The post Most RWAs today are tokenized nonsense appeared on BitcoinEthereumNews.com.

The ability to mint money — whether through traditional bank loans or via crypto leverage and new tokens — is crucial for funding growth and innovation.  And stablecoins, the most liquid and widely adopted onchain real-world assets (RWAs), are increasingly forming the backbone of DeFi, mirroring the role of credit in today’s global economy. Multiple stablecoins now enable efficient cross-border transactions, thereby reducing reliance on traditional banking systems and supporting complex financial products like decentralized lending platforms, liquidity pools and yield farming protocols. However, let’s be clear: Most tokenized nonsense is a waste of time.  Real estate, for example, is barely liquid in the real world due to difficulty in pricing (no two locations or buildings are exactly the same) and a lengthy and complex legal system to process legitimate changes in ownership (not to mention enforcement of leases for cash flow, maintenance, etc.). Publicly traded REITs and mortgage backed securities use rating agencies and bundling to circumvent these liquidity problems. Tokenization of individual real estate (e.g., NFTs of buildings) does not solve these fundamental problems. In fact, tokenization introduces a new problem — aligning legal ownership with token ownership (there is no future where stealing an NFT of a house will confer legal ownership of that house). Tokenization of REITs, bonds and stocks, while cool in theory, is so heavily regulated that even platforms like Uniswap won’t show them on their frontend. Synthetics and perpetuals that cover stocks are just player vs. player markets for funding rates, not real-world assets. Within today’s RWA ecosystem, stablecoins do solve problems. Stablecoins as digital cash can easily serve as bearer assets. Holding it is owning it. This feature enables the primary use case for stablecoins — the globalization and decentralized adoption of one of the most sought-after assets in the world, US dollar-denominated…

---

Filed under: News - @ June 20, 2024 1:22 pm