Are RWAs Overvalued? Experts Believe the Market's Growth May Not Be as Significant as Expected

The market for tokenized real-world assets (RWAs) has sparked a great deal of interest in the crypto community, with projects varying significantly on its future growth. Recently, some estimates have suggested that this market could reach $30 trillion by 2030. However, this figure has generated skepticism among certain industry experts, who believe that growth could be more moderate, though no less significant.

Jamie Coutts, chief crypto analyst at Real Vision, is one of the critics questioning the viability of the $30 trillion projection. According to Coutts, a more realistic figure would be approximately $1.3 trillion by 2030, based on the current 121% compound annual growth rate (CAGR) that tokenized assets have experienced. While this valuation is considerably lower than the most optimistic projection, it still represents remarkable growth that could have a profound impact on the Web3 ecosystem.

Asset tokenization involves converting physical assets, such as real estate, bonds, artwork and stocks, into digital tokens that can be traded on blockchain platforms. This process is seen as a way to improve liquidity, transparency and accessibility in traditional financial markets. And since its inception it has managed to attract the attention of investors and developers around the world.

Are we being overly optimistic? The initial $30 trillion forecast came from a report published in June by Standard Chartered bank and consulting firm Synpulse, which estimated that RWAs could reach this valuation by 2034. However, Coutts cautions that these expectations may be too optimistic and that the projected exponential growth may not materialize in the near term.

Despite his more conservative view, Coutts suggests that even a $1.3 trillion market could trigger a massive “ripple effect” in other areas of the crypto industry, such as non-fungible tokens (NFTs), social platforms and gaming. However, it also raises concerns about how the value generated by these tokenized assets will be distributed, especially on the Ethereum network, which has been the platform of choice for many financial institutions for their forays into blockchain.

One of Coutts' main concerns is that much of the revenue generated by tokenization could be captured by Layer 2 networks, leaving the Ethereum base layer with a small fraction of the value.

More conservative projections also support a more measured growth view. A recent report by McKinsey & Company notes that while tokenized financial assets have had a “cold start,” the market is still expected to reach $2 trillion by 2030. Other studies, such as one by the Global Financial Markets Association (GFMA) and Boston Consulting Group, estimate that the global value of tokenized illiquid assets could reach $16 trillion in the same period.

Even more cautious estimates, such as those from Citigroup, suggest that between $4 trillion and $5 trillion in tokenized digital securities could be issued by 2030. This potential has led large firms, such as Goldman Sachs, to take significant steps in the tokenization arena, with plans to launch new tokenized products in the near future.

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