RWA TVL hits all-time high: TradFi's golden opportunity in blockchain?

The RWA sector is growing rapidly, and the total value has recently hit a new high. This article explores the development opportunities, challenges of RWA, and its impact on TradFi, analyzing the potential rise over the next decade. The article is based on a piece by Moomsxxx, compiled and translated by Plain Blockchain. (Background: MEME coin has declined in the short term, why should you follow the counter-trend rise of RWA?)(Background: With a rise of 64 times in one year, what actions does L1 project MANTRA take in the RWA track?) The RWA sector is growing at an astonishing pace. Just a few days ago, the total value of RWA reached a new high, surpassing it again today. 1. RWA TVL Despite many ongoing operational frictions caused by challenges related to privacy solutions, digital identity solutions, Interoperability, and others, which have become bottlenecks for faster adoption, the on-chain fundraising of $20-30 billion and approximately $200 billion in Stable Coin indicate the increasing interest and adoption of the Web3 industry. The current tokenized fund only accounts for a small part of the expected growth of the fund industry in the coming years. Similarly, the growth in the private lending sector reflects the increasing interest of market participants in opportunities beyond Bitcoin, Decentralized Finance native returns, alternative coins, and meme coins. According to @Preqin, the global private lending market's investment scale is close to $1.7 trillion, while the Tokenized private lending scale is only about $119 billion according to @RWA_xyz. Active lending value - Private lending market (source: RWA.xyz) Delving into this field, it is necessary to mention that since the market crash in 2022, the reliability of these loans has undergone significant changes, with teams of various platforms becoming more cautious and investing more resources to ensure higher-quality loan issuance. From July 2021 to the end of 2022, borrowing was mainly dominated by encryption transactions and market makers. Therefore, borrowing in this field collapsed during the bear market of 2022. Subsequently, growth mainly came from real-world borrowing dominated by relatively less volatile asset categories such as consumer asset-backed securities (such as auto loans, credit card debt, student loans, small business loans, etc.), real estate transition loans, trade finance, and other less volatile asset categories. The proof of this point is the resilience protocol like @maplefinance demonstrated in the clearing event on February 3, 2025 — the largest clearing event in encryption history. For more details, please see the link below: Additionally, over the past three years, the industry has matured considerably, with technical solutions continuously emerging to address regulatory and privacy obligations, further improving this critical field. 2. Opportunity Scale According to @BCG data, tokenizing all global mutual funds could unlock an additional $100 billion in returns annually for investors. At the same time, 'sophisticated investors' (sorry, not referring to you) could earn $400 billion through 'intra-day value capture' (in simple terms, day trading). Looking at the historical adoption patterns of ETFs, it is reasonable to expect that tokenized funds will account for 1% of global mutual funds and ETF Assets Under Management in the next seven years. Global ETF Assets Under Management (source- JP Morgan Asset Management) This means that by 2030, tokenized assets will exceed $600 billion. Furthermore, if regulators allow existing mutual funds and ETFs to convert to tokenized funds (which is simpler than launching new tokenized funds), we may see trillions of dollars in Assets Under Management. Considering similar growth expectations before the launch of BTC ETFs, I believe these digital estimates may be too conservative, and the actual growth could be astonishingly high. However, even based on these expectations, we are still talking about at least a 200-fold growth. Let me say it again, from now on, at least a 200-fold growth. Are you still sitting there lamenting the lack of profit? Give me returns, please! According to @BCG's study, our industry's investment demand for tokenized funds is estimated to be $290 billion. This figure includes the demand from Stable Coin holders, Tokenized RWA, and Decentralized Finance protocols. I believe this figure may be on the high side since they consider the growth of the Decentralized Finance protocol market cap, which comes from a user group with a higher risk appetite, and their investment preferences may differ from those willing to invest in tokenized assets. A more reasonable approach is to consider the growth of the Decentralized Finance total value Lock-up Position (TVL) over the past two years, although it is still a significant digital number: $58.06 billion (source - @DefiLlama). Decentralized Finance total value Lock-up Position (TVL) Nonetheless, the value proposition of tokenized funds and RWA is undeniable. They provide a channel to access real-world investment opportunities, allowing investors to better diversify their portfolios in dynamic market conditions. Imagine being able to convert your on-chain tokens into stocks, commodities, and real estate through @Rabby_io in the past few months without the need for cash withdrawals. But why must all this happen? What are the benefits for TradFi? Recently, I haven't seen much discussion on this topic on encryption Twitter (CT), especially amidst the craze and controversy surrounding meme coins. We always talk about how TradFi is entering the Web3 industry and adopting the technologies we are building. But why are they doing this? Although I plan to write an article specifically discussing this topic, here are some key points explaining why TradFi needs and must adopt the encryption railway: Real-time settlement as shown in the figure below could add approximately $50 billion annually to investors' portfolios. A drop in commissions will save an additional $33 billion in funds, ultimately flowing into investors' portfolios. Composability tokenized funds will be more easily lent out. Accessible trading Tokenization will make it easier for investors to trade assets. How tokenization enhances returns (source: Boston Consulting Group) Emotions follow, momentum leads TradFi bids, while encryption Twitter (CT) is muted. The chart above shows that regardless of market conditions, especially the sentiment on encryption Twitter (CT), TradFi institutions are more interested in Tokenization, encryption, and Blockchain than ever before. This reminds you of how incredible the next few years will be. Think about it: if TradFi institutions were interested in Tokenization and encryption in the past — even when adoption was almost non-existent, unfriendly regulations, and less innovation — why shouldn't they be extremely optimistic now? In fact, there is only one answer. You know. How does the encryption market look? Even as market participants' sentiment hits historic lows, most discussions focus on the nonsense of @KaitoAI, Solana...