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Surge in Tokenized U.S. Treasury Market Reflects Crypto's RWA Race

Oct 31, 2023 at 10:41 am

Ethereum Emerges as Leader in Tokenized U.S. Treasury Market

The Tokenized Treasury Market: A Glimpse through RWA.xyz 

In the fast-evolving landscape of tokenized government bonds, Ethereum has taken the lead, surpassing Stellar. Additionally, newcomers Solana and Polygon have made significant strides in this space.

The tokenized U.S. Treasury market has experienced a staggering growth of nearly sevenfold in 2023. This surge can be attributed to the heightened competition among investment offerings and blockchain platforms. According to RWA.xyz, a platform for monitoring real-world assets (RWA), the tokenized Treasury market has surged to $698 million as of Monday, up from approximately $100 million at the beginning of the year. Charlie You, co-founder of RWA.xyz, highlighted that this expansion was driven by both new players entering the arena and the substantial growth of existing platforms, as mentioned in the Our Network newsletter.

RWA data indicates that established protocols like Ondo Finance, Maple, and Backed have experienced a notable uptick in the past few months. Meanwhile, recently launched protocols such as Tradeteq and TrueFi's Adatp3r have attracted deposits of $4.5 million and $8.5 million, respectively, in September alone.

In terms of on-chain value of Treasury tokens, Ethereum (ETH) has recently outperformed the Stellar (XLM) network. Later entrants, namely Polygon (MATIC) and Solana (SOL), have also collectively garnered over $40 million in assets. This shift points to a diversifying landscape within the blockchain realm for tokenized assets, according to Charlie You from RWA.xyz.

The Valuation of Treasury Tokens on Blockchain: Insights from RWA.xyz 

A noteworthy development in tokenization is the emergence of permissionless yield-bearing stablecoin alternatives. Ondo Finance introduced its USDY token, and Mountain Protocol unveiled USDM. These offerings distinguish themselves from leading stablecoins like Tether's USDT and Circle's USDC by directly passing on the yield earned from the underlying assets.

Tokenization of Treasuries represents a significant stride in incorporating real-world assets into the blockchain domain. Crypto investors are drawn to these offerings as they seek to capture higher returns, particularly in light of the surge in global interest rates and the decrease in decentralized finance yields. Investment firm 21.co has even projected that the market for tokenized assets could reach a staggering $10 trillion by the end of this decade.

 Read more: Circle Revolutionizes the Cryptocurrency Landscape with Native USDC on Polygon

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