Why alternative real-world assets are booming.
The real world assets (RWA) market has grown to $8 billion in total value locked (TVL) this year, excluding non-production stablecoins. Real-world assets currently registered on blockchains include private equity, real estate, government securities, commodities, and other financial obligations.
During the bear market of 2022 to 2023, the popularity of tokenized RWs in decentralized finance (DeFi) began to grow as bond yields eclipsed traditional finance's low-risk DeFi yields. The US Federal Reserve's interest rate hikes have made US Treasury yields competitive. Despite their very low risk, DeFi stablecoins offer yield. As of June 13, the one-year Treasury bill offers a three-month average yield of 5% to 5.24%, while Ave has stable coin annual percentage returns of 3.73% to 7.46%.
The real world wealth projects reached a market value of 8 billion dollars
A number of protocols have started to leverage the high cost of borrowing and offer US Treasuries and tokenized personal loans in blockchain ecosystems, defeating the DeFi movement. As of early June, the average annual percentage yield for such tokenized personal loans was 9.57 percent. In the year In 2024, when the crypto market recovered with new institutional activity, TVLR projects to reach its current capitalization of $8 billion.
Asset management giant BlackRock entered the space and quickly became the largest provider of US Treasuries with its BUIDL fund. Immediately after its launch, it gained a market capitalization of $180 million and now stands at $462.27 million. With a 30% market share, it is the largest issuer of tokenized Treasuries, surpassing long-time leader Franklin Templeton's Benji Investments fund.
However, the growth of the RWA market is seen not only in TVL but also in the execution of related projects. RWA tokens rose 55.20% in May and are up 224.57% year-to-date. Tokens contributing significantly to this impressive number include TrueFi, Ondo, Dusk, Clearpool and TokenFi.
To assess the risk-adjusted year-to-date performance of RWA tokens, Cointelegraph Research calculates their daily Sharpe Ratios, which are profit per unit of risk. Using daily returns from January 1 to May 31, the Shape ratios for RWA tokens were as follows:
Ondo: 4.78 TokenFi: 2.66 TrueFi: 1.88 Hide: 1.4 Clearpool: 0.4
For comparison, the Sharpe ratios for Bitcoin (BTC) and Ether (ETH) were 1.37 and 1.36, respectively.
Calculating returns of RWA tokens
These ratios are calculated using the risk-free rate derived from the daily annualized yield of a one-year Treasury bill. With the exception of Clearpool, all tokens had a risk-adjusted return compared to the BTC/ETH portfolio, with an average Shape ratio of 1.37 over the same period. The higher Sharpe ratio for RWA tokens indicates that short-term and long-term trades offer better return and risk. Surprisingly, with the exception of Clearpool, they outperformed the BTC/ETH portfolio in terms of raw price performance.
Ondo Finance offers high returns
Ondo Finance recorded the highest return, 461.62% year-to-date and the strongest Sharpe ratio at 4.776. This performance may be due to the launch of new products on its platform, including the US Government Bond Fund (OUSG), a tokenized origin of BlackRock's US Treasurys ETF, which consists of short-term US Treasurys. Ondo expanded to the Solana blockchain and introduced instant investments and redemptions. In the year As of June 13, Ondo has become the third largest issuer of US Treasurys tokens.
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