By Bhaji Illuminati, CMO, Centrifuge
As the year wraps, it's not just closing chapters; it's gearing up for what's next.
It’s been ten months since I joined as Centrifuge’s CMO. And a lot has happened— both for Centrifuge and our industry at large.
The Fed is bullish on tokenization. The tokenized T-Bill market grew by over $600M. The BIS concluded a study quantifying the monetary impact of blockchain efficiency. BlackRock and major institutions continue to push the tokenization narrative. The Tokenized Asset Coalition came to life. Centrifuge TVL passed $250M. And we're just getting started.
This year, we also had the pleasure of hosting the industry's first Real-World Asset Summit in New York alongside amazing partners like Coinbase, Circle, and Galaxy.
The invite-only event brought together some of the industry's most distinguished investors, builders, and thought leaders to have meaningful conversations about where we are and where we’re heading.
To that end, I’m excited to announce our plans to expand the Real-World Asset Summit footprint in 2024.
In addition to the return of our flagship NYC event, we’re taking the Real-World Asset Summit global to continue to shape and drive the RWA narrative. Look out for official dates and more details in the New Year posted to the website and the Centrifuge social channels.
For now, I leave you with a priceless gift – 2024 predictions from some of the thought leaders who made our inaugural summit a huge success.
"Three important themes are transpiring in parallel: 1) Tokenized real-world assets are rapidly converging upon the total value of crypto-native assets locked in smart contracts, 2) Onchain GDP for permissioned applications is gaining market share relative to permissionless applications, and 3) Wallets are linking offchain and onchain identity, enabling whitelisting and gated access. These three crosscurrents are producing the necessary conditions for some of the world's largest financial institutions to interact with blockchain infrastructure for trade finance, b2b payments, cross-border remittance, bilateral lending, structured products, and a wide range of capital market functions." - Ben Forman, Founder, ParaFi
Diversified portfolios that mix crypto native and real world investments, liquid and illiquid assets, will provide the best risk-adjusted returns relative to the rest of the market. The stablecoins, treasuries, and crypto cash managers that can achieve this will have a definitive edge over their peers as the next cycle plays out. As the market becomes more saturated with assets and providers, investors will begin valuing the protocols and platforms that can claim the highest credibility and quality.” - Lucas Vogelsang, Co-Founder & CEO, Centrifuge
"Real-world asset tokenization will be a driving force in bringing the next wave of investors onchain. We’ve started to see people do an increasing number of things onchain — from art to music to gaming — and real-world assets will bring more everyday investments onchain. By increasing the number of use cases, we’ll give more people more to do onchain and increase global crypto adoption." - Jesse Pollak, Creator of Base
On Treasury Bills
"Treasuries and stablecoins will continue to be the only "at scale" real-world assets we can expect to see in 2024. At least in the US, broader adoption and integrations with the financial system will take clear crypto legislation. Once we have that, the real-world asset market cap will explode." - Ryan Selkis, CEO & Founder, Messari
"We will see a shift in how protocols build for "risk-free" asset classes. Tokenizing the underlying assets gives investors more visibility and ownership, removing intermediaries and cutting costs. This tech-driven evolution is the direction investors are demanding, and protocols are following suit." - Martin Quensil, Co-Founder, Anemoy
"As we see more consolidation and standardization around models and platforms that facilitate issuing real-world assets, we’ll see more regulatory clarity in certain jurisdictions. This is going to give us the both technical and operational ability to scale real-world assets in order of magnitude at least if not more." - Niklas Kunkel, Founder, Chronicle Labs
"Permissionless DeFi will begin to phase out and everyone will be learning to KYC next year. The potential departure of Gary Gensler will mean the SEC may become less hostile to crypto and could even begin to provide interpretative guidance. At the same time, the investment landscape might be reshaped by decreasing short-term interest rates, leaving those piled into T-Bills searching for alternative yields.” - Eli Cohen, General Counsel, Centrifuge
"There's going to be a lot of pressure for Tether and Circle to replace a yield free USDT/USDC rate with a regulatory compliant tokenized T-bill with identical ERC-20 functionalities. The rates in DeFi, which are currently lower than the rates in the traditional world, which is the arbitrage, will converge, and ultimately the DeFi rates are going to basically mirror the offline rates." - Fabrice Grinda, Founding Partner, FJ Labs
“We’re going to see $10 billion plus of onchain tokenized financial asset products. Right now there’s about 300 million of these products on Ethereum Mainnet, there's about 300 million on other chains. I think we are going to go from that middle nine figures to 10 billion + in the next year and a half or so.” - Mark Phillips, Steakhouse Financial
"The amount of capital being committed into real-world assets is incredible. This is like a sub-niche of an industry that maybe before a year ago the total size was 100 million. Now we’re at I think like 3.5 billion dollars of credit extended from DeFi into real-world assets. And that’s only going to grow from here.” - Niklas Kunkel, Founder, Chronicle Labs
There you have it - some fascinating ideas and predictions. There is a lot to think about with regard to the future of tokenization, regulation, and the convergence of DeFi and TradFi.
It's been an exciting year in our industry – and I can't wait to see what the next year brings.