Tokenization of real-world assets, including sovereign bonds, bank-issued debt and real estate on blockchain, is expected to emerge as a growth sector in 2024 and over the next decade, according to Jasper De Maere, research leader at Outlier Ventures. . .
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In the latest episode of Yahoo Finance Future Focus, De Maere discussed debt tokenization by financial players like Franklin Templeton (ben) and the concept of real estate tokenization, highlighting its potential to be registered on the blockchain and traded fractionally.
Tokenization of real-world assets is a growing sector
The total addressable market for real-world asset tokenization is estimated to reach between $10 trillion (ยฃ7.9 trillion) and $15 trillion by the end of the decade, according to Outlier Ventures Real-World Asset Tokenization 2024 Thesis.
"As technology spreads throughout society over the next decade, we believe it will have a transformative impact on industries such as financial markets, manufacturing, healthcare and infrastructure," De Maere said.
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He added that tokenizing real-world assets, such as financial products, real estate and even art, on a blockchain could provide greater accessibility and liquidity, allowing for easier and more efficient trading.
Additionally, using the immutable and decentralized features of blockchain could make things more transparent and secure. These tokenized products can also be programmed with โsmart contractsโ to create new trading methods.
Benefits of tokenization
"There are two big benefits of tokenizing real-world assets. The first is increased efficiency. So by having more real-world assets on the blockchain, you'll really unlock efficiency. Thus, the financial market itself will be more efficient," De Maere told Yahoo Finance UK.
โThere are multiple ways to increase efficiency in real estate, but one that I am very excited about is capital formation by having your assets represented on the blockchain,โ he added.
De Maere said tokenization allows ownership of assets to be divided into fractions of any size. "Fractionation is when you actually divide ownership of your asset, which could be a house, which typically belongs to one person, into multiple pieces. This could allow you to sell specific percentages of your house to other people," she said. .
Participation of large financial players.
According to De Maere, some players in the financial markets, such as banks, asset managers and financial institutions, are currently exploring the use of blockchain to tokenize real-world assets.
"Large financial players such as banks and asset managers and some of the institutional players are exploring tokenization through pilot programs. Franklin Templeton is tokenizing debt and treasuries and placing them on the blockchain to achieve execution efficiencies and transparency gains," De Maere said.
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"You have other asset managers like WisdomTree (weight) and Brevan Howard, who are looking to tokenize their funds. โSo what they are doing is creating a representation of their fund on the blockchain for easy distribution and transparency,โ he added.
De Maere mentioned that financial markets, in particular, will benefit from blockchain tokenization, unlocking efficiency gains and streamlining financial processes. However, he added that the tokenization process will be expanded to cover multiple asset classes, including supply chain inventories and even works of art.
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