welsh team Wrexham by mega-celebrities Ryan Reynolds and Rob McElhenney. Therefore, Watford, with its 150-year pedigree in the beautiful game, has a prime opportunity to draw from a wider pool of investors while creating an avenue of participation for fans and supporters.

Tokenized Assets as Loan Collateral

Raising equity is one use for tokenized assets, while loan collateral is another. Tokenization enables two parties to enter an on-chain loan agreement enforceable through smart contract code, holding the tokenized asset in escrow until the borrower repays the loan in full or defaults. This concept is familiar in the world of DeFi lending.

Imagine a wealthy founder of a successful Web3 gaming firm who acquired a 300-year-old Stradivarius violin for $9 million. If this founder needs a multi-million dollar loan, what better use for the fine fiddle than as tokenized collateral? Yat Siu, founder of Animoca Brands, did precisely this by tokenizing the instrument and securing a loan from Galaxy Digital.

The Allure of Exotic Assets On-Chain

The presence of exotic assets on-chain can even boost the value of the underlying blockchain network. For instance, the value of Avalanche’s AVA token recently experienced an 8% price surge following the news that the platform was hosting a tokenized investment fund focusing on fine wines. Through a partnership with Oasis Pro, investors can now access the Wine Capital Fund sponsored by WIVX Asset Management.

Over the last decade, wine and whiskey have delivered substantial returns compared to other alternative investments, but the $400 billion market has remained exclusive to high-end investors. Avalanche’s initiative, like Watford FC’s, aims to make the opportunity more accessible to the masses.


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