The Rise of Tokenization in 2024
Experts predict that the tokenization of real-world assets (RWA) will be a major trend in 2024. Asset managers like Brevan Howard and Hamilton Lane have already announced plans to tokenize their funds, joining other financial giants like Deutsche Bank and HSBC. This trend opens up a $16 trillion business opportunity, with non-financial assets like intellectual property and artworks also being tokenized.
The On-Chain Opportunity
The decentralized nature of the crypto industry allows for unique opportunities. For example, decentralized exchanges (DEXs) have evolved without market makers, leading to the dominance of automated market makers like Uniswap. However, advancements in blockchain infrastructure have now made on-chain order book exchanges possible, offering different options for institutions interested in RWA tokenization.
Institutional Interest in Crypto
Traditional companies are increasingly investing in or acquiring crypto-native projects and talent to access on-chain opportunities. This trend is expected to continue as interest in RWA tokenization grows. The Federal Reserve of San Francisco, S&P Global, and the National Payments Corporation of India have all recently hired specialists with defi or digital asset backgrounds.
Decisions and Trade-Offs
As the crypto sector becomes more intertwined with the global financial sector, individuals may face difficult decisions. The principles of decentralization and privacy that attracted many to the crypto space may conflict with compliance requirements and corporate governance. Participating in institutional investment may require compromising on these principles.
Hot Take: Embracing Institutional Adoption
In 2024, institutional investment and mainstream interest are driving adoption in the crypto industry. While this may mean making compromises, it also presents significant opportunities for growth and development. Embracing institutional adoption can lead to a more inclusive and sustainable future for the crypto sector.
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