Chainlink Labs’ director of capital markets believes that real-world data is the best use case for tokenization, rather than traditional finance. The potential market for tokenizing real-world assets (RWA) is estimated to be in the hundreds of trillions of dollars. By tokenizing assets, blockchain technology can enable near-instant settlement, enhanced liquidity, fractional ownership, DeFi integration, and more. While there are numerous projects looking to tokenize various assets, including cash, commodities, and real estate, Chainlink researchers argue that the biggest opportunity lies in real-world asset tokenization within the digital financial infrastructure. They believe that asset managers have an opportunity to enter the tokenization market as financial asset infrastructures become more digital.
Chainlink’s industry report, titled “Beyond Token Issuance,” emphasizes the need for interoperability and real-world data in tokenization to meet the rising demand for tokenized assets. Asset managers who are unable to incorporate tokenized assets into their product offerings risk falling behind their competitors as clients seek exposure to these assets. By unlocking dormant capital and tapping into previously inaccessible markets or asset classes, asset managers can generate higher returns and create novel revenue models with new revenue sources. Bridging the gap between traditional financial assets and digital assets would unify client portfolios and reduce back-office operational costs by eliminating intermediaries through decentralization.
According to Chainlink, blockchain technology is becoming an integral component of the existing financial ecosystem as it provides better infrastructure for transactions and asset storage. The integration of blockchain and traditional assets into a unified financial ecosystem is seen as a result of ongoing digitization. While there are more opportunities to apply tokenization with real-world data, traditional finance should not be overlooked as a target for technology development and adoption. Chainlink has already made inroads into the traditional finance market through partnerships with companies like ARTA TechFin and ANZ Bank, facilitating the adoption of tokenization and adapting their services to meet the needs of the financial industry.
Real-world data tokenization is not just a focus for Chainlink but also a contributing factor to the growing adoption of blockchain technology in the real world. By enabling asset managers to seamlessly incorporate tokenized assets into their product offerings, Chainlink believes that greater availability to previously inaccessible asset classes and markets can be achieved. This integration also allows asset managers to differentiate their service offerings with bespoke financial products for clients. With blockchain technology evolving to become an essential part of the financial ecosystem, the potential benefits of tokenization, including enhanced liquidity, fractional ownership, and new revenue models, outweigh the limitations of traditional finance in leveraging blockchain technology.
