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Unlocking $130 billion+ market for tokenization

Updated: Apr 22

Real world asset tokenization has been a hot topic in both crypto and traditional finance circles lately. From the SEB and Credit Agricole’s recent green bond tokenization effort to the issuance of US dollar backed stablecoin by BTG Pactual, Latam’s biggest investment bank, more and more traditional financial institutions are bringing assets onchain for easier distribution, tracking and trading. Of course these financial institutions can rely on their existing clients to soak up that demand but do they know there is an immediate and growing untapped opportunity underserved by the current crypto native yield opportunities? I am talking about the $130bil+ onchain stablecoin market. Let’s dig in.

The context/background

Stablecoins are dollars that have been tokenized through a process where institutions and people deposit their US dollars at a financial institution such as Tether or Circle and get an equal amount back in tokens on Ethereum or other blockchains.

Why do people like to have onchain tokenized USD? Because it is much easier to store, use and interact with. You cannot buy Bitcoin or Ether with $100 in cash, but you can at a click of a button with 100 USDT or USDC. You cannot pay for your coffee with your USD cash in France, but you can with your crypto debit card funded with USDC or USDT. And if you have $10mil and need to store it at a local bank in Brazil, you will have a lot more hoops to jump through than having it tokenized and stored onchain. Tokenized USD travel the world at the speed of bytecode computation on a blockchain and are available for anyone in the world with an internet connection. I daresay that is a little more convenient than banking with a traditional bank in USD.

Based on Coingecko’s data, the top 10 stablecoin markets command approx $130bil in total. This number is down from an all time high of $190bil in May 2022, but up from around $60bil in March 2021.

Of the current total of $130bil, the top four stablecoins (USDT, USDC, BUSD and DAI) make up 96% ($125bil) of that market.

But just how much yield are these stablecoins getting in crypto?

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