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While real-world asset tokenization can be traced back all the way to the 90s, it wasnât until 2023 that the sector experienced serious growth. In this article, we explore the current situation of RWAs in DeFi with on-chain indicators.
Real World Assets (RWA) aim to harness the yield and assets from the real economy and channel it into DeFi, leveraging its inherent interoperability. The year 2023 marked significant advancements, with projects successfully incorporating U.S. Treasury bond yields into DeFi through the creation of stablecoins.
Innovations like this led to the total value locked in RWA protocols reaching over $2.6B, almost on par with the $2.87B combined market cap of top RWA protocols. Currently, the RWA ecosystem is wildly successful, counting over 127.000 RWA protocol token holders.
MakerDAOâs Strategic Diversification
MakerDAO has strategically diversified its revenue by incorporating US Treasury bonds into its portfolio. This move has not only enhanced the stability of its income streams, generating over $100 million in annualized revenue but also improved the risk profile of its collateral assets. This strategy demonstrates MakerDAOâs commitment to integrating traditional finance elements to reinforce the DAI stablecoinâs sustainability.
It is this strategy that has fueled positive price movement for MKR, leading yearly returns amongst top RWA protocols. It is also no surprise that MKR comes out on top in terms of average transaction volumes, reaching a daily average volume of $94.5M during the second week of January.
While other assets in this category can not compete with MKRâs volume at the moment, there is still a significant amount being transacted, with USDM reaching a high of $34M in December.
Mountain Protocol stands out in TVLÂ growth
Mountain Protocol has emerged as a notable entity in the DeFi sector with its unique yield-bearing stablecoin, USDM, an ERC20 token backed by short-term U.S. Treasuries.
Mountain Protocol has seen a remarkable ascent, with its TVL reaching $150 million, a 400% increase in just the last month. This positions it as the second-largest RWA DeFi protocol, following MakerDAO.
Analyzing RWA protocol holders
Looking more deeply into specific RWA protocol tokens, we can observe a few more notable tokens. Analysis of holder profitability across various RWA tokens reveals a diverse situation. MKR stands out with a solid 75% of addresses in profit.
In contrast, tokens like TNGBL and GFI exhibit lower profitability ratios, with 12.2% and 33% of holders in profit respectively.
TNGBL Has The Most âDiamond Handsâ
The âHodlersâ ratio metric represents the proportion of addresses holding a specific coin for at least one year, serving as a crucial indicator of long-term investment confidence and potential market stability. A high number of hodlers suggests strong belief in the coinâs future value, while also implying greater market stability as these individuals are less likely to react to short-term market variations. In the RWA ecosystem, TNGBL stands out with a Hodler ratio of more than 90%.
The future of RWA in DeFi
The integration of RWAs into DeFi brings incredible value to the cryptocurrency landscape. The data analyzed from various RWA protocols demonstrates an exciting and growing ecosystem. The seamless integration of traditional financial instruments like U.S. Treasury bonds into DeFi protocols by pioneers like MakerDAO and the rapid growth of protocols such as Mountain Protocol underscore the value and potential of this sector.
Are you interested in more insights like these? Our RWA Perspective dashboard is now live for IntoTheBlock Pro users. You can use the indicators from this article and much more. You can view the dashboard here.
Exploring Real-World Assets in DeFi was originally published in IntoTheBlock on Medium, where people are continuing the conversation by highlighting and responding to this story.
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