According to data from a16z Crypto, gold now essentially dominates the entire tokenized products market, with its latest report pegging tokenized gold alone at nearly $5 billion, compared to about $5.1 billion for tokenized products.
Silver and other commodity products together account for only $57.6 million, with gold accounting for about 98% of the market. Oil, agricultural products, energy, and computing tokens still barely exist.
According to a16z Crypto, the market for tokenized assets, also known as RWA, “recently exceeded $30 billion and remains at $34 billion,” excluding stablecoins.
Its market value in mid-2024 was less than $3 billion. This massive increase occurred after the passage of the GENIUS Act, which provides clearer laws regarding stablecoins in the United States.
Treasury promotes tokenized assets as gold dominates commodity side
U.S. Treasury debt has been the biggest driver of recent growth. a16z Crypto said, “U.S. Treasuries have driven most of the market’s recent growth.” Investors will be able to hold regular yielding assets in a faster digital format. Fixed income is the largest tokenized asset class at $15.2 billion.
“For crypto investors, tokenized U.S. Treasuries offer a way to take advantage of the yields of traditional money markets while also leveraging idle stablecoins,” said a16z. “BlackRock, Franklin Templeton, and a growing number of asset managers are moving quickly to meet demand, building a multibillion-dollar market around this idea.”
Not all categories grew at the same speed. Asset-backed credits, including tokenized HELOCs and lending vault tokens, reached $1 billion just 185 days after the first recorded on-chain activity. Next came specialized finance. This includes tokenized reinsurance contracts and Bitcoin mining notes, and has surpassed $1 billion in less than two years.
It took over seven years to reach $1 billion in venture capital. The active strategy took about the same amount of time. Government debt and goods grew even faster, reaching $1 billion in about two to three years. By early 2024, these two categories accounted for nearly the entire tokenized asset market.
Since then, the share of asset-backed credit, specialty finance, equities, and active strategies has increased, but Treasuries and commodities still account for about two-thirds of the market.
Ethereum leads tokenized assets while most products remain outside of DeFi
Gold is well-suited for tokenization because crypto traders love it, thanks to GoldLink, as Bitcoin was referred to as “digital gold” long before tokenized gold products became commonplace. Tether’s XAUT and Paxos’ PAXG convert gold claims held in vaults into tokens that users can store in their cryptocurrency wallets.
Ethereum still holds the largest share of the fully tokenized asset market, with $15.7 billion on the network. BNB Chain is worth $4 billion, Solana $2.2 billion, Stellar $1.7 billion, and Liquid Network $1.5 billion. XRP Ledger, ZKsync Era, and Arbitrum are each close to $1 billion.
The usage numbers are not as large as the market cap numbers. a16z Crypto said that while fixed income is the largest category, only about 5% of its supply, or about $800 million, is used within DeFi protocols. The usage rate of precious metals in DeFi is also low. Most of the tokenized gold is held on-chain rather than being used as programmable collateral or within other apps.
a16z Crypto said its top categories of DeFi applications were built from the beginning for on-chain use, including products related to Nexus Mutual and Maple Finance.
The a16z report says:
“Some assets are freely transferable and can be used between on-chain applications; others use blockchain primarily as a record-keeping infrastructure and have limited transferability or composability.RWA.xyz(For example, distinguishing between “distributed” and “expressed” assets). Much of what is called “tokenization” today is actually more like digitalization. ”
McKinsey sees the tokenization market reaching between $2 trillion and $4 trillion by 2030, Ark Investments predicts $11 trillion, BCG and Ripple predict $9.4 trillion by 2030 and $18.9 trillion by 2033, while Standard Chartered (LON:STAN) predicts more than $30 trillion by 2034.
