A Dune dashboard shows that the niche now boasts a marketย cap of greaterย than $220 Million across the 6 projects measured.
Tokenization refers to issuing financial securities, like stocks and bonds, on the blockchain.
Corporations like Matrixport, Backed Finance, Ondo, and Franklin Templeton have all created ERC-20 cryptoย tokens, representing Government bonds or exchange-traded funds (ETFs)stock.
Theย previousย 30ย days, forย instance, Franklin Templeton tapped Polygon to host a tokenized version of its Nasdaq-listed OnChain Unitedย States Government Money Fund (FOBXX). Elsewhere, Backed Finance launched a tokenized version of Coinbaseโs stock on Ethereum.
Per the same Dune dashboard, the collection of corporations in the niche has announced tokenized securities on Ethereumย (ETH), Polygon, and Gnosis Chain. The bulkย of activity is, onย theย otherย hand, occurring on Ethereum.
Ondo and MatrixDock dominate the market with 61.4 percent and 32.1 percent share, with mostly short-term Unitedย States Government bonds, which asย ofย now yield 4 percent to 5 percent owingย to the hike in benchmark interest prices by the Federal Reserve.
Both Ondo and MatrixDock provide tokenized securities on Unitedย States Government bonds supplying a suite of digital investment management tools, trading services, and financial products.
Ondo likewise offers a lending service wasย known Flux, allowing users to put their ERC-20 securities cryptoย token as collateral. Upย toย now, users have added bonds worth $41.2 Million as collateral.
Backed Financeโs tokenized fixed-income bonds are likewise accepted as collateral on protocolsย ofย Decentralizedย Finance like Angle and Ribbon Finance.
In addition to issuing Unitedย States Treasury Bills, the Swiss-based company likewise collaborated with the worldโs largest investment fund manager BlackRock to trade and own an ERC-20 version of BlockRockโs ETF of over 400 corporations in the S&P 500 index.
Backed Financeโs head of marketing Kit Popplestone informed Decrypt that the โinteroperability betwixt tokenized assets and Decentralizedย Finance platforms opensย up wholeย lotย of opportunities for new products and makes lending more efficient.โ
Tokenization tendency on the rise
BlackRockโs CEO Larry Fink thinksย that tokenization of securities will form โ theย following generation for markets.โ
Fink noted in a New York event aย yearย ago that tokenized securities provide advantages such as instantaneous settlement, reduced charges, and simple integration in BlackRockโs business model.
Citi Bank analysts shared similar opinions in a March 2023 report, keepingย inย mindย that monetaryย authority digital currenciesโ wasย known CBDCsโand tokenization would drive adoption.
Althoughย while blockchainย tech shows promise of innovation with tokenized securities, regulatory clarity has restricted growth and adoption.
โTo continue this rapid growth, weย must regulatory clarity and consistency, and just as significantly, cryptoย tokens must be interoperable and composable with DeFi,โ stated Popplestone.
Nevertheless, he alsoย mentionedย that as the worldwide interest in monetaryย authority digitalย currencies and on-chain assets rises, the demand for tokenized securities โis only going to increase.โ
