Stable currency, token treasury bond, decentralized private credit, NFTs supported in kind, climate and regenerative finance DeFi - these are just some of the trends that will reshape the capital market in the next year.

In the constantly changing financial landscape, the past two years have brought us a series of unique challenges. The most significant one is inflation in the United States, which reached a staggering 9.1% in June 2022, prompting the Federal Reserve to implement a series of aggressive interest rate hikes (which are still ongoing).

At the same time, the cryptocurrency industry has also experienced its own storm, with large projects such as Terra/Luna, Celsius, Voyager, and FTX, as well as banks such as Silvergate, Signature, and Silicon Valley Bank falling one after another.

In this turmoil, blockchain builders continue to forge ahead, and the real world asset (RWA) sector has become a beacon of innovation and resilience. Essentially, the core of real world asset tokenization is to create an investment tool on the blockchain that is associated with tangible assets such as real estate or cars, or anything else that may exist in physical form. Once ownership is recorded on the blockchain, assets can be traded, divided, or securely held.

Entering 2024, the following seven RWA prospects will reshape the financial landscape:

1. Stable currency: the cornerstone of programmable currency

As federal regulation approaches, stablecoins - a microcosm of programmable currencies - are on the brink of transformative growth, fundamentally changing our view of currency. In the United States, two publishers dominate this field - Circle (issuing USDC as a multi chain solution) and Paxos (providing PayPal's PYUSD and other labeling solutions, such as). Globally, the market value of stable currency is about US $125 billion, and it has become an infrastructure layer powered by the Internet of Value. Stable currency has stability and flexibility, which will completely change the global payment, remittance, e-commerce, trade finance and other fields.


2. Tokenized treasury bond: a bridge between traditional finance and decentralized finance

Tokenized treasury bond reflects the true integration of traditional finance and decentralized finance. With the yield of risk-free short-term treasury bond rising from near zero at the beginning of 2022 to about 5.4% in October 2023, Franklin Templeton, Ondo, Backed, Maple, Open Eden, Superstate and other companies took the lead in tokenizing short-term U.S. treasury bond and bank deposits. According to data from data tokens and analysis platform RWA.xyz, this new asset class currently has a market value of $700 million. Tokenized treasury bond is breaking down barriers and providing new ways for investment and financial inclusion.

3. Private credit: Empowering small and medium-sized enterprises through DeFi

The private credit market in the United States is worth $1 trillion, while the global private credit market is worth $1.7 trillion. However, for a long time, small and medium-sized enterprises have not been able to enter this market. Centrifuge, Goldfinch, Credit, Maple, Huma, and other DeFi lending agreements are changing the rules of the game, opening the door to debt capital from public markets, banking systems, and traditional private lending institutions.

The initiator of private credit. RWA.xyz focuses on specific industries or regions and is currently estimated to have approximately $550 million in active loans in the market, with growth expected to continue in the coming months.

4. NFT: Completely Transforming Collection Financing Models

The annual global art sales exceed 65 billion US dollars (compared to 30 billion US dollars in the United States alone), indicating that there are huge business opportunities hidden in art. However, the traditional art and collectible market lacks liquidity and is expensive (auction houses usually charge 15-20% extra fees for small items). It is estimated that the global collectible market (coins, stamps, books, comics, artworks, toys, etc.) is approximately $400 billion in size and also lacks liquidity. Market platforms like eBay and some smaller customized markets cater to the needs of this industry, while lending methods are generally limited to pawnshops with higher interest rates.

Fortunately, decentralized protocols such as 4K and arcade. xyz are changing this model. By bringing physical collectibles into the blockchain, borrowing and lending for assets such as Supreme T-Shirts and comic books has become a reality. These measures democratize lending and allow collectors around the world to access it.


5. Consumer brand NFT: Enhancing customer engagement

Leading consumer brands including Nike, Adidas, Louis Vuitton, and Coca Cola are all embracing NFTs. From Starbucks on Polygon to the rumored efforts of Amazon's private blockchain, big brands are using blockchain to enhance their digital footprint, customer engagement, and entertainment experience. Whether on public blockchain (Starbucks on Polygon) or private blockchain (rumored around Amazon), these brands are shaping the future of consumer interaction by incorporating gaming and metaverse elements.

6. DeFi in the field of climate and renewable finance

In the context of increasing attention to environmental, social, and governance (ESG) issues, blockchain technology is driving positive changes in the $2 billion and growing carbon market. Flowcarbon and other companies are leveraging the potential of blockchain to enhance transparency in this important market. To achieve the goals of the Paris Agreement, this market must achieve 15 times growth by 2030. The accuracy and transparency of blockchain at each stage of the carbon lifecycle are indispensable for promoting sustainable development in the future.


7. Tokenized deposits and wholesale banking settlements: completely changing cross-border transactions

Blockchain technology is reshaping the way banks handle token deposits and wholesale settlements. Although Central Bank Digital Currency (CBDC) may not be an urgent issue in the United States, especially if private issuers can be regulated at the federal or state level, some banks are experimenting with blockchain technology for tokenized deposits and wholesale settlements within or between banks. The pilot projects of industry giants such as Citibank and JPMorgan Chase Bank have demonstrated the potential of real-time cross-border transactions. In the coming months, this field will continue to expand, thereby improving the efficiency of global finance.

These RWA trends herald the arrival of a new financial era and provide solutions for long-standing challenges. Although their market value may seem small now, their potential for change is immeasurable. Stablecoins, tokenized treasuries, decentralized private credit, physically supported intangible assets, consumer brand intangible assets, DeFi in climate and renewable finance, and tokenized deposit/wholesale bank settlements are not only trends, but also the cornerstone of a more inclusive, efficient, and sustainable financial future. In 2024, these innovations will undoubtedly lead the trend and bring unparalleled opportunities to businesses and individuals.