Excluding stablecoins that do not generate income, the total value locked (TVL) of the real-world assets (RWA) market has increased to $8 billion this year. Private equity, property, government bonds, commodities, and other monetary liabilities are among the real-world assets that are being tokenized on blockchains.
As low-risk DeFi rates began to outpace bond yields in the traditional banking sector during the lousy market of 2022–2023, tokenized RWAs began to gain traction in the decentralized finance (DeFi) space. Despite the significantly decreased risk associated with DeFi stablecoins, the returns of US Treasury bonds became competitive due to the aggressive interest rate hikes implemented by the United States Federal Reserve. In contrast to Aave’s stablecoins, which offer fluctuating yearly percentage returns ranging from 3.73% to 7.46% as of June 13, June 13 Treasury bills offer three-month average yields of 5% to 5.24%.
Real-world Asset Projects Hit $8 Billion Marketcap
With borrowing costs going up and deregulation in the DeFi market going down, specific protocols saw an opportunity and began offering tokenized US Treasury and tokenized private loans in blockchain ecosystems. Such tokenized private loans had an average yearly percentage yield of 9.57 percent as of the beginning of June. The crypto market rose with institutional activity in 2024, capitalizing the TVL of RWA projects to $8 billion.
With the launch of its BUIDL fund, asset manager BlackRock quickly became the leading provider of tokenized U.S.S.S. Treasurys. Its market valuation has grown from $180 million at inception to $462.27 million today. It overtook Franklin Templeton’s Benji Investments fund, which had long held the lead, and is now the largest issuer of tokenized Treasurys, with a 30% market share.
Nonetheless, TVL and the token performance of associated projects show that the RWA market is growing. With a year-to-date gain of 224.57%, RWA tokens increased 55.20% in May. Some of the most notable tokens contributing to this remarkable total include TrueFi, Ondo, Dusk, Clearpool, and TokenFi.
To evaluate the risk-adjusted year-to-date performance of RWA coins, Research computed the daily Sharpe ratios, which quantify excess return per unit of risk. The following Sharpe ratios were calculated for RWA tokens using the daily returns from January 131st to May 314.78
- TokenFi: 2.66
- TrueFi: 1.88
- Dusk: 1.4
- Clearpool: 0.4
For reference, the Sharpe ratio for Bitcoin BTC$66,210 was 1.37, and for Ether ETH$3,527, it was 1.36.
Calculating returns of RWA tokens
The daily yearly yield of a one-year Treasury bill was used to calculate these ratios, representing a risk-free rate. Over the same period, a BTC/ETH portfolio had an average Sharpe ratio of 1.37; nevertheless, all tokens except Clearpool had a better risk-adjusted return. Their higher Sharpe ratio indicates that RWA tokens have provided a more substantial return-to-risk ratio for short-term long bets. As expected, they have also done better in raw price performance than a BTC/ETH portfolio, except for Clearpool.
Ondo Finance delivers the highest Returns
Ondo Finance has produced the best results, with a 461.62% gain this year and the top Sharpe ratio of 4.776. Its success is due to introducing new products to its platform, such as the Gthe Government Bond Fund (OUSG), a tokenized version of BlackRocUSs US Treasury ETF, which holds short-term US Treasury securities. Ondo also introduced instant investments and redemptions as they extended to the Solana blockchain. On June 1 and 13, Ondo surpassed all but two other issuers of tokenized US Treasurys to take third place.
Also Read: Real-World Asset (RWA) Tokenization: A Complete Guide
FAQs
Why did RWAs gain traction in the DeFi space in 2022–2023?
RWA growth was spurred as DeFi interest rates started to surpass traditional bond yields during the bearish market period of 2022–2023, attracting attention.
Which asset manager currently leads in tokenized U.S. Treasuries?
BlackRock has become the leading issuer, surpassing Franklin Templeton’s Benji Investments fund, with its BUIDL fund now holding a 30% market share.
How do RWA tokens compare in performance to major cryptocurrencies?
RWA tokens generally showed higher Sharpe ratios and raw performance than a BTC/ETH portfolio, indicating better risk-adjusted returns, particularly with Ondo Finance’s 461.62% gain.
